Mark Chalmers: Yes. Well, the Phase 1, as I said, that’s around $25 million. And that gets us up to say, up to 1000 tonnes of NdPr per year. And that’s low because we’re doing the crack and leach in the mill. And we’re using existing SX building for the separation stage. So that’s very low. And it’s — but it’s a very attractive strike rate, obviously, on capital. We do not have all the final engineering completed on Phase 2, but we believe it could be between $250 million to maybe $350 million, somewhere in that order, that would provide a facility that would do 3,000 to 4,000 tons a year of NdPr. But it doesn’t mean that that Phase 1 facility also wouldn’t still potentially be operational. But the Phase 2 facility will include its own crack and leach circuit.
So we don’t have to do any flip flopping of the current uranium vanadium mill, between uranium runs and rare earth runs. So we believe that our operating costs are going to be low and really as competitive not as low as anybody outside of China. And — but we have to show that we’ve secured enough monazite to run that on through.
Heiko Ihle: Fair enough. That’s very helpful. I’ll stop hogging the question queue here and get back in queue. But thanks so much for answering your questions and keep on going all the different directions that you’re going. I think it’s very impressive.
Mark Chalmers: Thank you, Heiko.
Operator: Your next question is from Mike Heim from Noble Capital Markets. Please ask your question.
Mike Heim : Thanks. Hi, Mark. You just said that you believe your operating costs for the NdPr should be as low as anybody outside of China. If I were to look at minus or one of those and talk about gross margins, which we’ve never really talked about, is it reasonable be thinking about 50, 60, maybe even 70?
Mark Chalmers: Well, yes, it depends a lot, Michael, on — I mean, we have — and again, the reason we haven’t gone into real details is we’re still and we have a good handle on what we believe they are. But we’re still doing some of our engineering studies. But we believe that it’s their robust margins. A big part, and I’ve talked about this before, and had been criticized a bit before, but it depends what you acquire your monazite for. And we’re looking at a blended price of monazite, that includes purchasing and from our own sources, sort of a hybrid model a little different. So those are all factors that come up with what the ultimate cost is. But yes, I believe we are going to be in the same order of competitiveness of others, people that you just mentioned and others, and really, a lot of it’s going to be focused on the fact that we’re operating in an area that has low water cost, low power cost, very good people skills labor skills in the United States and compared to Australia, very favorable jurisdiction for low operating capital costs.
Mike Heim: Now I can do the math on 100 metric tons or a million kilograms and see the potential of $65 million if we were running at peak or so. But that’s just for the NdPr help during phase one, what happens to the other heavy REEs, can they still be sold off? Or will you kind of inventory them till you get them at they were?
Mark Chalmers: They can, the SM+ we call it, samarium-plus, in heavier. We will make a concentrate that can either be sold, or we can hold it and the most likely scenario is we’ll probably hold it. And because really, the Dy and the Tb are a couple of the elements that particularly U.S. government is very, very interested in. And actually a lot of people in the world are very interested in those elements. So, as I said, it’s a very tricky business here. The — and I believe that the Chinese continue to manipulate the market at some level, because they want to continue to be the dominant force in rare earths in the world. And so, we’re trying to position ourselves in a way that provides us and decouples from to have our own capabilities internal as much as possible.
Mike Heim: Can you give us any indication how much the NdPr represents in terms of the overall value of the heavy metals?
Mark Chalmers: Yes, in NdPr it varies, because not all four sources have heavies in them. For example, basanite has very little heavies, but the NdPr is generally speaking around 75% of the total value of the rare earth oxides that you recover. A lot of people try to count every element in the rare earth feeds. We really count the neodymium praseodymium and dysprosium and terbium. And so the heavies are generally about 25% of that value and the NdPr is around 75%. It could be 80% 70%, somewhere in that order.
Mike Heim: Okay. And final question for me. You said twice that talking about Phase 2 and Phase 3? If you get enough monazite? Does that imply that you feel if contracts are lived up to you have enough for what you want to do with Phase 1?
Mark Chalmers: Well, as I said, I think, we’re rounding up what I’m believing is around 50% of our sort of line of sight to Phase 1. We are talking to multiple parties, and I know I’ve said this before, but we’re talking to probably half a dozen different groups. And those all have the potential any one of them to fill up Phase 1. But again, we’ve got to get them signed up. And one of the things I’ve found is that a number of parties that were kind of looking at where and who they could do business with, a lot of them have come back to us because they feel that Energy Fuels offers something that others don’t. And the main thing we offer is operating in the United States of America, processing in the United States of America, and also being able to operate in an environment where we don’t have to pay these extraordinary operating costs, like you’re seeing currently in Australia.
