fair question firstly, ARL seem to be a two trick pony at present. I think its fair to say the market values their primary laterite asset at $70M since the price has been stable around that level for ages, the new sulphide discovery of only 2m high grade Ni has sent their SP rocketing 50% so perhaps market values it at ~$35M. SRL is valued at $200M, about 3x ARL laterite valuation.
i have had some discussions on ARL forums trying to compare the companies laterites.
Resource- ARL have a lot of minerals spread over a vast area, BUT i deduce from their literature a very large proportion of their resource is indeed saprolite, not feasible for HPAL operations. they reported at a 0.5% and 0.8% NiEq cut-off with very large numbers, some 5,900kt contained Ni and 380kt contained Co @ 0.5% NiEq cutoff. in my opinion the saprolite shouldn't even be reported in their MRE, its deceptive. the global numbers are definitely not a fair comparison to SRL. in recognising this, ARL instead list a "feed resource" of 2,400kt Ni and 154kt Co. SRL have 935kt Ni and 168kt Co @ 0.35% NiEq cut-off but we also have Hylea to consider just up the road. ARL progressed to PFS which they expanded, focusing on the cobalt thematic. circumstantially they appeared to stall in the interim and are presently re-focusing on a much larger throughput nickel-focused DFS which will be 3.0Mtpa dual autoclave HPAL with 0.5Mtpa atmospheric leach feeding on some saprolite. SRL pushed through to FEED by end of 2020 with a design throughput 2.5Mtpa dual oversized autoclave upgradable to 3.5Mtpa. ARL are proximal to Bulong, Cawse (both shut) & Murrin2 (operating) which are all terrible examples of HPAL operations, poor ramp-up, cost overruns etc ARL are likely to have high Mg content even in their geothite as local operations have. Strangely they sort of hide a lot of these facts. ARL claimed in a quarterly somewhere they will use 260kg/t sulphuric acid which is unlikely given historical precedent for the area being 400-500kg/t SRL has extremely low Mg content (worlds best basically) which is principally why we will only require 200-250kg/t of acid which we will produce on site
Grades: ARL reports global grades at 0.7%Ni 0.046%Co SRL 0.6%Ni 0.1%Co. Both laterites are essentially over-drilled relative to the life-of-mine time period of which feasibility studies assess, ie. 25years. ARL 830Mt ore @ 3.5Mtpa could mine for 237 years theoretically whereas SRL 335Mt ore @ 2.5Mtpa could for theoretically mine 134years. ARL obviously have a mammoth resource but honestly whats the significance? for investors, we are interested in economic feasibility, this is precisely why i compare the proposed mill feed grade below. this will require updating once ARL DFS is released but as it stands SRL is superior mainly because we have pockets of very high grades in initial years (0.25%Co!) which in DCF / NPV modelling is critical. Flowsheet - ARL will use a pretty standard flowsheet but added complexity with dual processing types. critically they now plan to produce to intermediate MHP which historically has 70% payability. SRL - after HPAL will use our very own cRIP technology which has been extensively tested and understoof but never built in commercial setting for base metals (only some examples like uranium extraction). SRL will go direct-to-sulphate ~120% payability or even precursor CAM which will further upgrade payability. SRL will have recycling capability (highly attractive, think European minimum recycling content laws for battery makers) and will also append Scandium refinery for world wide significant scandium oxide output. CAPEX - ARL 2.25Mtpa PFS design was US$918M. importantly this is a low end estimate simply because its a PFS level. SRL- Of coarse the modern leading edge technology deployed at SRL comes at a cost, and its a thoroughly understood cost at FEED level of confidence. Total capex US$1.8B. but what you get for it is a LOT which needs to be considered. Heaps of upside not formally modelled ie. ore thoughput upgrade, recycling, Scandium (+US$80M), PCAM potential (+~US$200M). OPEX - SRL - Negative cash cost -$2 first 10 years, hard to beat. ARL state -$0.34 / lb Location - perhaps biased but I think Sunrise is better situated though obviously Kalgoorlie a well established mining precinct. ESG - because SRL vertically integrate and go direct to sulphate or PCAM, the carbon footprint is extremely lean. sulphuric acid plant regen + solar panels means our LCA is at 12 kg CO2 / kg Ni in sulphate. ARL will be multiples of this simply because it has to ship the MHP which then needs to be further refined by end user. Government support - SRL - Major Project status, huge political move to get Dubbo region fired up with InLand Rail project, and Parkes special activation precinct and Dubbo Critical Minerals Hub, the list goes on. Transparency & Strategy - you cant beat SRL, we have a 43-101 DFS document which details everything you'll need to know about project, history and our proprietary ion exchange technology used in met testwork. ARL have a lot of documentation but key details are omitted and they keep changing their strategy, from Ni/Co sulphate to MHP and from cobalt focused development to nickel focus and NOW its nickel sulphide... mgmt are a bit all over the place IMO. SRL has pretty well been executing a single strategy born in 2015 with the Syerston/Sunrise-CleanTeQ acquisition. Other upside- ARL have the Ni sulphide strike. SRL has the bonanza Platinum strike. We have a range of Scandium upside too with offtakes and industry research partnerships with the likes of UACJ / Panasonic / Relativity Space / Chinalco .. huge names pro's n con's - i hope my notes are of use cheers
SRL Price at posting:
$2.20 Sentiment: Buy Disclosure: Held
(20min delay)