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Yes, seems very obvious. In the meantime, if I were to apply the 2010 Field Results disclosed in Ucore's 12/22/2010 News Release to the historical estimate of 37.8 million tons of raw ore, I get an inferred resource of #464,625 TREO, with 30.901% HREE content. If I were to use the lowest current price for these HREEs ($305/kg for Dysprosium vs. $640/kg for Terbium), and the lowest price for the 69.099% LREEs ($61/kg for Lanthanum vs. $88.50/kg for Neodymium), the current price tag for the TREO in the ground would be $63.374 billion.
But, to actually value this resource, its necessary to make three assumptions:
Annual Production Annual Costs/kg Discount Rate
If I assume #5,000 tons/yr of production, $40/kg annual costs and expenses (much higher than the $7/kg that Lynas assumes for its costs), and a discount rate of 15% (to be conservative), I calculate a targeted market cap of $3,213,239,719. Assuming fully diluted shares outstanding (including stock options and warrants not yet converted into shares), this would translate into a share price of $23.73/share.
Substituting an 8% discount rate, I get $6,020,117,167 market cap, equivalent to $44.46/share.
Again, I assumed the lowest current prices for the mix of LREEs and HREE's.
On top of everything else, Bokan Mountain is also located just north of the Prince Rupert deep water port, so it would be a great place for Molycorp to locate its downstream processing/shipping facilities. Molycorp had better buy this asset, or enter into a JV ASAP before Rare Earth Mines, or someone else, does. I'll bet there are a lot of people at Molycorp and in the US Government that are just holding their breath until the NI 43-101 compliant resource estimate is released. |