If go back to my earlier post on this thread, these were a couple of points I made in italic and in bold is my view of latest development:
1. The word binding before the words Offtake Agreement. A binding Offtake is the key ingredient IMO to securing funding, albeit Stage1 funding is not that large here, and the FID decision, and makes meeting stated timelines a big plus. Whilst the word binding is used REEtec is still a conceptual company in terms of this agreement, so still a lot of water to go under the bridge for this Agreement to be binding. Whilst I say conceptual, I will ass they have built a pilot plant as well as progressing in the scaling to industrial production, so the term conceptual I am using loosely here. http://reetec.no/
2. Provides some information that allows one to get an understanding of value, given the rare earth market, especially as it relates to pricing,is relatively opaque. Given the above can see why no information provided.
3. The Offtake is with a non-Chinese player, which I suspect it will be, because greater value is generated by this especially IMO. Also will give hope to other worthwhile non-Chinese rare earth resources, as it will send to market a message that Europe/USA is moving to reduce reliance on Chinese supplies where games can be played by the Chinese - Post #: 47663715 This is a big tick if can get it over the line.
Further comment in relation to today's Ann:
I guess one of my confusions with the latest Ann is how it fits with the 22 September 2020 Ann with SRC. From the 22/09/2020 Ann was the following in italics below: 1. "Vital’s Rare Earth Extraction Plant is planned to be located adjacent to SRC’s Separation Plant which will convert mixed rare earth carbonate to commercial grade separated rare earth oxides 2. SRC’s facility will require mixed rare earth carbonate product for separation making Vital a likely customer." 3. The Rare Earth Extraction Plant will produce a mixed rare earth carbonate product and will be located adjacent to SRC’s recently announced Rare Earth Processing Facility which will produce separated rare earth oxides. SRC’s Separation Plant will be a potential customer of Cheetah's mixed rare earth carbonate product. 4 The intention of this stage will be to transport beneficiated ore from Nechalacho North T to SRC at Saskatoon where Cheetah’s Rare Earth Extraction Demonstration Plant will produce a mixed rare earth carbonate product for sale to separation facilities.
A key point to the VML strategy is to produce 5000 t/pa of Rare Earth Oxide by 2025, and one thing I have noticed of the Ann from 22/09/2020 it doesn't actually quote numbers, i.e. maybe after reading this Ann a few times I can't see the number LOL, but presume the 5,000 tpa will be produced from the Rare Earth Extraction plant (? and yes this is a question mark see below) after scale up given the 5,000 tpa comes from Stage 2 - refer slide 18 from the 26/11/2020 AGM Ann Post #: 49157948.
Which takes me back to production under the 20/09/2020 Ann that is slated to start in 2021 under Stage 1. Not clear what production is been targeted in the initial extraction plant, including any Stage 1 scale up) where capex costs are stated to be less than A$20 million in that AGM Ann of late November 2020, but the 20/09/2020 Ann states costs of $5.3 million (so presume the $5.3 million realtes to VML's share).
I guess this is where clarification will be needed, as todays Ann seems to be more about Stage 2 IMO IMO, than Stage 1 in my opinion. Albeit I also note the binding term sheet is for 1,000 tpa REO for 5 years, possibly up to 5,000 tpa if options are 'exercises' albeit not clear how the option works, as well as what is the timeline for VML/REEtec to production targets is not stipulated either. So at this stage it would appear too me that VML is leaving its options open to sell/utilise SRC's Separation facility which makes sense.
A further key to today's Ann is also the following comment comment in italics below: "Stage 3: Subject to each party's FID and following construction and commissioning of a commercial extraction and processing plant by Vital, Vital to provide up to 2.5 tonnes of Vital Product from various production lots to REEtec for processing through REEtec’s demonstration plant to confirm REEtec’s acceptance of Vital’s Product."
I presume here we are talking about some of the Stage 1 product been given to REEtec to test. I presume this will come from the Rare Earth Extraction plant, albeit this point needs to be read in the context of the discussion below. This might also provide a guide to timelines as well, but would be interested in what other posters think.
In addition, cerium in the rare earth solution that goes to separation facilities can act as a 'penalty' hence you want to be removing this before your sales to Separation facilities and obviously sell what cerium you recover yourself - i.e. your customers that separate the rare earth elements from the solution. https://link.springer.com/chapter/10.1007/978-3-319-95022-8_233
From VML's various Anns, they state they will be providing a beneficiated product to the Rare Earth Extraction Plant they are building/using next to SRC's Separation Plant.
The Extraction Plant produces a rare earth carbonate that downstream facilities then use to extract the individual rare earth elements. The question is, is cerium removed in the Rare Earth Extraction Plant? My reading of the below paper, is that most likely the removal of cerium happens post this Extraction Plant stage or in the latter stages of the Extraction Plant itself, which suggests to me VML will need to attach a small unit to the RareEarth Extraction Plant it is building near SRC's facilities, unless of course it enters into an agreement with SRC, in terms of its Separation facility, to achieve that before onselling to REEtec. I doubt SRC's Separation facility would be used for this purpose, in an onsell to REEtec, so suspect the Rare Earth Extraction Plant will need to deal with cerium itself.
As I said, I am trying to digest the contents of the Anns in my mind, and at this stage there is some uncertainty too me around these various Anns and their relationships. Obviously, all Anns are still around developing Definitive Agreements, but thought I would put some views down for discussions. Obviously would prefer VML provide how these agreements fit into the overall picture, and whether this Ann, should a definitive agreement be developed with REEtec, intends using the facilities near to SRC.
For me it is highly possible that they could ultimately be building the Stage 2 Extraction plant at minesite, as not clear in my own mind the scaleability of the Stage 1 extraction plant to Stage 2 targets albeit should be scalable IMO - especially if they intend supplying both SRC and REEtec etc etc.
All IMO and posted for discussion as suspect there would be a few errors in this.
VB downed.
VML Price at posting:
3.2¢ Sentiment: None Disclosure: Held
(20min delay)