beginning with the end in mind: rare earths - sept 2013 - greenfields research / curtin university /...


http://www.stephencovey.com/

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0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Au

g 2

007

De

c 2

00

7

Ap

r 200

8

Au

g 2

008

Dec

2008

Ap

r 200

9

Au

g 2

009

Dec

2009

Ap

r 201

0

Au

g 2

010

Dec

2010

Ap

r 201

1

Au

g 2

011

De

c 2

01

1

Ap

r 201

2

Au

g 2

012

Dec

2012

Ap

r 201

3

Au

g 2

013

Metal Pages La Oxide 99% min FOB China (CN) / tonne


0 2 4 6 8

Mt Weld

Dubbo

Nolans

Delay (years)

0

5

10

15

Fre

qu

en

cy


“Getting your ducks in a row” – all appears in order

(compliance)

Legs madly working away below the surface

(strategy)


“Taking a Risk

for Rare Earths”

New York Times, Keith Bradsher,

8th Mar 2011

“The Fear of a

Toxic Rerun”

New York Times, Keith Bradsher,

29th Jun 2011


0.000

2.000

4.000

6.000

8.000

10.000

12.000

14.000

16.000

18.000

To

tal R

are

Ea

rth

Ox

ide

Gra

de

(%

)

Advanced light rare earth deposits

Early stage light rare earth deposits Most advanced rare earth

projects are the highest

grade – early mover

advantage


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Examples: Molycorp, Lynas


Ma

rket

Gro

wth

(re

qu

irin

g in

ve

stm

en

t)

DOGS/PETS Not profitable. Usually

“pet projects” that

provide a non-financial

benefit i.e. synergies,

labour retention etc

CASH COWS High market share in

slow growth industry –

“milked” to fund other

investments

STARS Leading

assets/products

dominating fast

growing markets, still

requiring investment.

QUESTIONS Also known as

“problem children”.

High growth sector but

large capital investment

required.

Market Share (beating the competition)



Ma

rket

Gro

wth

(a

dd

ing

to

th

e c

om

pe

titi

on

)

PET

PROJECTS Not profitable. Usually

“pet projects” that

provide a non-financial

benefit i.e. synergies,

labour retention etc

CASH COWS High grade, small scale

projects, which are quickly

cash generative, allowing

access to an industry and

providing cash for

investment elsewhere.

STARS World class assets with

high grades and large

scale. Will dominate future

sector and be hugely

profitable.

PROBLEM

CHILD Challenging projects with

scale, that could be stars in

a high growth industry,

assuming some structural

changes.


0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

Lofdal

Wolverine

Hastings

Kutessay II

Bokan

Thor Lake (Basal)

Strange Lake (Enriched)

Kipawa

Norra Karr

Olserum

Buckton South

Buckton

Strange Lake (Granite)

Mt Weld (Duncan)

Foxtrot

Thor Lake (Upper)

Dubbo

Grande-Vallee

Mt Weld (CLD)

Mt Pass

Total Rare Earth Oxide Basket Value (US$/kg)

Heavy rare earth deposits



0.000

0.020

0.040

0.060

0.080

0.100

0.120

0.140

0.160

0.180

Dys

pro

siu

m O

xid

e G

rad

e (

%)



Early stage light rare earth deposits

Some “heavy” rare earth

projects actually have a very

low heavy rare earth grade

The highest grade

“heavy” rare earth

deposits are actually the

high grade “light”

projects


20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

0.00 1.00 2.00 3.00 4.00 5.00

TR

EO

Ba

sk

et

Va

lue

(U

S$

/kg

)

TREO Ore Value (US$/kg)

Focus should be on these:

mainly advanced “light”

rare earth projects

Focus is on these

projects: mainly “heavy”

rare earth projects

Gold ore equivalent: 23.7g/t 47.3g/t 71.0g/t 94.7g/t 118.3g/t


20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

0.00 1.00 2.00 3.00 4.00 5.00

TR

EO

Ba

sk

et

Va

lue

(U

S$

/kg

)



PROBLEM

CHILDREN

PET PROJECTS CASH COWS

STARS


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Examples: Northern Minerals, Hastings Rare Metals, Stans Energy, Tasman Metals, Quest Rare Minerals


Likely to be > 10 years for a new material

Con

stru

ctio

n

Fin

ance

PF

S

Off-ta

ke

Pe

rmittin

g

Me

tallu

rgy

(Se

pa

ratio

n)

Me

tallu

rgy

(Extra

ctio

n)

BF

S

Me

tallu

rgy

(Be

nific

atio

n

)

Sco

pin

g

Re

so

urc

e

s

Exp

lora

tion

Likely to be > 10 years for a new mine


0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0

Lofdal

Wolverine

Hastings

Kutessay II

Bokan

Thor Lake (Basal)

Strange Lake (Enriched)

Kipawa

Norra Karr

Olserum

Buckton South

Buckton

Strange Lake (Granite)

Mt Weld (Duncan)

Foxtrot

Thor Lake (Upper)

Dubbo

Grande-Vallee

Mt Weld (CLD)

Mt Pass

Total Rare Earth Oxide Basket Value (US$/kg)



Assumes separated rare earth oxide prices

Assumes 100% recovery of all rare earths

No assessment of resource grade


0.002.004.006.008.00

10.0012.0014.0016.0018.0020.00

Ce (US$/kg) La (US$/kg)


Recoveries range:

6.5% to 41.0% Recoveries range:

65% to 90%

Remember: “basket values” analysis assume even 100% recovery


RARE EARTHS 101

Resources x reserve recovery x mining recovery x

grade x processing recovery x cracking recovery

(x separation recovery) = LOM production

90% recoveries: 90% x 90% x 90% x 90% x 90% = 59%

75% recoveries: 75% x 75% x 75% x 75% x 75% = 24%

50% recoveries: 50% x 50% x 50% x 50% x 50% = 3%


0

5

10

15

20

25

30

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00

Co

nc

en

tra

tin

g F

ac

tor

(mu

ltip

le)

Ore Grade (%)

96.7%

93.3%

90.0%

86.7% 83.3%

80.0% 76.7% 73.3% 70.0% 66.7%

Percentages indicate equivalent mass

loss to take ore to a 30% concentrate


1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

LYNAS: Mt Weld (Forecast 12 years from purchase to production)

Project

Farm In

Resource

Drilling

Scoping

Study

Feasibility

Study Peer Review

Project

Funding GFC

Refinancin

g Construction PRODUCTION >>>

ALKANE: Dubbo (Forecast 15 years from purchase to production)

Project

Purchas

e Feasibility Study Financing Definitive Feasibility Study GFC

Definitive

Feasibility Study Expanded

FS

Financing /

Construction PRODUCTION >>>

ARAFURA: Nolans (Forecast 12 years from purchase to production)

Project

Purchas

e Scoping Study

Prefeasibilit

y Study

Feasibilit

y Study GFC Feasibility Study

Expanded

Feasibility

Study

Financing /

Construction PRODUCTION

>>>

Second mover rare earth projects • Shorter development time, and lower development cost

• Maturing new market outside of China

Targeting 5-10 years from purchase to production?

COMPARISON OF AUSTRALIAN RARE EARTH PROJECTS

First mover rare earth projects • Delays due to technical problems at feasibility stage

• Faced funding problems throughout due to lack of investor awareness

Typical development timeframe will be 12-15 years


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6.00

8.00

10.00

0.0 200.0 400.0 600.0 800.0 1000.0 1200.0

TR

EO

Gra

de (

%)

Ore (Mt)

Major early stage light

rare earth projects

Major late stage light

rare earth projects

Heavy rare

earth projects

Early stage light

rare earth projects


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4.00

6.00

8.00

10.00

1.0 10.0 100.0 1000.0 10000.0

TR

EO

Gra

de (

%)

Ore (Mt)

PROBLEM CHILDREN

CASH COWS

PET PROJECTS

STARS


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Examples: Rare Element Resources,

Arafura Resources, Peak Resources,

Frontier Rare Earths


0.00

2.00

4.00

6.00

8.00

10.00

1.0 10.0 100.0 1000.0 10000.0

TR

EO

Gra

de (

%)

Ore (Mt)

PROBLEM CHILDREN

CASH COWS

PET PROJECTS

WHERE ARE ALL

THE STARS?


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30.00

40.00

50.00

60.00

70.00

80.00

90.00

0.00 1.00 2.00 3.00 4.00 5.00

TR

EO

Ba

sk

et

Va

lue

(U

S$

/kg

)



PROBLEM

CHILDREN

PET PROJECTS CASH COWS

WHERE ARE ALL

THE STARS?


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Examples: Tantalus Rare Metals, TUC

Resources, Namibia Rare Earths, Vale


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$5 billion

$1 billion

20%

80% $800 million

$1,000 million

$200 million

200 20% 5,000 1,000 80% 1,000


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Examples: Greenland Minerals, Pele Mountain Resources, Alkane Resources, CBMM


Kvanefjeld

(Greenland Minerals & Energy)

Mt Weld

(Lynas)

Mountain Pass

(Molycorp)

Zandkopsdrift

(Frontier Rare Earths)

Nolans Bore

(Arafura Resources)

Dubbo

(Alkane Resources)

Strange Lake

(Quest Rare Minerals)

Eco Ridge

(Pele Mountain Resources)

Hastings

(Hastings Rare Metals)

Bear Lodge

(Rare Element

Resources)

Sarfartoq

(Hudson Resources)

Thor Lake

(Avalon Rare Metals)

Kipawa-Zeus

(Matamec Explorations)

Market Capitalisation

(equiv. US$10 million)

Project Capital Cost

(equiv. US$100 million)


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Examples: India Rare Earths? Tin

smelter slags?


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Examples: Alkane Resources, Kimberley

Rare Earths, Avalon Rare Metals


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Ma

rket

Gro

wth

(a

dd

ing

to

th

e c

om

pe

titi

on

)

6) CASH DOG 1) CASH COW

4) FIND A STAR!

2) HEAVY

PROBLEM CHILD

3) LIGHT

PROBLEM CHILD

5) BY-PRODUCT

CASH COW 7) DO

SOMETHING

ELSE!


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mailto:[email protected]

http://www.greenfieldsresearch.com/

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beginning with the end in mind: rare earths - sept 2013 - greenfields research / curtin university /...

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