The one word you should know for investing in rare earths is Xenotime

Xenotime – the “thinking man’s REE mineralization”: In the film, “The Graduate”, the unworldly character Benjamin (played by Dustin Hoffman) is told at the cocktail party that there is one word that he should know and that word is “plastics”. We are not sure in light of plastic’s progress over the last 40 years whether that would have been the best of tips. However in the Rare Earth space we have been convinced for some time that the key word is “Xenotime” and this is what arouses our interest in those rare earth element (REE) players who have a Xenotime component in their REE mix.

The mineral in question is a REE phosphate mineral, whose major component is yttrium orthophosphate (YPO4). The rare earths dysprosium, erbium, terbium, and ytterbium, and metal elements like thorium and uranium (all replacing yttrium) are the expressive secondary components of xenotime. Due to uranium and thorium impurities, some xenotime specimens may be weakly to strongly radioactive. Xenotime is used chiefly as a source of yttrium and heavy lanthanide metals (dysprosium, ytterbium, erbium, and gadolinium). Occasionally, gemstones are also cut from the finer xenotime crystals.

The etymology of the name xenotime is from the Greek words “κευός vain and τιμή honor because the yttrium contained within it was first thought to be a new element. In some versions, the original name of the mineral was “kenotime”, but due to a misprint, the “k” became an “x”, and the change stuck. “Xeno” means strange or foreign in Greek, so the error was somewhat fortuitous as well.

Xenotime is typically translucent to opaque (rarely transparent) in shades of brown to brownish yellow (most common), but also reddish to greenish brown and gray. Its crystal system, may lead to some confusion with zircon (ZrSiO4), that a similar crystal structure and with which xenotime may sometimes occur.

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Occurring as a minor accessory mineral, xenotime is found in pegmatites and other igneous rocks, as well as gneisses rich in mica and quartz.

Historically, the main occurrences of note of Xenotime were at Hidra (Hitterø), Flekkefjord, Vest-Agder, Norway (the mineral first being described in 1832 from an occurrence at the latter location). Other notable localities include Arendal and Tvedestrand in Norway, in Brazil at Novo Horizonte, São Paulo, Novo Horizonte, Bahia, and Minas Gerais and in Madagascar. In the US, California, Colorado, Georgia, North Carolina and New Hampshire have occurrences. In the equities markets the main exposure is through three stocks, one of which has a deposit in Alaska and two companies with deposits in the wilderness of Northwest Australia.

The beauty of Xenotime is the mix of REE in the mineral. The lanthanide content is typical of “yttrium earth” minerals, and runs about two-thirds yttrium, with the remainder being mostly the heavy and medium lanthanides, where the even-numbered lanthanides (such as Gd, Dy, Er, or Yb) each being present at about the 5% level, and the odd-numbered lanthanides (such as Tb, Ho, Tm, Lu) each being present at about the 1% level. Dysprosium is usually the most abundant of the even numbered heavies, and holmium is the most abundant of the odd numbered heavies.

The relevance of this…

As became well-known in the REE boom, with most rare earth mineralisations one must take on a preponderance of the abundant REEs (Cerium and Lanthanum) to get to the more valuable rarer Rare Earths that appear in much smaller proportions. Thus the preponderance of lookalike deposits with bastnasite, eudialyte and apatite started to ring alarm bells that there may be “too much of a good thing”.

Ecclestone-Xenotime-1In the case of YPO4, instead one is encountering phosphate (which has a market in fertilizers), Yttrium (a rare earth not always found in standard REE deposits because it lies outside the Lanthanide series) and then a preponderance of the more attractive Heavy Rare Earths and obscurer Light Rare Earths.

As is also (now) well known there are no shortcuts in treating the REE minerals that the bulk of companies have so far discovered. One cannot “send the Cerium to the tails”. One must process out each REE in sequence in a very elaborate and costly process. Not having the “rubbish” REEs of Cerium and Lanthanum to an appreciable level makes Xenotime more valuable and with less processing cost per tonne of rock.

Current production is largely the small tonnages of xenotime sand that are recovered, in association with Cassiterite tin mining in Malaysia. It is also mined in Guangdong province in China. The metal mix of these two sources in shown in that table at the right:

As can be noted, the low value Light Rare Earths, Lanthanum and Cerium appear in minimal amounts in Xenotime production.

The Value of Yttrium

The chart (compiled by us from information from IMCOA/Metal Pages) shows the exponential growth in the Yttrium price in the last few years. In the middle of the last decade the metal was almost a giveaway at a mere $4 per kg but at one point in 2011 the oxide was going for $180 per kg. Prices in 2012 have fluctuated between a low of $90 to a high of $130 with the current price, according to Metals Pages being around $100, FOB China.Ecclestone-Xenotime-2

More than any other REE, we see the strongest potential in Y for the Western producers to take significant market share away from the Chinese. This would be via a combination of the existing “outside China” share of the Malaysians and the onset of serious volume output from any of the properties we mention later on.

IMCOA estimates that the annual demand for Yttrium Oxide in 2016 (with a 20% margin of error either way) would be 13,350 tpa while the supply would be 10,000 tpa, implying a meaningful deficit. We are estimating prices at $32 per kg in 2016.

The Players

The three Xenotime plays here are all quite different. The assets of Northern Minerals are hard rock REE xenotime located in two outcrops. The Spectrum property is xenotime in an ionic clay type deposit, which is at surface and easily mineable. The Ucore deposit has xenotime as one of its several mineralisations at Bokan Mountain. All three were uranium players that morphed into REE stories.

Northern Minerals (ASX: NTU): This company owns two properties in far north-western Australia. The main target is the 100%-owned Brown’s Range property formerly was part of the Gardiner-Tanami Project (which was the focus when NTU was a uranium explorer), but since 2009 has become a focus for its HREE exploration program. The other project is the John Galt deposit which is a very interesting mineralisation in a massive outcrop in which the Rare Earths are within a cliff. The John Galt main zone was partially tested with nine diamond holes (503m) returning four intercepts >15% TREO.

Historical sampling and metallurgical studies identified the John Galt mineralisation as having significant concentrations of dysprosium, erbium and gadolinium, as well as other heavy rare earths from terbium through to lutetium. John Galt looks the easier prospect to mine but it has taken a back seat in recent times to the push on Brown’s Range.

Ecclestone-Xenotime-3

Again the old adage that a picture tells a thousand words comes into play. Above can be seen the REE breakdown of NTU’s Brown’s Range deposit against Lynas’ Mt Weld (which could be regarded as broadly similar to Molycorp’s Mountain Pass). As can be seen the Xenotime at Brown’s Range is largely the heavy Rare Earths, a wedge of the seldom spoken of medium REE (Samarium and Gadolinium) and a smattering of LREE. Mt Weld is almost exclusively LREE and like Molycorp’s mine, has a small amount of the medium REE, Europium.

In October 2013, the company reported that the project now had a JORC-compliant mineral resource estimate of 4.13-million tonnes, at 0.68% rare-earth oxides, for 28 084 t of total rare-earth oxide.  This was up from the previous estimate of 17 584 t of rare-earth oxide.

The shareholder mix is also worth mentioning as the Australian major in the REE space, Lynas is a shareholder with 3.69%, while a Chinese group, Conglin Yue with 45.5% having bumped up from 18% only two years ago. We know the company has been of interest to major trading houses in recent years.

Spectrum Rare Earths (ASX: SPX): This company used to be TUC Resources. In its hunt for uranium in the Northern Territory of Australia it came upon a massive resource of what appeared to be ionic adsorption clays, the true Holy Grail of REE deposits, easier to mine, high-grade and biased towards the most attractive REEs. The companies projects are the Stromberg and Skyfall properties. Mineralisation at the Stromberg Prospect is situated at, or very near surface, in flat lying, tabular bodies. In addition, thickening of mineralisation has been noted around faults that possibly represent feeder and concentration zones for mineralising fluids.   This style of mineralisation is also evident at Skyfall.

Diamond Drilling at Stromberg has provided excellent HREE results including: STDH3, 3m @ 1.19% TREO (92% HREE) within 4.2m @ 0.93% TREO and STDH2, 3.0m @ 0.59% TREO (92% HREE). The distribution of valuable and high demand HREE in all significant intersections is an impressive ~8% Dysprosium/TREO, ~6.5% Yttrium/TREO and ~5% Erbium/TREO.

Skyfall is the concession to the southeast of Stromberg. In early 2009 the tenement was pegged due to a similar large radiometric signature having been noted. This zone measures 9kms in length and 1 km in width. Rock chip samples on the radiometric anomaly showed as their best results 1.25% TREO, with HREE making up 37% of that. With a low market cap of only around $4mn, Spectrum is a more accessible plaything for an end-user or trader wanting exposure to REE clays than Northern Minerals, for instance, with that company’s solid core shareholder effectively blocking interlopers.

Ucore Rare Metals (TSXV: UCU | OTCQX: UURAF):  This company’s Bokan Mountain deposit in Alaska is not solely a Xentoime deposit but it is the Xenotime component that makes Yttrium its largest REE output.  The presence of Yttrium at Bokan was first displayed in 1988 when a report (non-NI43-101 obviously) postulated a combined Indicated and Inferred resource of 133mn lbs of Y2O3 at the site.

Since then a more comprehensive resource has been calculated and the company’s PEA shows 4.7mn kgs of Yttrium Oxide being produced over the life of mine for a total value of $153mn. While this is well-outranked by the Dysprosium resource (and value), it still makes Bokan potentially the largest source of Yttrium in North America if it can get to production ahead of Texas Rare Earths (which has Yttrioflourite in its resource, rather than Xenotime).

Met-testing undertaken by Hazen Labs in Golden, Colorado also showed that Yttrium makes up the largest percentage of any REE in the TREO+Y mix so its fortunes will aid the viability of Bokan if the company decides to prioritise recovery and marketing of this mineral.

Conclusion: When we first stumbled upon Xenotime it wasn’t via any company’s presentation it was rather through some reading on exotic REE mineralizations. How could it be that there was a REE mineralization not massively overweighted to Lanthanum and Cerium? Quite straightforward indeed. If all one hears is that the world is flat and one does not travel then it is easy to believe what one is told. All the REE companies had deposits that were LREE-heavy (to mix a metaphor) and thus they would have it that La and Ce were necessary evils (but then make an aside that they had less of them than the next presenter). With Xenotime one scarcely has these “necessary evils”, indeed they represent the type of percentages in a Xenotime material that Samarium might represent in a monazite or bastnasite. Xenotime can best be described as “having the icing without having to eat the whole cake”.


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Christopher Ecclestone

About Christopher Ecclestone

Christopher Ecclestone is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten & Company in New York in2003 he was the head of research at an economic thinktank in New Jersey which he had joined in 2001. Before moving to the U.S., he was the founder and head of research at the esteemed Argentine Equity research firm, Buenos Aires Trust Company, from 1991 until 2001. He worked in London from 1985-1991 as a corporate finance and equities analyst and as a freelance consultant on the restructuring of the securities industry.
  1. Thanks Chris. I have a photo of Ian Chalmers of ALKANE Resources and Dudley Kingsnorth looking at Dudley’s license plate on his BMW — it reads: XENOTIME. We need a Dudley interview update and I will send him your piece. Great work!

  2. Chris, thanks for the good read.

    You wrote: “In October 2013, the company reported that the project now had a JORC-compliant mineral resource estimate of 4.13-million tonnes, at 0.68% rare-earth oxides, for 28 084 t of total rare-earth oxide. This was up from the previous estimate of 17 584 t of rare-earth oxide”

    On 26 February, 2014 Northern Minerals upgraded the resource up from 28K tonnes to 48K.

    See:
    http://www.northernminerals.com.au/investor-centre/asx-announcements.html?view=category&id=36

    “Major upgrade in Heavy Rare Earth (HRE) resource at Browns Range Project with the global Mineral Resource now estimated at 47,997,000kg (47,997 tonnes) of total rare earth oxides (TREO) in 6.48
    million tonnes @ 0.74% TREO (classified and reported according to the guidelines of the 2012 JORC Code1).

    Northern Minerals have a double blessing. In addition to the rich xenotime resource, the host rock is soft and very amenable to beneficiation and hydrometallurgy. The flowsheet is straightforward and low-cost. This enables another plus. The plant build capex could come in under $150M. See recent Feb 27 announcement under above link for more details.

  3. Regarding 99.999% Yttrium Oxide FOB China, you wrote “Prices in 2012 have fluctuated between a low of $90 to a high of $130 with the current price, according to Metals Pages being around $100, FOB China.”

    The depicted graph may be correct, which shows $100/kg in 4Q11, but the price has come way down since then. Under 20 bucks a kilogram now for FOB China, and about half of that for domestic China. Yttrium is the “cerium” of HREEs. Unless significant new uses are found for it, I don’t think Yttrium prices are going to hold up well once even a couple of HREE (high in Yttrium oxide) mines go into production.

  4. Fully agree on the significance of xenotime and more importantly wrt Northern Minerals it is a pure xenotime bedrock deposit. Only one other one in the world which you may recall as we have presented which is Lofdal in Namibia. Both xenotime projects are small wrt tonnage but inherent in the REO distribution is as you point out, significant production potential of HREOs that can be contemplated from both at quite low capex. Two other significant points are the proven separation technology at a commercial scale and monomineralic ore composition which does not require “new processes” after beneficiation. Lofdal remains under the radar screen in our assessment due to its early stage (no PEA so numbers to play with) but hopefully will emerge from the ashes of the sector. For the record I am biased on that point!

  5. Hi Chris,

    Thanks for the article.. the presence of xenotime i think is critical to success as you identify.. i do think its important to note though of i may..

    Spectrum has no resources that i am aware of so really its hard to gauge this project at all.. its merely an occurance of REEs i would say at this stage..

    Ucore i dont think qualifies as xenotime related deposit in any regard.. i believe its RE bearing minerals include Cerite, Kainosite, REE-Ca-Y silicate, Limoriite-(Y), Y-Fe-Ca-REE silicate, Th (U) Mineral, Synchysite-(Y), Bastnaesite, Xenotime, Fergusonite, Monazite, Pyrochloreb, Ti-Y-Fe-REE oxide.. so xenotime is likley very nsignificant to the total REE contained..

    Browns Range and Lofdal i agree are the pure xenotime plays.. the tonnage is just quite low so its unclear of the market impact… they do have the metallurgical advantage though.. simlar to Commerce’s Ashram deposit that does have a significant heavy component related direclty to xenotime… good grade and tonange to boot..

    i look forward to the next article..

    Cheers

    • Chris, you have the same error, which I commented on above, in your linked Hallgarten report as in this article. Namely “Prices in 2012 have fluctuated between a low of $90 to a high of $130 with the current price, according to Metals Pages being around $100, FOB China.” This is not even close, and given the relatively large amount of Yttrium oxide at Bokan,use of these erroneous Yttirum prices would contribute to a dramatic overestimation of Ucore’s finanical prospects. Even the Hallgarten 2016 price of $32.00 shown on the p. 21 price deck is rather optimistic, all the more so if ANY new “HREE” (mostly Ytttrium) mines go into production.

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