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  • Hastings Rare Metals' CEO Alastair Metcalf Talks Heavy Rare Earths With Investors 0 comments
    Feb 20, 2013 12:17 AM

    Hastings Rare Metals (ASX: HAS) wholly owns the world-class Hastings project in Western Australia, and the company's CEO Alastair Metcalf recently presented to over 140 investors at the "Stars in 2013 Series" in Sydney - and answered questions from the audience.

    FULL PRESENTATION HERE

    The Hastings project has resources for +25 years, and currently includes 36.2 million tonnes Indicated and Inferred JORC Resources at 0.21% TREO (0.18% HREO), plus 0.35% Nb₂O₅ and 0.89% ZrO2.

    What differentiates the deposit from other rare earth projects is that Hastings contains predominantly heavy rare earths (HREO) (85%), such as dysprosium and yttrium which are substantially more valuable than the more common light rare earths (LREO).

    Production is targeted in 2016, and importantly ANSTO (Australian Government) scientists have had metallurgical success, with recoveries of 75% for Dysprosium, Yttrium and Niobium and 70% for Zirconium.

    QUESTION FROM THE FLOOR

    With the Hastings recent $3 million capital raising, what attracted so many Asian investors?

    ALASTAIR METCALF

    We do have a lot of Singaporean and some Japanese investors, both individuals and some small resource funds, and I think what these investors understand are the rare earth uses - and the demand - as they are closer to China and the manufacturing countries.

    QUESTION FROM THE FLOOR

    If Hastings was looking to raise additional capital in the future, would you consider going to the Asian markets first?

    ALASTAIR METCALF

    First of all we have no plans to raise money, and are well-funded at the moment. (Hastings had $4 million in cash at the end of December 2012).

    We have received strong support out of Asia, and Singapore in particular, which is Singaporean money, Malaysian money, and some of it is coming from China itself.

    QUESTION FROM THE FLOOR

    Can you please update us on any off-take arrangements.

    ALASTAIR METCALF

    We don't have any off-take arrangements at the moment - and that is quite deliberate. We feel that our products would be very, very saleable, due to the uses for them - and their significant quantities.

    When we talk to people such as European car manufacturers, the question we get is two things. The first, can you produce more? And the second, can you produce it quicker?

    In response to the first question is a Yes, and we could potentially do a larger scale of operation, but this would need more CAPEX, and the second is we can't do any quicker (Production is currently expected in 2016) - as we are doing it fairly quick already.

    We have deliberately and strategically avoided getting into off-take arrangements because we think we will generate more value for current shareholders by waiting.

    QUESTION FROM THE FLOOR

    You touched on attracting a strategic partner, how far along are you with negotiations and what country could this potential partner come from?

    ALASTAIR METCALF

    We have had, and are in negotiations and discussions with various parties. We are only a few months into the discussions, but we could have a result in the short-term, or it could take a little bit longer than that.

    In terms of geographic location, it is attractive to the manufacturing countries. So it is attractive to China as they already control 95% of rare earths, Japan because of its manufacturing industries, Korea, the U.S. to some degree, Germany and possibly France.

    QUESTION FROM THE FLOOR

    Do you have a price projection for Dysprosium going forward? (Hastings could produce around 10% of current world supply.)

    ALASTAIR METCALF

    The supply and demand equation for Dysprosium at the moment is extremely strong with forecasters indicating that demand will increase by a factor of two-and-a-half times supply.

    Therefore the economics show that the price of Dysprosium should go up. It's very much a contractual market - so it's not a liquid traded market like say gold - it's a direct contractual market.

    We would expect to sell at a negotiated price to one party.

    QUESTION FROM THE FLOOR

    Could this increase in demand for Dysprosium match the Hastings production time-line?

    ALASTAIR METCALF

    When I talk to people they would like us to produce earlier. While we intent to be in production in 2016, I am sure if we could say we would be in production in 2015 it would delight some of the buyers.

    METRICS FOR HASTINGS

    Hastings has a Net present value (pre-tax) of $1.9 billion, an Internal rate of return 26% and a Capital payback of 3.6 years.

    Other metrics include; $720 million Capital costs (excluding contingencies); $482 million Annual revenue; $259 million Operating costs; and $223 million Earnings before interest and tax.

    SIGNIFICANCE MILESTONES

    Achieved:

    - JORC compliant Resource. Nov-11.
    - ANSTO validates sulphation and Water Leach flowsheet. Jul-12.
    - Scoping Study defines operating parameters and confirms strong business case. Sept-12.
    - Primary solvent extraction of valuable minerals successful. Nov -12.
    - Commence feasibility study preparations. Q1 2013.

    Moving forward:

    - Pilot plant design. Q2 2013.
    - Commence Pre-feasibility study. Q2 2013.
    - Strategic partner to be secured (funding, technical, offtake?). Q2 2013.
    - Southern Extension and Infill drilling and resource upgrade. Q3 2013.
    - Target to commence engineering and construction. Q1 2014.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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