Beginning with the End in Mind: Rare Earths - Sept 2013 - Greenfields Research / Curtin University / University of Western Australia

© Greenfields Research Ltd
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120,000
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180,000
200,000
Aug2007
Dec2007
Apr2008
Aug2008
Dec2008
Apr2009
Aug2009
Dec2009
Apr2010
Aug2010
Dec2010
Apr2011
Aug2011
Dec2011
Apr2012
Aug2012
Dec2012
Apr2013
Aug2013
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
Frequency

“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
TotalRareEarthOxideGrade(%)
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

MarketGrowth(requiringinvestment)
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)

MarketGrowth(addingtothecompetition)
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
DysprosiumOxideGrade(%)
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

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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
TREOBasketValue(US$/kg)
TREO Ore Value (US$/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

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30.00
40.00
50.00
60.00
70.00
80.00
90.00
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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
Construction
Finance
PFS
Off-take
Permitting
Metallurgy
(Separation)
Metallurgy
(Extraction)
BFS
Metallurgy
(Benification
)
Scoping
Resource
s
Exploration
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

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2.00
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6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
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%

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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
ConcentratingFactor(multiple)
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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TREOGrade(%)
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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10.00
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TREOGrade(%)
Ore (Mt)
PROBLEM CHILDREN
CASH COWS
PET PROJECTS
STARS

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Examples: Rare Element Resources,
Arafura Resources, Peak Resources,
Frontier Rare Earths

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2.00
4.00
6.00
8.00
10.00
1.0 10.0 100.0 1000.0 10000.0
TREOGrade(%)
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
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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MarketGrowth(addingtothecompetition)
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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Beginning with the End in Mind: Rare Earths - Sept 2013 - Greenfields Research / Curtin University / University of Western Australia

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Beginning with the End in Mind: Rare Earths - Sept 2013 - Greenfields Research / Curtin University / University of Western Australia