ausheds wrote: Great to see some constructive thinking, but I'd suggest you are coming at it from the wrong end, which is the biggest flaw across virtually all RE discussion/analysis.
The real Q is what is the scale of potential revenues, the volume of identified demand in the first year of operation x conservatively estimated prices at that point, then perhaps extended out Y3 or Y5 with again conservative growth numbers.
Once you have your revenue lines you can then look to see if you can build & service a profitable business within those parameters.
Conversely the Govt/DoD will be looking to establish their demand profile > see the 2016 GAO report to understand what a dog's breakfast that is:
https://www.gao.gov/assets/680/675165.pdf If you work their 1% of US demand that's just 98t 2018!
Obviously they will set their sights far higher than that but without the middle supply chain to manufacture REO to product and the likely 5 - 10yr program to build that out at any scale how high will they go for the first 5yrs? 1000t? 2000t? With most of it going into stockpile.
1000t x $30kg average value = $30Mpa divided among the number of suppliers that can step up around benchmark pricing, and no one company is likely to win it all.
What level of support would the Govt be likely to invest to get that value in return?
Best operating margin that could be forecast would range 30/40% but let's settle for $10M of the $30Mpa.
What sort of RE business could be built on gross profit of $10Mpa?
And before any start waving the magic wand re "other" customer I'll restate one of the first Q I put here > Specifically Who, Where, How Much?
This is the conundrum RE, tiny mkt, with very narrow points of entry (none in the US bar catalysts), and very high establishment costs with long lead times to steady state revenues.
Why Moly tanked, and why Lynas came perilously close but for 850t of on spec NdPr June 2015 that got the Japanese back onside, 2.5yrs after start up
Read more at https://stockhouse.com/companies/bullboard?symbol=v.ucu&postid=30100439#OVjdTtRykZt5Kb6v.99