Categories: Energy
Topics: General Energy

Medallion Resources (TSX-V: MDL)(OTC: MLLOF) CEO Mark Saxon on Completion of TEA & Potential Partnerships for Extraction of Rare Earth Elements Technology

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Medallion Resources, Mr. Mark Saxon. Mark, how are you today?

Mark Saxon: Gerardo, good afternoon. Great to be talking to you again, doing well back in Australia here and yeah, COVID rolls on for us and it sounds like you guys are doing much better than we have, so yeah, we'll see how it goes.

Gerardo Del Real: It's good to catch up. I have to start by wishing you and everyone at Medallion and Don Lay's family all the best. Sudden passing here recently and always, always tough. Never the right words, but all the best from us to everybody on your end, and all the best to his family. He was the founder of course, of Medallion Resources, and so, yeah...

Mark Saxon: Yeah, absolutely. I appreciate the comments, Gerardo and yeah, Don was the vision, I guess, the voice, of the work we're doing now and was the real team leader for this project for about 10 years and yeah, I hope we can do him justice and yeah, give him a great legacy to go on with in the work we're doing.

Gerardo Del Real: Well said, well said. You had some news here this morning. That is a milestone moment for the company. As always, the headline is always a mouthful. So let me go ahead and mouth it off, right.

Medallion Resources Announces Completion of Techno-Economic Assessment for Extraction of Rare Earth Elements from Mineral Sand Monazite.

I'm going to let you do it justice and provide the overview and then we can get into the details and what it means, and why it's such a milestone moment for the company.

Mark Saxon: For sure. Thank you, Gerardo. It is a milestone, and a mouthful at the same time, so I appreciate the handing it over to give some context there. It absolutely took longer than we were hoping, I'd like to put out there, first of all, and it was independent study. It was in the hands of consultants and really there was no way we can short cut that. So yeah, a few frustrations I know from shareholders along the way, but yeah, we got there and I'm very pleased with the results in the end, so I guess that's the main thing.

So yeah, I guess, first of all, just to give the high level view on what Medallion has been doing and is doing. So, there's two components to the business. So the first of all is the rare earth extraction from mineral sand monazite. So, that's the process that we're talking about here with the TEA. The second part that we're not talking about, which is a standalone process, which is the separation of rare earth elements, which is being done by Purdue University, who we're invested with a great team.

So this is about the extraction of rare earth elements from mineral sand, Monazite. So the completion of the work that we've done over the last six months, I guess, is a techno economic assessment, a TEA. So that's like a big pool together of all the technical and financial data that we have to date, really over particularly the last five years, I suppose, in terms of test work, in terms of supplier relationships, in terms of understanding customers in the markets.

We've pulled all that knowledge together and the physical test work into one, I guess, massive summary document. And from that summary document, we've been able to work out capital costs, operation costs, the cost of every piece of equipment, the power, the people, the land use, the water use, the waste management, everything that you can imagine, I guess, that goes with that process. So wherever we now, I guess, go and land it in the real world and, and set up as an operating case, then we have all of that knowledge behind us.

So I guess we chose, and I know we've spoken in the past, we were thinking about a plant in West Texas. So this plant is developed with West Texas thinking. So that's about, I guess the power costs, the labor costs, the taxation regime. So that's where our baseline is.

However, we've developed the model to really be able to go anywhere so we can now drop a similar plant in Western Australia, we can drop it to where I live in Victoria, we can top it in parts of Africa where there's mineral sands. And so we're really able to be quite iterative now to say, "What's the best business case going forward? Where should we be operating? What price should we be paying for monazite, and the revenue sharing and licensing deals?" So this is the fundamental knowledge base now.

Gerardo Del Real: I have to highlight the fact that you don't get into specific numbers, and I have to speculate that that is because you're likely discussing opportunities as you highlight in the release with partners and prospective licensees under NDAs. I know how delicate that can be, if you can comment on any aspect of that, that would be excellent. If you can't, I completely understand, because I know negotiations can be delicate to say the least.

Mark Saxon: Yeah, most certainly. I'm very happy to touch on that as best I can. And as you say, I guess there's a few elements in our consideration for that. There was a lot of, I guess, soul searching and legal advice that went into the way that we approached it. So I guess three components, I suppose, that came into that thinking.

So first of all, the monazite price that we have been seeing in the market. So we've been out there looking and speaking to various suppliers. The monazite price varies massively. So, the internal price to a company that really, I guess, two or three years ago, they put zero value on the monazite, to what's being sold in small batches into the Chinese market. There's probably a 10 times range of prices over that number. So really, it depends on the price that you use for the monazite, makes a very big difference to the NPV and IRR. Obviously, it's a very major part of the cost profile.

The second one, I suppose, is also about the labor costs and the scaling that we have assumed. So we've assumed a 7,000 tonnes of monazite per year plant. As we increase that the numbers change dramatically, and again, it's very hard to benchmark it exactly where we want to be on that spectrum. So I guess we were thinking let's leave that to the customers and the partners to make those decisions.

Confidentiality is a very big one, and so this is a process, not a project. It's not linked to any one mining project. It's a process that can go and connect itself to every single mineral sand monazite project in the world. So that's yeah, like 20 projects. So we don't want to give too much away, I guess, in terms of our thinking in how we operate, in terms of the technical work behind it, and also, in terms of the cost protocols and things behind it as well. We're keeping that a little confidential.

And also, TSX rules give us certain boundaries that we can work with in as well. So yeah, we need to have certain independence in reporting, so we're making sure we're staying on the right side of all of those.

Gerardo Del Real: Makes all the sense in the world to me. What comes next?

Mark Saxon: Yeah. We're now, I guess, digesting the results of that document. And really, it's telling us everything we need to know now about our business plan going forward. You touched on for a moment there, the licensing idea, and so we're certainly very active in that sector. And so, we have had preexisting discussions with a number of potential partners, but another partner wrote to me literally five minutes after the TEA went out yesterday, or this morning your time.

And so as soon as that hit the market, then someone wrote to me immediately to say, "Can we engage in a discussion about what we're doing with the technology?" So, that's a real and live discussion for us.

We're adequately financed. We've got enough money in the bank to get through the short-term goals, and I guess one of the things in particular that we have identified is that the pairing with the separation process that we're developing with Purdue University really has the potential to add massive value, I guess, to the process, because that allows us to go all the way through to a finished market ready product. And so, that's really triggered us to say, "Yeah, let's really buckle down and get that resolved."

We have invested in that technology for about six months and that's doing remarkably well, much better than we had planned at the time. We want to make sure that bumps along and gets through to the next milestones so that we can really understand, I guess, and do a TEA, do a similar study on that separation part and integrate those two sides of the story then, and that really maximizes the value. So yeah, we're pushing on those fronts and yeah, I think we'll see some pretty good news flow coming in the short term.

Gerardo Del Real: Well, it sounds like I may see you in Texas sometime in the near future. I'll leave it there. Thank you so much for that update, Mark, and anything else to add to that?

Mark Saxon: Thanks, Gerardo. That's fine and yeah, I appreciate the shout outs, and yeah. Always happy to talk and update the markets. Have a good evening, then.

Gerardo Del Real: Thanks so much for your time. All the best, Mark.

Mark Saxon: Thanks, Gerardo. Bye.