I have gone back and tested all the assumptions based on the last year or so of updates. Usual caveats….DYOR…I may have modelling errors…etc. 

My key takeaway….ARU is not priced correctly at its current 13 cents. Maybe this is the market’s discount for not being fully funded yet and/or bit of market manipulation. 

Here are the assumptions used in my model:

Here are the results of different NdPr prices and dilutions for Phase 1 (4,400) and Phase 2 (11,000).

Some points to make:

 1 - Diluted to the Max - If ARU management had of raised when the SP was $0.70, exisiting shareholders would have been MASSIVELY in a better position than we are today. I think this borders on negligence because the board knew that ECE Nolans were going to sell on the market (creating downward momentum), short position was clearly going up, they knew the timelines of the finance etc. etc. It looks like we will be adding about 3-7 billion new shares to lock in the Final Equity Raise. 

 2 - Phase 2 is where it is at - It is clear we have a ‘gold plated’ project here. The cost is massive and we have contingency upon contingency. I understand that to reach finance on what the market perceives to be a risky project, they required all this gold plating and contingencies. But if management are up to the task, and can deliver Nolans and barely touch these contingencies, then combined with some of the first year ‘profits’ Phase 2 should be able to be built without raising more capital. If management can achieve that, I may forgive them for the failure in point 1 above. And this also does not factor in additional supply from other sources. So these SP’s are a lower bound. 

 3 - NdPr pricing is sensitive - Given everything that is going on with Trump and the rest of the world, NdPr pricing should go up, but by how much. My previous ex-china supply deficit modelling showed massive demand from 2026. This is a hard one to predict. But you want some skin in the ex-china NdPr game…..because the modelling shows the valuation is very sensitive to it. 

 4 - There is still value left!!! - From today's SP of 13 cents.....upon FID...my most likely scenario (in Yellow Box) will x2 your money. If you wait for Phase 2 (in Orange Box) (probably in around 2-3 years) will x7 your money. (obviously lots and lots of assumptions etc. etc.)

The analysis above is just looking at fair value using Net Present Valuation method. If the market was rational, it would be priced somewhere close to the above prices. 

But there are some other tail winds that may cause SP to go up even more than the above:

 - There will be a bunch of funds that were involved with the equity raise, that missed out, and would likely buy on the market (ie they have done the due diligence…and know what a great project it will be and happy to buy in a little above - or at least will provide a back stop if it drops).

 - There will be lots of funds, institutions, family offices and retail that will not invest in a mine until it is fully funded. 

 - All the tariff talk is not only getting stronger, it is happening. This will be a wake up call to China and the west. None of this is factored into our SP. 

 - Once ARU achieve FID, watch all the other NdPr juniors out there contact ARU management to discuss processing. Expect lots of announcements around this. 

 - Also watch the phosphoric acid, and if we lock in much better terms due to ARU being pretty much the only unassigned ex China product!

Once FID is achieved, ARU will be the first NdPr mine (at scale) to begin construction since Lynas around 2010. That is 15 years ago. Back in 2010, NdPr demand was about 30,000 tpa. Today it is about 75,000 tpa and expected to double to about 150,000 tpa by 2035. ARU in phase one is only producing 4,400 tpa. Where is all the ex-china supply going to come from?