Rhodium45
17 Mar 2017
Rainbow presenting next Wednesday Rainbow Rare Earths : Rare Earth Minerals Plc to present at the dbVIC - Deutsche Bank ADR Virtual Investor Conference on Wednesday 22nd March 2017[link]
Rhodium45
17 Mar 2017
RBW in the News Africa Vies to be a Rare Earths Player, Create a Rival for Dominant China:[link]
Eadwig
28 Feb 2017
Problem with figures? For the trial mining phase we are given these figures in the presentation document referred to in the last couple of posts.TRANSPORT, MARKETING AND ROYALTY COSTS shown as $240/t(Transport is estimated at $200/t, marketing (3.5) royalties (4) are 7.5% of revenue).So, 7,5% of REVENUE adds $40/t Now, my maths is terrible, so bear with me.If 7.5% of revenue is $40/t then REVENUE (not profit) is approx $40 x 13.34 per tonne, which is a grand total of $533.6/t ($533.6 x 0.075 = $40.02)The same presentation states:"Contained value of average REO content of Gakara concentrate samples c.US$6,000/t (on a separated basis)" Now, this may be my lack of understanding, but as far as I can tell, the trial mining project produces concentrated ore, but does not separate out the different metals, which is done by Thysenkrupp raw materials. I believe the $6000/t is based on the value of a tonne of separated metals from the project's ore based on the proportional value of the metals in the mix?If GentG's figures are correct at $1050/t for extraction and transport, then the first 2 years trial mining project is unable to cover its own costs IF both our figures are correct. That would increase investment risk significantly as well as delay any possibility of dividend payments.I actually think the cost per tonne may be in excess of $1050 because the ON-SITE OPERATING COSTS $103,000/month = $1,236,000 for the first year look like they may be separate to the OPEX costs calculated at $1050/t. Some of this will be upfront costs starting on a new site and building a processing plant but 13 months into the project a second site is opened, so they may also be indicative of on-going costs? At least to some extent, assuming the same processing plant is used for both sites, which may be feasible for the first two sites, but will become increasingly inefficient if the project continues across the dozens of sites identified.If margins are tight, the cost of transporting pay dirt to the processing plant is often key to the profitability of smaller scale mining projects such as this. Although the tonnage to be moved in this case is small, so probably not that significant. Also the re-processing of tailings for a lower grade concentrate I don't think is included in the total revenue per tonne, plus additional on-site processes could be added to increase the value (purity) of the concentrate being shipped in future.Then there is $2.23m (from memory) of CapEx costs which also need to be covered at some point.Also, why is 3.5% of revenue spent on marketing? As there is already a customer, there should be no need for marketing in the traditional sense. In mining, marketing often refers to the middle-man commodity dealer's cut. Again, with an agreement in place for a take-off of all production during the trial mining phase to one customer, why the need to go through a middle man?Hoping some one can shoot down these figures either through showing my maths, my understanding or both to be incorrect.
Eadwig
27 Feb 2017
Re: Dipped my toe in GentG:"As such, assuming they reach 5000 tonnes, that is $24,750,000. "Should keep the following in mind if considering investment. Taken from the same presentation document, page 10 of 30:[link] plan to produce c.3,900t of concentrate during two year trial mining phase. Intention to move to *commercial production* at target rate of 5,000tpa thereafter, subject to trial mining result" [My emphasis]So, presumably just approx 2,000 tonnes p.a. initially. Unsure if that includes the 9 month run up to production. Probably not. I imagine if results of the 'trial mining' are positive, then there may be a return to markets to fund ramping up to 5.000 tonnes p.a plus. Not really certain about that, and happy to be put straight by someone who has had more time to peruse the available documents. Links to relevant details in any documentation would be appreciated.I found a great site for current prices of rare earths and ores and while I'm sure I would have bookmarked it, I can't find the bookmark (I do have dozens associated with mining alone). I'll continue to search as I get time and pass it on when found, but my time is a very rare commodity itself at the moment.
GentG
26 Feb 2017
Re: Dipped my toe in I think that $10,000 per tonne is a bit too high.In the investor presentation on page 19 ([link] it is indicated that the value of contained REOs is about $6000 per tonne. Extraction and transport costs are $1050 per tonne, so the value per tonne is about $4950 after transportation and extraction are accounted for.As such, assuming they reach 5000 tonnes, that is $24,750,000. I have no idea what thyssenkrup will pay as a percentage of contained value. However, as they are hard to separate, I think that we would get at best 20% of this, which means RBW would profit about $4,950,000 per 5000 tonnes, I.e. $990 per tonne. If they can get $5,000,000 per year, that's $0.033 per share, which is 2.65 pence per share.Assuming that they returned half of this as a dividend, that would give a yield based on a price of 11p per share of 12%. This seems high so I must have calculated wrong somewhere. Any thoughts would be appreciated!
suicidal_tendencies
22 Feb 2017
Re: Dipped my toe in Supposedly the offtake agreement allows for $10,000/tonne basket price.[link]
Eadwig
22 Feb 2017
Re: Dipped my toe in GentG,no, hadn't seen that. Will take a look as soon as I can grab some time.
Eadwig
20 Feb 2017
Re: Dipped my toe in suicidal_tendencies,Point 2, yes, that's the key (deposit being economic) - most often they have to be found with some other metal deposit which is economic to mine, then the rare earths can be collected up from the tailings or separation process. I expect there are many such mines around that could choose to do that IF the price for ore made it worth while suddenly. This is very similar to Glencore's Copper assets in Congo, by the way (just next door, as it were). They have Cobalt in the overburden/ore strata. Cobalt (not a rare earth) is absolutely vital for Lithium-ion batteries and many other 'green' technologies, including the very strongest new-tech magnets for electricity generation at maximum efficiency, yet I don't think there is a working Cobalt-only mine on the planet (there is a small potential one in Canada that is floated on the Toronto exchange, but far from production).Glencore just bought out their partner's holdings in Congo, so they now have control over about 10% of the world's production. This could turn very profitable in future, once again, China has ownership of pretty much every other producer of Cobalt, even though they're (mostly) not geographically in China.1. The more serious point as far as RBW. Yes, I am talking of the agreement with ThyssenKrupp (that's a guess at the name based on Krupp Steel of infamous World War I and II fame). No, there is no money up front that I am aware of, and would be very unusual if there was.If there were, then that would be in some sort of Joint Venture agreement and they would have a holding in the company too most probably. A company that size (or as big as I am imagining it to be, anyway) doesn't need a lot of ties and responsibilities with small time mining companies. Much safer to steer clear - especially if you can reserve supply with just your word. I'm sure they are happy about their 5,000 tonnes (with options) for strategic reasons - those being the same I list in PROs - I.e. The chance of a bust up with China causing a crisis in rare earths supply."Even rare earth oxides are very valuable."Some rare earths made into pure form will actually oxidise to nothing - I.e. into the atmosphere, at a pretty fast rate. This includes the one which is currently most often used in the magnets in wind turbines right now, if I remember correctly. They only exist in the 'ore' due to having combined with other metal ores making them less volatile. Sorry for the very non-scientific explanation. I looked very closely at rare earths maybe a year or so ago when evaluating investment opportunities in green energy, as you can see, I have some pretty vague recollections but I'm afraid the details have now gone.Once I passed about 30 I found I have to dump knowledge in order to retain new knowledge, but don't have a great deal of control over the process. My brain is obviously out of RAM. When doing research, all too often it never gets downloaded to long term memory, and sooner rather than later most short term memory gets replaced. With the above results.So, while I retain the Division 3 league table for 1973/74 season in long term memory, I'm afraid my hard won knowledge of rare earths needs a refresher course! So, please be aware of that, anyone reading my posts. All 'facts' worth double-checking, especially if about to commit cash, unless I obviously just copied and pasted them from somewhere E.g. the FO's travel advice on Burundi.
GentG
20 Feb 2017
Re: Dipped my toe in Hi EadwigThanks for your detailed and helpful comments.Did you see the short research note by Shakeypremis over on LSE? He has done some calculations and has suggested that the total value of 5000 tonnes would be around $14,000,000 per year. He has suggested that taking 50% off would give a fair estimate of earnings in the first year.I am a bit more pessimistic and am thinking more in the region of 20% at best, which would be around $2.7 million. I think that the best we can hope for in the first year is to cover the expenses and build from that going forwards.I am investing in companies which provide raw materials for use in electric motors and uranium. I don't think hydrogen will go too far. I think ammonia based fuel cells will be preferable to hydrogen based ones, but the power to make the mmonia will need to come fro somewhere. Hopefully, from wind turbines and uranium. Just my thoughts. What do I know!All the best GentG
suicidal_tendencies
20 Feb 2017
Re: Dipped my toe in EadwigI've already dipped my toe in here (in a very small way).1 .Presumably when you say: ' Simplicity, 5000 tonnes p.a. already sold' - you are referring to the offtake agreement that will buy up the first 5000 tonnes (and have first option on another 5000 tonnes of production) and you don't mean that the big German company with the really long name have already paid up front. I've certainly seen no indication of them paying RBW any money yet.2. 'Rare earths have been hyped for a long, long time, and they're not so very rare really'. You're right, rare earths aren't all that rare, *BUT* but finding them in a significant enough quantity that makes mining them economically viable is apparently rare. That's why they are valuable. Even rare earth oxides are very valuable.[link]
Eadwig
20 Feb 2017
Re: Dipped my toe in GentG,I know what you mean about the simplicity (low paid workers digging by hand, pretty much. Real old school stuff, yet nothing exploitative about it and jobs safe and welcome, I'm sure, so even a change of government might no affect things adversely.I also know what you mean about your trade being shown as a sell. On AIM companies, when you can pick your own trade out as I sometimes do to see what kind of price I'm being offered compared to others, sells and buys are continually shown the wrong way around. That's why ii stopped listing that detail, I think.Although my previous posts looked negative (probably), I'm still contemplating dipping my toe in here, perhaps a bit closer to the IPO price, maybe ay a similar level to yourself, perhaps half that initially (no stamp duty so fees on top aren't too painful, especially in a month where I'm at $5 a trade with ii).PROs. Simplicity, 5000 tonnes p.a. already sold, lots of African experience on the board, the chance a trade bust up with China could see its price rocket, long term necessity for the product globally, Burundi desperate for exports and jobs ...CONS Instability of Burundi generally, and government level particularly, and not much else I can think of that doesn't apply across the sector. In fact less risks than much of the sector, I.e. a sudden rise in diesel costs less of an issue for them than most miners, due to the nature of the depositOh, not so keen on the fact the area has been mined before and then abandoned.All views welcome, I haven't costed out 5,000 tonnes (plus) p.a. and expected revenues etc as yet. I figure plenty of time to get in on this if I decide to. Rare earths have been hyped for a long, long time, and they're not so very rare really, so a big price rise would see competition open up quickly I'm sure, and I'm not kidding myself that lots of people aren't looking at this and the banks didn't price the IPO accordingly (I.e allowing for the hype to some extent or other).A lot of rare earths aren't recyclable in that in their pure state they oxidise *very* quickly and volume is lost (unlike, say, copper or even iron). One of the things I need to review.The prior - RE: My research - welcome as ever. If I can generate some thoughtful discussion it can only be beneficial to decision making, is the way I look at it.
