EDITOR: | June 24th, 2014 | 21 Comments

Northern Minerals Limited: PFS Confirms Value and Technical Strength of Browns Range

| June 24, 2014 | 21 Comments
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Comments

  • JJ

    Very exciting project model.

    June 24, 2014 - 7:35 PM

    • Tim Ainsworth

      USD724kg Dy seems a bold assumption, particularly contained in a final mixed RE format.
      Any idea of the price deck employed for the by product credit against CoP?

      June 24, 2014 - 10:27 PM

      • freethinking

        Tim, it’s nothing out of the norm to use price forecasts, or in fact an average of past prices

        Ucore used USD$845 kg for Dy in their PEA

        http://ucore.com/documents/PEA.pdf

        June 25, 2014 - 1:46 PM

        • Tim Ainsworth

          Yes, and Peak used $550Kg, also with no qualification for final separation or finishing.
          Remains to be seen but current developments with thrifting suggest that the economic threshold for Dy could settle well under all three estimates.

          June 26, 2014 - 8:02 AM

          • freethinking

            really, according to who ? …

            Forecast Global Demand and Supply by Curtin-IMCOA May 2014, puts Dysprosium ROW Demand at 375,000 kg verses ROW Supply Excluding NTU at 70,000 kg.

            The uncertainty of dysprosium supply during the past few years has resulted in efforts to develop substitutes and new technologies that optimise the amount of dysprosium applied to NdFeB permanent magnets. However, while this work is progressing, the removal of dysprosium completely has not been successful, resulting in continued strength of dysprosium demand.

            The permanent magnet sector’s forecasted growth from 2014 to 2020 is expected to be 8 to 12% per annum. The uncertainty of dysprosium supply during the past few years has resulted in efforts to develop substitutes and new technologies that optimise the amount of dysprosium applied to NdFeB permanent magnets. However, while this work is progressing, the removal of dysprosium completely has not been successful, resulting in continued strength of dysprosium demand.

            June 26, 2014 - 1:32 PM

          • Tim Ainsworth

            From the very same table in the NTU PFS 2020 Global supply 1175t vs Demand 1150t. IMCOA also recently forecast 2016 supply 1000t vs demand 800/850t.
            Regardless, quite a lot of anecdotal evidence about that the re-emerging RE market may look quite different to popular presumptions.

            June 27, 2014 - 3:52 AM

  • merlion

    Page 58 of the PFS states: ‘The dysprosium price realised over the LOM is US$724/kg Dy.’
    Tim, you state: ‘USD724kg Dy seems a bold assumption…’

    You’ve omitted the LOM qualification.

    The Life of Mine is 10 years and 724 is the number realised over that 2016 to 2025 period. To reach that number, supply/demand models as well as USD projections are required. USD projections relative to renminbi and the AUD are also critically relevant.

    Calling the 745 number ‘bold’ is … well, bold.

    Care to share your 2025 scenario with the ‘mortals’ on this page?

    June 26, 2014 - 7:50 PM

    • Tim Ainsworth

      AUD/USD set 80c LOM, no impact on selling prices.
      They are using a TREO basket price of USD95kg vs TMR current FOB USD66kg, a 44% upside over LOM.
      Reasonable assumption the PFS uses USD FOB pricing so I’m not sure why you would be concerned with renminbi, unless the mixed con is going to be sold into China for final processing and finishing, in which case you wouldn’t use USD FOB pricing????
      A point that I have never seen anyone attempt to rationalise is how ROW magnet manufacturers can possibly be competitive to their Chinese peers by paying FOB prices for RE inputs, particularly Dy.
      In fact there have been numerous recent reports from Siemens, Ford, Magnequench (Moly QR), etc, that they are successfully designing around this issue.
      In the absence of a defined market I think there is certainly enough anecdotal evidence to question forward projections of USD724kg vs today’s Baotou price of USD290kg.
      Including IMCOA’s forecast 2016 & 2020 surpluses, sans NTU.

      June 27, 2014 - 6:08 AM

      • merlion

        “Care to share your 2025 scenario with the ‘mortals’ on this page?”

        Hmmmm. I thought so! There isn’t one.

        When boldness fails, try obfuscation.

        June 27, 2014 - 6:27 AM

      • Chris

        Tim
        Some well reasoned points there. Doubt anyone would be able to provide a rational point as to how ROW magnet producers can be competitive paying FOB REO prices, never mind Northern Minerals forecast REO prices.
        If NTU forecasts are correct, highly doubtful, it will not be long before Dy is completely removed from NdFeB magnets. That would be the most rational outcome.

        June 27, 2014 - 10:20 AM

  • JJ

    How do we predict the Dy over the LOM, 2016-2025? Supply Vs Demand is one indication but there must be an “economic threshold” above which it is not economical for the end user?

    June 26, 2014 - 8:10 PM

  • merlion

    It’s not my 2025 scenario. I’m an observer. I’m not even taking it to the bank.

    I’m taking it to you. Hadn’t you noticed!

    It’s your claim. You own it. You labelled 724 a ‘bold assumption’.

    So give us your 2025 scenario. Show us the money.

    And then this …

    Tim’s ‘bon point’ … “the market is evolving and simply projecting the status quo is fraught with danger.”
    Really?
    So, why evaluate a 10-year horizon?

    Fact is, you don’t know.
    Duh!

    June 27, 2014 - 9:13 AM

  • Tim Ainsworth

    Exactly, I haven’t a clue, simply making the observation that predicating a project on a forward price of $724kg for Dy in a mixed con off today’s base price of $290kg appears “bold”, particularly with the number of RE magnet manufacturers reporting success with Dy lite/free.
    Nothing above would influence that POV.

    June 27, 2014 - 11:15 AM

    • merlion

      Oh Tim! It’s not about magnets. It’s about the forecast. That’s where you started. Remember?

      And the very simple concept is that if you cannot define the metrics at the forecast’s endpoint, then you haven’t grasped the forecast’s assumptions.

      And then you cannot afford a value judgement such ‘bold assumption’.

      Why not investigate the forecast author’s assumptions then make your judgement?

      Try asking some questions and you’ll advance beyond your declared clueless state.

      June 27, 2014 - 7:52 PM

      • Tim Ainsworth

        merlion, if the price forecast for Dy is not based on magnet demand you definitely haven’t grasped the forecast’s assumptions:

        “The uncertainty of dysprosium supply during the past few years has resulted in efforts to develop substitutes and new technologies that optimise the amount of dysprosium applied to NdFeB permanent magnets. However, while this work is progressing, the removal of dysprosium completely
        has not been successful, resulting in continued strength of dysprosium demand. The permanent magnet sector’s forecasted growth from 2014 to 2020 is expected to be 8 to 12% per annum, which could increase markedly if more reliable long term dysprosium supplies are made available at
        competitive prices.”

        Two clear errors in those assumptions IMO:
        1/ There have been a number of references here to ROW magnet manufacturers successfully & significantly reducing Dy in their magnets. Just on the information to date it is highly unlikely Dy demand will grow at anything like NdFeB CAGR.
        2/ With a current cost value to Chinese magnet manufacturers of $290kg I really doubt ROW peers are going to consider $724kg a competitive price, either now or at any point in the forecast period.

        Another baseline Hongpo has just provided is the current ROW demand numbers of 1871kg Dy for the first four months current year. Simple extension gives us 5600t full year.

        NTU’s assumption is that ROW Dy demand is going to grow from say 6000kg in 2014 to 375,000kg in the 6 yrs to 2020 and that ROW manufacturers will pay $724kg over the current Chinese base of $290kg, just as they are reporting successful reduction in Dy usage.

        Yep, I’ll stick with “bold”, but you should get in touch with longtermlegs & spacebar, they will have a good deal more sympathy for your POV.

        June 27, 2014 - 9:33 PM

  • merlion

    Timmy, do us all a favour.

    Remove the mirror from your work station.

    You’ll accrue more wisdom.

    June 28, 2014 - 3:43 AM

    • Chris

      merlion
      Tim provides a rather well informed point of view. Maybe you could offer an alternative point of view if you disagree rather than simply resorting to snide remarks.

      June 28, 2014 - 4:58 AM

      • merlion

        Chris, consider this. Starting from the top …

        1. It’s all about China. Only China. Nothing else, but China.

        2. China strategises with a 10-year vision and executes with 5-year plans. (Compare that with USA, which is dictated by a 4-year term with a mid-term election.) China does not change its governing party.

        3. Conglin Yue is Northern’s main shareholder with a 45 % holding. He chairs the company. His Deputy has a Chinese Investment Banking pedigree. His wife is also on the Board.
        CY has built considerable wealth via 10-years of trading bulk resources. His business trades coking coal and iron ore sourced in AUS and shipped to Chinese clients – exclusively. No clients in Japan, Korea et al. CY’s next 10-year vision is to change tack. Move out of bulk and up to higher pound-for-pound value in RE, Au and U. Again, Chinese clients’ needs will be the focus. Japan, however, is not excluded from the picture.

        4. Recently, Lynas sold its 15 million shares to Shuai Xing in one tranche. This transfer had a consideration in the vicinity of AUD1.7 million. This week, at Northern’s Shareholder Briefing, I hope to discover who this new #3 shareholder is. Offtaker? Investor? Banker? Industrialist?

        5. Northern’s top 10 shareholders now feature SX at #3, another Chinese investor at #2, and another at #5. They total more than 54%.

        6. Northern’s PFS released last week alludes to the importance of industry stakeholders, potential customers and recognised market consultants in their 10-year deliberations.

        7. Do not assume there will be a takeover. Australia’s National Interest presides over matters of this magnitude. The responsibility lies with the Treasurer. He’s a ‘banker’. The capitals ‘N and ‘I’ are used intentionally. They mean it is government policy designed with a code, you’ll never see.

        The mundane …

        8. Ainsworth started this thread with an incomplete quote. We all know this: beware of misquotes, incomplete quotes and errant quotes. They harbour spin and political agendas.

        9. To afford a qualified opinion, you have to be privy to all the information. To offer a claim that a forecast number is a ‘bold assumption’, logically, it belies access to – and an understanding of – all cornerpost metrics thru to the forecast endpoint.

        10. When Ainsworth is pressed to flesh out the latter half of the 10-year plan, he declares an empty hand.

        The broken mirror …

        11. Ainsworth recycles minutiae garnered from various qualified sources and re-badges them to suggest ownership. The minutiae span a period up to 2020. After 2020, the mirror is broken. The guise is good for the first five years. But not thereafter.

        12. It’s one thing to look down into the valley. It’s another to look across the valley. Ainsworth does only the former. He needs a telescope.

        Readers, review points 1 to 6 and ask yourselves, who owns a telescope.

        June 29, 2014 - 5:34 PM

  • Mugen75

    Merlion, sounds like you are an easy sucker on Wall Street. The ignorance people demonstrate and simply accept whatever numbers an exploration company throw at them to milk them for their money is astounding. Been well aware of what actually goes behind the scenes of a start up ree explorer you would be amazed at what actually goes on.

    June 28, 2014 - 12:47 PM

    • merlion

      Mugen75, we are China watchers with an interest in matters far beyond business.

      We also watch people. You know, body language stuff.

      This week, Northern Minerals is conducting Shareholder Briefings. We will be attending. Looking and listening.

      Are you attending?

      You know Mark Twain’s definition of a gold mine…a hole in the ground with a liar on top.

      The liars know where to ‘mine’ the other gold.

      June 29, 2014 - 5:48 PM

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