Levelling the Rare Earth Playing Field

Rare Earth Deposits & Mining / Rare Earth Exploration, Mining, Processing, & Uses

Date posted: 12/22/15

Alastair Neill reports that we have come a long way from the heady days of 2010-2011 when everyone jumped on the rare earth bandwagon and raising money was simple if you had rare earths in your company name. A lot has changed since then but there is still a lot of noise and mixed messages and fund raising has become a real fight for survival in a very challenging market. Every project is the next best one outside of China and if one reviews PEA and PFS reports all elements can be sold at projected prices with no context of supply and demand. In an attempt to level the playing field I have developed the attached table to evaluate all the main projects using the same pricing, which I feel is reasonable and defendable. In addition it assumes all La, Nd, Pr, Tb and Dy can be sold and Eu is sold at a 30% discount and Y at 25% off market given the current oversupply situation. Some private projects are not included including ionic clay projects in South America. Until now most PFS studies look at selling everything that is produced even though this is a near impossibility. This is especially interesting when people talk that they will sell concentrate and use their best guess for market prices of separated elements in the future to build their revenues. What is noticeable is that in all cases the BIG 4 (Nd ..Pr ..Dy ..Tb) magnetic elements account for greater than 90% of all revenues in every project. The same pricing assumptions were used on all projects with a base of 1,000 TPY REO output to see how composition plays into the project revenues. Some assumptions were made ... 1. Projects will sell all the La, Nd, Pr, Tb and Dy 2. They will get 70% of the value of Eu and 75% of the Y value as most of this will be sold as a concentrate, if possible 3. No value is given for any of the other elements ... any sales of these would be a bonus. Neill evaluated Market Cap, Enterprise Value and cash position to see how the projects compare.