The document discusses strategies for companies in the rare earth industry given various uncertainties. It notes that rare earth projects face geological risks around the quantity and quality of resources, as well as risks in the development process. It analyzes different categorizations of rare earth deposits and projects based on their geology and market potential. Overall, the document examines approaches companies can take to navigate the challenging development of rare earth mines.
The King-King Copper-Gold Project is held in a Mineral Production Sharing Agreement (MPSA#009-92-XI, approved by the government May 27, 1992 and amended December 11, 2002) by The Philippine Government, NADECOR (Nationwide Development Corporation), and Benguet Corporation.
The MPSA grants the parties to the MPSA the exclusive right to explore, develop and exploit minerals within the area comprising the King-King deposit.
The deposit size depicted in Figure 1-1 below is 2.5 square kilometers and the area of the Mineral Property in the MPSA is 15.5 square kilometers (see Figure 4-2). There is a memorandum of understanding (MOU) between NADECOR and St. Augustine Mines Ltd., a subsidiary of Russell Mining and Minerals, Inc. (RMMI), that provides for formation of a Joint Venture (JV) once Benguet Corporation is eliminated from the MPSA.
Under the MOU, RMMI retains the exclusive right to develop the project through itself or an associated entity. Ratel and RMMI have agreed to complete a Share Exchange Agreement wherein Ratel will gain 100 percent control of SAML and RMMI will be compensated in Ratel equity.
Jack Lifton från TMR berättar om sällsynta jordartsmetaller (REE).Vilken är efterfrågan och hur stort är utbudet? Presentationen tar upp politik, priser, problem och mer när det kommer till Rare Earth Elements.
The King-King Copper-Gold Project is held in a Mineral Production Sharing Agreement (MPSA#009-92-XI, approved by the government May 27, 1992 and amended December 11, 2002) by The Philippine Government, NADECOR (Nationwide Development Corporation), and Benguet Corporation.
The MPSA grants the parties to the MPSA the exclusive right to explore, develop and exploit minerals within the area comprising the King-King deposit.
The deposit size depicted in Figure 1-1 below is 2.5 square kilometers and the area of the Mineral Property in the MPSA is 15.5 square kilometers (see Figure 4-2). There is a memorandum of understanding (MOU) between NADECOR and St. Augustine Mines Ltd., a subsidiary of Russell Mining and Minerals, Inc. (RMMI), that provides for formation of a Joint Venture (JV) once Benguet Corporation is eliminated from the MPSA.
Under the MOU, RMMI retains the exclusive right to develop the project through itself or an associated entity. Ratel and RMMI have agreed to complete a Share Exchange Agreement wherein Ratel will gain 100 percent control of SAML and RMMI will be compensated in Ratel equity.
Jack Lifton från TMR berättar om sällsynta jordartsmetaller (REE).Vilken är efterfrågan och hur stort är utbudet? Presentationen tar upp politik, priser, problem och mer när det kommer till Rare Earth Elements.
Challenges of rare earths - Wright et al - Sep 2016 - Argus Rare Earths Confe...John Sykes
Challenges of rare earths - Wright et al - Sep 2016 - Argus Rare Earths Conference - Greenfields Research / Rowton Ltd. / Centre for Exploration Targeting / UWA Business School / The University of Western Australia
Challenges of rare earths - Wright et al - Sep 2016 - Argus Rare Earths Confe...John Sykes
Challenges of rare earths - Wright et al - Sep 2016 - Argus Rare Earths Conference - Greenfields Research / Rowton Ltd. / Centre for Exploration Targeting / UWA Business School / The University of Western Australia
Exploration and discovery: Do frameworks and organisation matter?John Sykes
Framing business complexity in exploration:
First, some things around risk & value complexities…..
Then, some thinking around everyday frameworks and standards…..
Some thoughts on a framework for project-level complexity…
And a simple example: The Sinclair Zone Cesium Mine, Western Australia
Finally, the exploration organisation study that keeps on giving…
A global overview of the geology and economics of lithium productionJohn Sykes
Lithium demand is growing fast, driven by a wide range of battery applications, which are in turn changing the structure of
demand, the lithium supply chain and potentially raw material requirements though much still remains uncertain;
•
Geologically ‘brine’ salars and ‘hard rock’ pegmatites remain the most important lithium deposit types in terms of
production and undeveloped resources, however, there are some interesting emerging sedimentary / clay deposits and
unconventional brine concepts and lithium remains very ‘under explored’ globally;
•
Spodumene pegmatites in Australia are the fastest growing source of supply, however, long term competitiveness may be
dependent on successful downstream integration targeting the battery industry;
•
The concept of a Western Australian ‘Lithium Valley’ is possible, despite high costs, due to the number of quality mines,
proximity to Asia, and the unit reduction in freight costs associated with the low grade spodumene concentrate , in addition
to the ‘cluster effect’ of many minerals businesses, specialists and students;
•
The ‘green’ association of lithium use presents a challenge of ‘strategic coherence’ to explorers and miners impacting
decisions around exploration, mining, investors, stakeholders, and leadership;
•
But remember, we are in an unsustainable ‘lithium boom’ of high prices and high volume growth future long term growth
of the industry is reliant on structurally lower prices, and thus structurally lower costs.
Australia's advantage on the periodic table and the significance of emerging ...John Sykes
Opportunities are not equal
Some nearer ‘break out’ than others fewer solutions
required
Some challenges are more ‘resolvable’ than others
Some ‘break outs’ will be bigger than others
Key is to focus on those ‘near breakout’ with resolvable (i.e.
technical, geological) issues, and that have a big pay off
My PhD Or: How I Learned To Stop Worrying And Love Mining Or: Using Scenarios...John Sykes
Explorers, exploration teams, and exploration companies will require a broader skill set in the future including:
• a better philosophical understanding of the nature of exploration and discovery
• better understanding of the cognitive processes involved in exploration and discovery;
• developing strategies and capabilities to effectively enter emerging commodity markets;
• building a diverse exploration culture to bring in ideas from other industries and disciplines;
• switching from a focus on economic value to shared value;
• developing a stronger innovation and technology culture;
• encouraging creativity and ideation;
• linking short and long term thinking;
• improving the image of exploration;
• monitoring local and global socio political, economic and technological trends and
• measuring and understanding the potential impact of these trends;
• encouraging a collective approach to ‘big exploration’.
Perhaps with these capabilities we can resolve the ‘discovery constraint’ on the minerals industry.
Australian gold in 40-years: The need for greenfields explorationJohn Sykes
1. Landmark report looks out 40 years critically includes the impact of resource quality, exploration, and uncertainty;
2. Over the short term (<5 years) production will be dominated by existing mines;
3. Over the medium term (5 10 years) production will come from new mines based on known deposits, however, it is not enough to offset the decline (mainly due to ‘quality’ issues);
4. In the long term (10 40 years) exploration success will play a major role in overcoming much of the looming shortfall in gold production…
5. Consequently, in forty years time almost all of Australia’s future gold production will come from exploration successes…
6. ...even so, production and revenues are set to fall by half over the next 40
7. Also note that in 13 years half of Australia’s gold production will come from mines that are yet to be discovered…
8. …but the weighted average delay between discovery and development is also 13 years
9. For the gold industry to maintain production at current levels over the longer term, it will either need to double the amount spent on exploration or double its discovery performance
10. And finally, with sensitivity studies indicating each additional dollar spent on exploration (over the next ten years) generates extra revenue of ~$11.40 over the next 40 years there is incentive for both industry and government to further invest in gold exploration!
A Mining and Exploration Industry Perspective on the Energy TransitionJohn Sykes
The transition to renewable energy from fossil fuels will both fundamentally change the structure of minerals demand, and the process of mining. The mining and exploration sector in its current form may struggle to re-align mineral production to match these new demand patterns, whilst at the same time undergoing a significant shift in production technology.
The ‘CET Scenarios’ Programme was established to investigate structural discontinuities, of this kind, in the future of mining. One discontinuity investigated was the energy transition. Two scenarios were developed: one involving a voluntary and complete energy transition driven by industrial innovation and framed by concerns over sustainable development (‘Wonderland’); and another with a forced and partial energy transition driven by government and framed by geopolitical (strategic) concerns over raw materials security (‘1984’).
Following the development of the scenarios further research was conducted into the interaction of the mining and exploration sector with the energy transition, sustainable development and resource security, with the aim of better informing corporate strategy.
The strategic recommendations to the mining and exploration sector for re-aligning with changing, but unknown minerals demand patterns, and exploration and production technologies, included techniques for monitoring ‘progress in transition’, ‘horizon scanning’, market analysis, capabilities analysis, and ensuring strategic coherence.
An emphasis was placed on developing creative, social, adaptable and varied thinking skills amongst mining and exploration sector professionals and researchers.
NOTE: This presentation was made in 2018 not 2011!!!
Strategic Thinking About Long-Term 'Above Ground' Orebody Complexity Using Sc...John Sykes
AIMS:
1. Explain what is wrong with strategic planning and why we need scenarios;
2. Explain what scenarios are (and their many variants);
3. Show an example of a scenarios programme: the CET ‘Future of Exploration’ Scenarios
4. MAIN FOCUS: Discuss the benefits of scenarios as a strategic thinking tool
Graphite mining and the energy transition - Sykes - Nov 2017 - MinEx ConsultingJohn Sykes
This presentation is also available on the MinEx Consulting website, along with a number of other detailed presentations on minerals exploration. All are free to download: http://www.minexconsulting.com/publications/nov2017.html
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In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
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A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
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Kseniya Leshchenko: Shared development support service model as the way to ma...Lviv Startup Club
Kseniya Leshchenko: Shared development support service model as the way to make small projects with small budgets profitable for the company (UA)
Kyiv PMDay 2024 Summer
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Seven Strategies for Rare Earths Hopefuls - Nov 2012 - Greenfields Research
1. SEVEN STRATEGIES
FOR RARE EARTHS
HOPEFULS:
NAVIGATING THE
UNCERTAINTIES OF THE RARE
EARTHS INDUSTRY
John P. Sykes, Director,
Greenfields Research Ltd (UK) Image: Shutterstock
2. CONTENTS
– Where now for rare earths?
– Unanswered questions about geology?
– “Geology” based strategies
– Unanswered questions about mine project development?
– Unanswered questions about delays?
– “Development” based strategies
– Unanswered questions about the future?
– “Uncertainty” based strategies
– How do you plan in the face of all these unanswered
questions?
3. TWO FORMS: “LIGHT” & “HEAVY”
• •
• •
• •
21 39 57 58
Sc Y La Ce
59 60 62 63
Pr Nd Sm Eu
• •
64 65 66 67
Gd Tb Dy Ho
• • •
68 69 70 71
• • •
Er Tm Yb Lu • • •
4. …OR THREE: “LIGHT” “MEDIUM”& “HEAVY”
• •
• •
•
21 39 57 58
Sc Y La Ce
59 60 62 63
Pr Nd Sm Eu • •
64 65 66 67
Gd Tb Dy Ho • • •
• • •
68 69 70 71
Er Tm Yb Lu • •
•
•
5. …OR : “CRITICAL” & “NON-CRITICAL”
• •
• •
•
21 39 57 58
Sc Y La Ce
59 60 62 63
Pr Nd Sm Eu
64 65 66 67
Gd Tb Dy Ho • • •
• • •
68 69 70 71 • • •
Er Tm Yb Lu • • •
6. …OR: BY END USE
• •
• •
•
21 39 57 58
Sc Y La Ce
59 60 62 63
Pr Nd Sm Eu • •
64 65 66 67
Gd Tb Dy Ho • • •
68 69 70 71
•
Er Tm Yb Lu •
•
•
•
•
•
7. WHERE NOW FOR
RARE EARTHS?
Entering “Phase 2” of the
recent rare earth industry: mine
project development
Image: Shutterstock
8. ENTERING “PHASE 2”: PROJECT DEVELOPMENT
La Oxide 99% min FOB China
(CN) / tonne
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Aug Aug Aug Aug Aug
2007 2008 2009 2010 2011
Data: Metal Pages; Bloomberg
9. WHY IS MINING SO DIFFICULT?
1. Relative crustal
abundance.
2. Degree of metal
concentration by
natural processes into
mineral deposits.
3. The mechanical ease
of obtaining the ore
from the earth.
4. The ease of extracting
the metal from the ore.
Source: Gupta & Krishnamurthy (2005)
12. TWO PRINCIPAL TYPES OF DEPOSIT
Carbonatites Alkaline IOCG Hydrothermal
e.g. Mountain Pass, USA e.g. Thor Lake, Canada e.g. Olympic Dam, Australia Bear Lodge, USA.
Placer Paleoplacer Laterite Ionic clay
e.g. Chavara, India e.g. Elliot Lake, Canada e.g. Mt Weld, Australia e.g. Longnan, China
Source: BGS, USGS, Williams et al., Wikipedia, Encyclopedia Britannica, Goldavenue Encyclopedia, Kimberley Rare Earths, New York Times
13. WHERE WILL NEW SUPPLY COME FROM?
Data: Intierra, USGS, Infomine, Technology Metals Research, Google Earth, IHC Merwerde, Panoramio
14. PLENTY OF PROJECTS: NOW TO DEVELOP THEM?
Data: Greenfields Research, Company websites, Infomine, Technology Metals Research, USGS
15. MINING THROUGH STANDARD TECHNIQUES
Images: Greenfields
Research Ltd, BGS,
Molycorp, Atlas Copco
16. WHY IS MINING SO DIFFICULT?
1. Relative crustal 1. Rare earths are
Now largely resolved
abundance. abundant in the by “exploration” in
crust. “Phase 1” (2008-11)
2. Degree of metal 2. Rare earths do not
concentration by readily concentrate
natural processes into in the crust by
mineral deposits. natural processes.
3. Rare earth ore are
3. The mechanical ease easily extracted from Now entering
“Phase 2” where
of obtaining the ore the earth. “development” will
be the focus
from the earth. 4. Extracting the rare
4. The ease of extracting earth metals from
their ores is very
the metal from the ore. difficult.
Source: Gupta & Krishnamurthy (2005)
17. WHY ARE MINE PROJECTS DIFFICULT?
• Quantity : size of the resource
Geological Risk • Quality : grade (metal content) of the resource
• Scope: throughput, grade control; mining & processing type, recovery; waste
Technical Risk • Operating cost: both initial estimate and difference between estimate and actual
• Commodity price: forecast & sensitivity to primary, by- & co-products
Market Risk • Contracts: intermediate market conditions, realisation cost; counterparty risk
• Fatal flaws: discovery of major geological, technical, political, financing or legal issue
Completion Risk • Project management: cost overruns; delays; increased complexity
• Professional: management with experience; recruiting & retaining; ex-pats
Human Resource Risk • Labour: recruiting, retaining & training labour; labour unions during construction
• Regulatory: difficulties, costs and delays associated with environmental compliance
Environmental Risk • Technical: problems in running an environmentally sound mine
• Regulatory: changes in laws or problems complying with them
Legal Risk • Corporate: legal issues with corporate partners, suppliers & other counterparties
• Actual: problems with the government, legal & business environment of a country
Political Risk • Apparent: external reputation of a country affecting financing, recruitment, image
• Spending: problems with initial estimate; capital cost overruns
Capital Cost Risk • Financing: problems raising the required capital
• Discretionary: deliberate decision to delay a project
Delay Risk • Non-discretionary: unforeseen problem causing a delay to the project
• Location: political or natural problems in your location i.e. war or flooding
Force Majeure • Technical: sudden catastrophic technical failure at the mine project
Based on: Trench (2011)
19. THE “STANDARD” BASKET VALUE CHART
Total Rare Earth Oxide Basket Value (US$/kg)
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 200.0
Hastings
Kutessay II
Norra Karr
Kangankunde
Strange Lake
Bokan
Thor Lake
Mt Weld (Duncan)
Dubbo
Kvanefjeld
Zandkopsdrift
Bear Lodge
Nolans Bore
Mt Weld (CLD) Heavy rare earth deposits
Steenkampskraal Advanced light rare earth deposits
Ngualla
Mt Pass Early stage light rare earth deposits
Data: Greenfields Research Ltd, Company websites
20. QUESTION: HOW MUCH HEAVY IN A LIGHT?
Heavy rare earth deposits The highest grade
0.090 “heavy” rare earth
Advanced light rare earth deposits deposits are actually the
0.080 advanced “light” projects
Dysprosium Oxide Grade (%)
Early stage light rare earth deposits
0.070
0.060
0.050 Some “heavy” rare earth
projects actually have a very
0.040 low heavy rare earth grade
0.030
0.020
0.010
0.000
Data: Greenfields Research Ltd, Company websites
21. REDUX: ORE VALUE VERSUS BASKET VALUE
Focus is on these Or perhaps
120.00 projects: mainly “heavy”
110.00 rare earth projects this one?
TREO Basket Value (US$/kg)
100.00
90.00 Focus should be on these:
mainly advanced “light”
80.00 rare earth projects
70.00
60.00
50.00
40.00
30.00
20.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00
Gold ore equivalent: 26.3g/t 52.7g/t 79.0g/t 105.3g/t
131.7g/t 158.0g/t
TREO Ore Value (US$/kg)
Data: Greenfields Research Ltd, Company websites; Idea for original chart from Technology Metals Research
22. WHY ARE MINE PROJECTS DIFFICULT?
• Quantity : size of the resource
Geological Risk • Quality : grade (metal content) of the resource
• Scope: throughput, grade control; mining & processing type, recovery; waste
Technical Risk • Operating cost: both initial estimate and difference between estimate and actual
• Commodity price: forecast & sensitivity to primary, by- & co-products
Market Risk • Contracts: intermediate market conditions, realisation cost; counterparty risk
• Fatal flaws: discovery of major geological, technical, political, financing or legal issue
Completion Risk • Project management: cost overruns; delays; increased complexity
• Professional: management with experience; recruiting & retaining; ex-pats
Human Resource Risk • Labour: recruiting, retaining & training labour; labour unions during construction
• Regulatory: difficulties, costs and delays associated with environmental compliance
Environmental Risk • Technical: problems in running an environmentally sound mine
• Regulatory: changes in laws or problems complying with them
Legal Risk • Corporate: legal issues with corporate partners, suppliers & other counterparties
• Actual: problems with the government, legal & business environment of a country
Political Risk • Apparent: external reputation of a country affecting financing, recruitment, image
• Spending: problems with initial estimate; capital cost overruns
Capital Cost Risk • Financing: problems raising the required capital
• Discretionary: deliberate decision to delay a project
Delay Risk • Non-discretionary: unforeseen problem causing a delay to the project
• Location: political or natural problems in your location i.e. war or flooding
Force Majeure • Technical: sudden catastrophic technical failure at the mine project
Based on: Trench (2011)
23. THE BCG BOX OR “GROWTH-SHARE MATRIX”
Market Growth (requiring investment)
QUESTIONS STARS
Also known as “problem
Leading
children”. High growth sector
but large capital investment assets/products
required. dominating fast growing
markets, still requiring
investment.
DOGS/PETS CASH COWS
Not profitable. Usually High market share in
“pet projects” that slow growth industry –
provide a non-financial “milked” to fund other
benefit i.e. synergies, investments
labour retention etc
Market Share (returning investment) Based on: Boston Consulting Group (BCG)
24. THE BCG BOX FOR MINE PROJECTS
Market Growth (adding to the competition)
PROBLEM CHILD STARS
Challenging projects with World class assets with
scale, that could be stars in a high grades and large scale.
high growth industry, Will dominate future sector
assuming some structural and be hugely profitable.
changes.
PET PROJECTS CASH COWS
High grade, small scale
Not profitable. Usually “pet
projects, which are quickly
projects” that provide a
cash generative, allowing
non-financial benefit i.e.
access to an industry and
synergies, labour retention
providing cash for
etc
investment elsewhere.
Market Share (beating the competition) Based on: Boston Consulting Group (BCG)
25. “GEOLOGY” BASED RARE EARTH STRATEGIES
120.00
110.00
TREO Basket Value (US$/kg)
100.00 PROBLEM
STARS
90.00 CHILDREN
80.00
70.00
60.00
50.00
40.00 PET PROJECTS CASH COWS
30.00
20.00
0.00 1.00 2.00 3.00 4.00 5.00 6.00
Gold ore equivalent: 26.3g/t 52.7g/t 79.0g/t 105.3g/t
131.7g/t 158.0g/t
TREO Ore Value (US$/kg)
Data: Company websites; Idea for original chart from Technology Metals Research
26. STRATEGY 1A: THE CASH COW
Advantages
– Assets very competitive
– Most already very advanced
– Geology and technology already
known
Examples: Molycorp, Lynas, Great
– First mover advantage in geology as
best assets picked first Western Minerals, MbAC Fertilizer?
Disadvantages
– Financial markets currently very tricky
– First mover disadvantage – all R&D
had to be done “in-house”
– Currently not a viable strategy for non-
first movers
27. STRATEGY 2A: THE “HEAVY” PROBLEM CHILD
Advantages
– Attractive to the equity market
– Seems to be a high growth market
– No major incumbent competitors
Examples: Hastings Rare Metals, Stans
Disadvantages Energy, Tasman Metals, Quest Rare
– Projects currently low grade Minerals
– Process routes unknown – R&D
intensive
– Capital costs will be high
– Development timeframe very lengthy
– Debt financing will be very tricky
29. THE R&D RACE IS ON!
Likely to be > 10 years for a new material
Likely to be > 10 years for a new mine
Construction
(Separation)
Exploration
Resource
(Benification
Finance
(Extraction)
Metallurgy
Metallurgy
Permitting
Scoping
Metallurgy
Off-take
PFS
BFS
s
)
Source: Richard Holliday, Material Value Consultancy Ltd
31. WARNING ABOUT BASKET VALUES
Total Rare Earth Oxide Basket Value (US$/kg)
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 200.0
Hastings
Kutessay II
Norra Karr
Kangankunde
Strange Lake
Bokan
Thor Lake
Mt Weld (Duncan) Assumes separated rare earth oxide prices
Dubbo
Kvanefjeld Assumes 100% recovery of all rare earths
Zandkopsdrift No assessment of resource grade
Bear Lodge
Nolans Bore
Mt Weld (CLD) Heavy rare earth deposits
Steenkampskraal Advanced light rare earth deposits
Ngualla
Mt Pass Early stage light rare earth deposits
Data: Company websites; Idea for original chart from Technology Metals Research
32. WHICH RARE EARTH PRICE DID YOU MEAN?
La (US$/kg) Ce (US$/kg)
45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
Carbonate (45% Oxide 99% FOB Oxide 99.999% FOB Metal 99% FOB Mischmetal (La
REO) FOB China China China China 35%, Ce 65%) FOB
China
Data: Metal Pages
33. MORE COMPLICATED SUPPLY CHAIN
Images: Wikipedia, Science Photo Library, Images of the elements
34. WHEN IS VALUE ADDED IN RARE EARTHS?
Data: Metal Pages
36. VALUE ADDED LATER IN THE CHAIN
Data: Metal Pages; Wellmer, Dalheimer & Wagner (2008)
37. CONVEX METALS & STRATEGY
•
Value extracted from metal
•
•
•
•
•
•
38. CONCAVE METALS & STRATEGY
•
Value extracted from metal
•
•
• •
•
•
39. WHY ARE MINE PROJECTS DIFFICULT?
• Quantity : size of the resource
Geological Risk • Quality : grade (metal content) of the resource
• Scope: throughput, grade control; mining & processing type, recovery; waste
Technical Risk • Operating cost: both initial estimate and difference between estimate and actual
• Commodity price: forecast & sensitivity to primary, by- & co-products
Market Risk • Contracts: intermediate market conditions, realisation cost; counterparty risk
• Fatal flaws: discovery of major geological, technical, political, financing or legal issue
Completion Risk • Project management: cost overruns; delays; increased complexity
• Professional: management with experience; recruiting & retaining; ex-pats
Human Resource Risk • Labour: recruiting, retaining & training labour; labour unions during construction
• Regulatory: difficulties, costs and delays associated with environmental compliance
Environmental Risk • Technical: problems in running an environmentally sound mine
• Regulatory: changes in laws or problems complying with them
Legal Risk • Corporate: legal issues with corporate partners, suppliers & other counterparties
• Actual: problems with the government, legal & business environment of a country
Political Risk • Apparent: external reputation of a country affecting financing, recruitment, image
• Spending: problems with initial estimate; capital cost overruns
Capital Cost Risk • Financing: problems raising the required capital
• Discretionary: deliberate decision to delay a project
Delay Risk • Non-discretionary: unforeseen problem causing a delay to the project
• Location: political or natural problems in your location i.e. war or flooding
Force Majeure • Technical: sudden catastrophic technical failure at the mine project
Based on: Trench (2011)
40. RECOVERIES: SOME ARE MORE EQUAL THAN OTHERS
Recoveries range:
6.5% to 41.0% Recoveries range:
65% to 90%
Remember: “basket values” analysis assume even 100% recovery
Sources: Pele Mountain Resources, DNI Metals
41. RECOVERY: TURNING SOMETHING INTO NOTHING
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%
42. THE MASS LOSS-RECOVERY PARADIGM
Percentages indicate equivalent
30 96.7% mass loss to take ore to a 30%
concentrate
Concentrating Factor (multiple)
25
20
93.3%
15
90.0%
10 86.7%
83.3% 80.0%
76.7% 73.3% 70.0% 66.7%
5
0
0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 10.00
Ore Grade (%)
44. WHY ARE MINE PROJECTS DIFFICULT?
• Quantity : size of the resource
Geological Risk • Quality : grade (metal content) of the resource
• Scope: throughput, grade control; mining & processing type, recovery; waste
Technical Risk • Operating cost: both initial estimate and difference between estimate and actual
• Commodity price: forecast & sensitivity to primary, by- & co-products
Market Risk • Contracts: intermediate market conditions, realisation cost; counterparty risk
• Fatal flaws: discovery of major geological, technical, political, financing or legal issue
Completion Risk • Project management: cost overruns; delays; increased complexity
• Professional: management with experience; recruiting & retaining; ex-pats
Human Resource Risk • Labour: recruiting, retaining & training labour; labour unions during construction
• Regulatory: difficulties, costs and delays associated with environmental compliance
Environmental Risk • Technical: problems in running an environmentally sound mine
• Regulatory: changes in laws or problems complying with them
Legal Risk • Corporate: legal issues with corporate partners, suppliers & other counterparties
• Actual: problems with the government, legal & business environment of a country
Political Risk • Apparent: external reputation of a country affecting financing, recruitment, image
• Spending: problems with initial estimate; capital cost overruns
Capital Cost Risk • Financing: problems raising the required capital
• Discretionary: deliberate decision to delay a project
Delay Risk • Non-discretionary: unforeseen problem causing a delay to the project
• Location: political or natural problems in your location i.e. war or flooding
Force Majeure • Technical: sudden catastrophic technical failure at the mine project
Based on: Trench (2011)
45. CAPITAL COSTS: WHAT IS AFFORDABLE?
Market Capitalisation
Nolans Bore (equiv. US$10 million)
Kvanefjeld
(Arafura Resources) Project Capital Cost
(Greenland Minerals & Energy) (equiv. US$100 million)
Dubbo
Mt Weld (Alkane Resources) Sarfartoq
(Lynas) (Hudson Resources)
Mountain Pass Strange Lake Kipawa-Zeus
(Molycorp) (Quest Rare Minerals) (Matamec Explorations)
Eco Ridge
Zandkopsdrift (Pele Mountain Resources)
(Frontier Rare Earths)
Hastings
(Hastings Rare Metals)
Thor Lake
(Avalon Rare Metals) Bear Lodge
(Rare Element
Resources)
Data: Company websites
50. WHEN DO RARE EARTH STOCKS and
Mining permits
RUN?
contracts awarded
Scoping study Independent review China Non-Ferrous
completed completed Metals deal
Feasibility study GFC cancelled
Initial resource completed
Rare earth prices
announced take-off, not
reflected in Lynas
share price
1st technical study Resource
completed Downstream plant
moved to Malaysia upgrade
China Non-
Downstream 1st series of off-take Ferrous Metals
agreement signed agreements signed deal proposed
Malaysia reviews
downstream
operations
51. WHY ARE MINE PROJECTS DIFFICULT?
• Quantity : size of the resource
Geological Risk • Quality : grade (metal content) of the resource
• Scope: throughput, grade control; mining & processing type, recovery; waste
Technical Risk • Operating cost: both initial estimate and difference between estimate and actual
• Commodity price: forecast & sensitivity to primary, by- & co-products
Market Risk • Contracts: intermediate market conditions, realisation cost; counterparty risk
• Fatal flaws: discovery of major geological, technical, political, financing or legal issue
Completion Risk • Project management: cost overruns; delays; increased complexity
• Professional: management with experience; recruiting & retaining; ex-pats
Human Resource Risk • Labour: recruiting, retaining & training labour; labour unions during construction
• Regulatory: difficulties, costs and delays associated with environmental compliance
Environmental Risk • Technical: problems in running an environmentally sound mine
• Regulatory: changes in laws or problems complying with them
Legal Risk • Corporate: legal issues with corporate partners, suppliers & other counterparties
• Actual: problems with the government, legal & business environment of a country
Political Risk • Apparent: external reputation of a country affecting financing, recruitment, image
• Spending: problems with initial estimate; capital cost overruns
Capital Cost Risk • Financing: problems raising the required capital
• Discretionary: deliberate decision to delay a project
Delay Risk • Non-discretionary: unforeseen problem causing a delay to the project
• Location: political or natural problems in your location i.e. war or flooding
Force Majeure • Technical: sudden catastrophic technical failure at the mine project
Based on: Trench (2011)
52. WILL SCALE INCREASE ENVIRONMENTAL ISSUES?
“The Fear of a
Toxic Rerun”
New York Times, Keith Bradsher,
29th Jun 2011
“Taking a Risk
for Rare Earths”
New York Times, Keith Bradsher,
8th Mar 2011
Images: New York Times
53. WHY ARE MINE PROJECTS DIFFICULT?
• Quantity : size of the resource
Geological Risk • Quality : grade (metal content) of the resource
• Scope: throughput, grade control; mining & processing type, recovery; waste
Technical Risk • Operating cost: both initial estimate and difference between estimate and actual
• Commodity price: forecast & sensitivity to primary, by- & co-products
Market Risk • Contracts: intermediate market conditions, realisation cost; counterparty risk
• Fatal flaws: discovery of major geological, technical, political, financing or legal issue
Completion Risk • Project management: cost overruns; delays; increased complexity
• Professional: management with experience; recruiting & retaining; ex-pats
Human Resource Risk • Labour: recruiting, retaining & training labour; labour unions during construction
• Regulatory: difficulties, costs and delays associated with environmental compliance
Environmental Risk • Technical: problems in running an environmentally sound mine
• Regulatory: changes in laws or problems complying with them
Legal Risk • Corporate: legal issues with corporate partners, suppliers & other counterparties
• Actual: problems with the government, legal & business environment of a country
Political Risk • Apparent: external reputation of a country affecting financing, recruitment, image
• Spending: problems with initial estimate; capital cost overruns
Capital Cost Risk • Financing: problems raising the required capital
• Discretionary: deliberate decision to delay a project
Delay Risk • Non-discretionary: unforeseen problem causing a delay to the project
• Location: political or natural problems in your location i.e. war or flooding
Force Majeure • Technical: sudden catastrophic technical failure at the mine project
Based on: Trench (2011)
54. WHY ARE MINE PROJECTS DIFFICULT?
• Quantity : size of the resource
Geological Risk • Quality : grade (metal content) of the resource
• Scope: throughput, grade control; mining & processing type, recovery; waste
Technical Risk • Operating cost: both initial estimate and difference between estimate and actual
• Commodity price: forecast & sensitivity to primary, by- & co-products
Market Risk • Contracts: intermediate market conditions, realisation cost; counterparty risk
• Fatal flaws: discovery of major geological, technical, political, financing or legal issue
Completion Risk • Project management: cost overruns; delays; increased complexity
• Professional: management with experience; recruiting & retaining; ex-pats
Human Resource Risk • Labour: recruiting, retaining & training labour; labour unions during construction
• Regulatory: difficulties, costs and delays associated with environmental compliance
Environmental Risk • Technical: problems in running an environmentally sound mine
• Regulatory: changes in laws or problems complying with them
Legal Risk • Corporate: legal issues with corporate partners, suppliers & other counterparties
• Actual: problems with the government, legal & business environment of a country
Political Risk • Apparent: external reputation of a country affecting financing, recruitment, image
• Spending: problems with initial estimate; capital cost overruns
Capital Cost Risk • Financing: problems raising the required capital
• Discretionary: deliberate decision to delay a project
Delay Risk • Non-discretionary: unforeseen problem causing a delay to the project
• Location: political or natural problems in your location i.e. war or flooding
Force Majeure • Technical: sudden catastrophic technical failure at the mine project
Based on: Trench (2011)
55. WHAT IS A “DEVELOPABLE” PROJECT?
12.00 Major late stage light
rare earth projects
10.00
Early stage light
TREO Grade (%)
8.00 rare earth projects Major early stage
light rare earth
6.00 projects
Heavy rare
4.00 earth projects
2.00
0.00
0.0 200.0 400.0 600.0 800.0 1000.0
Ore (Mt)
Data: Company websites
56. WHAT IS A “STAR” PROJECT?
12.00
10.00 WHERE ARE ALL
CASH COWS
THE STARS?
TREO Grade (%)
8.00
6.00
4.00
PET PROJECTS PROBLEM CHILDREN
2.00
0.00
1.0 10.0 100.0 1000.0
Ore (Mt)
Data: Company websites
57. STRATEGY 2B: THE “LIGHT” PROBLEM CHILD
Advantages
– Metallurgy / processing better known
– Possibilities to leverage scale
– Second mover advantage in
development timeframe
Examples: Rare Element Resources,
– First movers success may make these
projects more attractive for debt Arafura Resources, Peak Resources,
financing Frontier Rare Earths
Disadvantages
– Unattractive to the equity market
– Capital costs still likely to be high
– Light rare earths market has less
attractive fundamentals
58. STRATEGY 3: AIMING FOR THE STARS
Advantages
– Potential to a new Bayan Obo or
Ionic Clay?
– Lower short term cash burn
– First movers may provide an exit Examples: Tantalus Rare Metals, TUC
strategy
Resources, Namibia Rare Earths, Vale
– Examples of exploration success in
rare earths exist
Disadvantages
– Won’t provide cash flow
– May miss the best years of the
market
– Exploration generally unattractive
for equity investors currently
60. WHAT IS A REALISTIC DEVELOPMENT TIMEFRAME?
First mover rare earth projects Second mover rare earth projects
• Delays due to technical problems at feasibility stage • Shorter development time, and lower development cost
• Faced funding problems throughout due to lack of investor awareness • Maturing new market outside of China
Typical development timeframe will be 12-15 years Targeting 5-10 years from purchase to production?
COMPARISON OF AUSTRALIAN RARE EARTH PROJECTS
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 Resource Scoping Feasibility Project Refinancin
Farm In Drilling Study Study
Peer Review GFC Construction PRODUCTION >>>
Funding g
ALKANE: Dubbo (Forecast 15 years from purchase to production)
Project Definitive Expanded Financing /
Purchase
Feasibility Study Financing Definitive Feasibility Study GFC
Feasibility Study FS Construction
PRODUCTION >>>
ARAFURA: Nolans (Forecast 12 years from purchase to production)
Expanded
Project Prefeasibilit Feasibilit Financing / PRODUCTION
Purchase
Scoping Study y Study
GFC Feasibility Study Feasibility >>>
y Study Construction
Study
Data: Company websites
61. TYPES OF DELAY AT MINE PROJECTS
Project Delay
Discretionary Non-Discretionary
Portfolio
Strategic Governmental Governmental Equipment People Finance Resource
Sequencing
Direct Indirect Cost Delays Skilled Unskilled Debt Equity Quality Quantity
Source: Trench (2011)
62. RARE EARTH PROJECTS PRONE TO DELAY
Length of delays at Australian rare Frequency of delays at Australian
earth projects 1999-2012 rare earth projects 1999-2012
15
Frequency
Nolans
10
5
Dubbo
0
Mt Weld
0 2 4 6 8
Delay (years)
63. DEALING WITH AN
UNCERTAIN FUTURE
Developing future rare earth
industry scenarios to help guide
strategy
Image: Shutterstock
64. THE BCG BOX FOR RARE EARTHS SCENARIOS
Increasing shortage of heavy rare earths
HEAVY SHORTAGE SHORTAGE
Chinese exports of heavy rare Chinese exports of all rare
earths restricted (i.e. partial earths fall (i.e. smuggling
Chinese WTO victory) AND/OR stopped, Chinese WTO
continued strong demand victory, planned reductions)
growth AND/OR higher than
expected demand growth
SURPLUS LIGHT
China increases exports of
all rare earths (i.e.
SHORTAGE
Preferential export of heavy
increased smuggling or
rare earths AND/OR
loss of WTO case) AND/OR
unexpected strong demand
widespread demand
growth (substitution?)
destruction occurs.
Increasing shortage of light rare earths Based on: Boston Consulting Group (BCG)
65. STRATEGY 1B: THE BY-PRODUCT CASH COW
Advantages
– Primary commodity provides hedge
against rare earth uncertainty
– Potentially easier to finance
– Potential earlier cash flow Examples: Greenland Minerals, Pele
– Rare earths extraction remains an Mountain Resources, Alkane Resources,
“option” CBMM
Disadvantages
– Metallurgy likely to be complicated
– Won’t work as a co-product or rare earth
“as a by-product” operation
– Difficult to achieve scale
– May be unattractive to equity markets
66. STRATEGY 4A: PET PROJECTS (THE “CASH DOG”)
Advantages
– Quick to implement, whilst market still
attractive
– Cash generative
– Simple & cost effective
Examples: India Rare Earths?
– Lower risk
Disadvantages
– Not a long term solution
– May be more trouble than it’s worth
– Not many obvious opportunities
– Rare earths not conducive to “quick &
easy” development
– May not be attractive to equity markets
67. STRATEGY 4B: DO SOMETHING ELSE!
Advantages
– Hedge against rare earth market risk
– Potential for faster development & cash
flow
– Maybe cheaper / easier / lower risk
Examples: Alkane Resources, Kimberley
– Wider range of opportunities available
Rare Earths, Avalon Rare Metals
Disadvantages
– May be unattractive to “rare earth”
focused investors
– Skills may not transfer as planned
– Loss of focus
– Spreading resources too thinly
69. THE BCG BOX FOR RARE EARTHS SCENARIOS
Increasing shortage of heavy rare earths
HEAVY SHORTAGE
SHORTAGE Positive for all rest of
world (ROW) rare earth
Positive for “heavy” rare
mine developers
earth mine projects.
Negative for all ROW rare
Negative for “light” rare
earth consumers
earth mine projects.
SURPLUS LIGHT
Negative for all rest of SHORTAGE
world (ROW) rare Positive for “light” rare
earth mine developers earth mine projects.
Positive for all ROW Negative for “heavy” rare
rare earth consumers earth mine projects.
Increasing shortage of light rare earths Based on: Boston Consulting Group (BCG)
70. THE BCG BOX FOR RARE EARTH STRATEGIES
Market Growth (adding to the competition)
2a: HEAVY
PROBLEM CHILD
3: FIND A STAR!
2b: LIGHT
PROBLEM CHILD
4a: CASH DOG 1a: CASH COWS
4b: DO 1b: BY-PRODUCT
SOMETHING CASH COW
ELSE!
Market Share (beating the competition) Based on: Boston Consulting Group (BCG)
71. THE RARE EARTH PROJECT SCENARIOS MATRIX
BY- HEAVY LIGHT DO
FIND A
CASH COW PRODUCT PROBLEM PROBLEM CASH DOG SOMETHIN
STAR
CASH COW CHILD CHILD G ELSE!
SHORTAGE
HEAVY
SHORTAGE
LIGHT
SHORTAGE
SURPLUS
72. HOMEWORK: PUTTING STRATEGY INTO ACTION
Now implement the strategy-
scenario grid:
– Assign probabilities to each of the
scenarios
– Define the parameters of the target
asset for each scenario
– Determine where your assets fit
into these strategies
– Determine the entrance &
implementation cost of each
strategy
– Select a blend of strategies that
cover as many scenarios as
possible for the resources & time
available
73. CONCLUSIONS
– Entering “Phase 2”: Mine project development
– Geology: Ore value NOT heavy versus lights
– Technical: Quality NOT scale
– Delays: Oversupply may NOT be imminent
– Future scenarios: Four possible futures
– Potential strategies: Seven possible company
strategies
– Dealing with uncertainty: “Horses for courses”
74. POTENTIAL RESEARCH AREAS
– Prices: What moves rare earth prices
– Value Chain: Understanding its structure
– Technical: Quality NOT scale
– Environmental: Dealing with radiation
– Financing: Concave metal financing
– Delays: Project development risk
– Strategy: Minor metals industry
75. CONTACT DETAILS & FURTHER REFERENCE
John P. Sykes
Director, Greenfields Research Ltd (UK)
john.sykes@greenfieldsresearch.com
www.greenfieldsresearch.com
Course Leader, 3-Day MBA in Rare Earth Metals
http://www.thembatrainingcompany.com/trainin
g/3-day-mba-in-rare-earth-metals
Logo courtesy of The MBA Training Company