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With rapidly developing EV businesses and great fintech assets, sounds like good Ideanomics

Sales to financing to charging – that is the Ideanomics, Inc. (NASDAQ: IDEX) model.  The company has two primary divisions – the Mobile Energy Global (MEG) division is a service provider which facilitates the adoption of electric vehicles by commercial fleet operators through offering vehicle procurement, finance and leasing and energy management solutions. Ideanomics Capital is focused on disruptive fintech solutions for the financial services industry.

Or put another way – end to end electric vehicle (EV) solutions.

Hydrocarbon-based transportation services are not dead and are not going away anytime soon – there is literally a century of infrastructure investment in this market segment. But, the beauty is that some of this infrastructure can also be utilized by the rapidly expanding EV market both in commercial and personal transportation.

By providing a full sales-financing-charging service, the MEG division has found a niche in commercial transportation. Specializing in the facilitation of vehicle procurement, finance and leasing options and energy management solutions, Ideanomics provides full-service to commercial fleet operators. This allows these transportation specialists to do what they do best – move things without trying to figure out and dissect the latest and greatest (or worst) in the EV transportation sector.

It can be complex to someone who is just trying to get boxes of stuff from Point A to Point B in the most cost effective and timely manner. Current EV infrastructure does not cut it – yet. In early 2021, Ideanomics announced the acquisition of private company Wireless Advanced Vehicle Electrification (WAVE). WAVE was founded in 2011 and is a leading provider of wireless charging systems for commercial EVs. Its technology is proven in the field with multiple customer deployments utilizing inductive (wireless) charging solutions for medium and heavy-duty electric vehicles. This system is fully automated and hands-free and can, the company claims, enable EV fleets to achieve driving ranges that match that of internal combustion engines. A bold statement but probably not that far off once the infrastructure is in place.

While a departure from commercial transportation, the company announced on March 3, 2021 that it has entered into an investment agreement with Energica Motor Company S.P.A pursuant to which Ideanomics invested 10.9 million Euro for 6.1 million ordinary shares of Energica. Energica is the world’s leading manufacturer of high performance electric motorcycles and the motorcycles are currently on sale through the official network of dealers and importers.

This should fit very well into the business model of financing and charging – look out Harley Davidson!

Not just about profit, the company is also supportive of the move to rapidly decarbonize transportation systems. In February 2021, Ideanomics announced its membership in CALSTART, a national non-profit organization focused on accelerating clean transportation. CALSTART has 270+ members, composed of transportation-related stakeholders, including manufacturers, suppliers, fleets, technology firms, academic institutions, government agencies, NGOs, power companies, fuel providers, banks, and more. CALSTART works nationally and internationally with businesses and governments to develop clean, efficient transportation solutions.

The company is growing each of their particular divisions with great fintech assets and a rapidly developing EV business. Let’s face it – the EV space is very exciting – WAVE will help fuel an entire line of EV business.

This is a high growth brand new industry and management will tell you that IDEX is not a one-trick pony. They will also say that the company has a low price compared to peer group and has a high growth potential through new technology.

The future is faster than you think. In a world that is rapidly changing, Ideanomics will be turning heads.




Initiative to break Chinese stranglehold of the global rare earths supply chain is here.

It was always a burning question – did Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) get into the rare earths carbonate production business just to send more product to the global dominant purchaser? Now we know – congratulations Energy Fuels and Neo Performance Materials Inc. (TSX: NEO).

On March 1, 2021, Energy Fuels and Neo announced the joint launch of a U.S.-European Rare Earth Production Initiative. Subject to completion of definitive agreements, Colorado-based Energy Fuels will process natural monazite sands into a rare earths carbonate beginning in March or April 2021 and ship a portion of that production to Neo’s rare earth separations facility in Sillamäe, Estonia (“Silmet”). Neo will then process the rare earths carbonate into separated rare earth materials for use in rare earth permanent magnets and other rare earth-based advanced materials.

This is the culmination of a technical collaboration between the companies, commencing in April 2020, to establish a monazite processing and rare earths carbonate production capacity at Energy Fuels’ White Mesa Mill plant. Neo’s Silmet facility in Estonia has successfully processed trial quantities of Energy Fuels’ rare earths carbonate. When ramped up to commercial scale, this new rare earth supply chain is expected to constitute the first time in over twenty years that monazite ore from the US will be used as a feedstock to manufacture separated rare earth materials outside of China.

This is a strategic partnership between the two companies to bypass the Chinese near-stranglehold on the rare earths market. The new rare earths facilities planned for the US are years away (some say if ever) and then there is the problem of handling the radioactivity from the associated uranium and thorium – meaning new facilities won’t be handling monazite unless they have a license to handle the radioactive materials.

As recently highlighted by rare earths industry guru Jack Lifton, “Energy Fuels operates the only licensed uranium mill in the USA. It is licensed not only to separate and sell uranium from ores, but is also the only legal destination in the USA for any natural radionucleide bearing materials from which its mill separates the radionucleides and either inventories them for sale (uranium) or stores them (thorium, etc.).”

In other words, good luck to all the proposed new US processing facilities….

While there will be a new Saskatchewan Research Council (SRC) concentration and separation facility in Saskatoon, Saskatchewan, this will not be ready until late 2022. Even then, it may not be a viable destination for commercial rare earths production. For testing, yes. For commercial production – to be determined. Silmet was the logical choice, plus Neo has 11 manufacturing facilities around the world and is a world leader in innovation and the production of permanent magnet powders, through its Magnequench business unit.

Energy Fuels will be the first U.S. company in years to produce a marketable mixed rare earths concentrate ready for separation on a commercial scale. The White Mesa Mill has a throughput capacity of approximately 2,000 tonnes per day, so the facility has ample processing capacity for rare earths and looks to make Energy Fuels a lowest cost mixed rare earths carbonate producer. As previously highlighted, future valued-added products including separation and potential metals or magnets are also likely to benefit from the infrastructure at White Mesa Mill. In the meantime, the company has a buyer and partner in their rare earths carbonate production.

Neo is leading the way in an industry that is continuing to evolve and grow. The company is innovative and management has the expertise and knowledge and the potential to continue to innovate and lead the pack. This announcement further supports that statement.

From a pure uranium/vanadium producer just a year ago, Energy Fuels is about to become a major domestic rare earths player. As the US strives to achieve a domestic rare earths industry, Energy Fuels can potentially become the low-cost domestic rare earths producer and a key player in full integration of the domestic rare earths supply chain with the White Mesa Mill.

This transaction is the start of a great partnership and just the first sign of things to come in the drive to develop a global rare earths supply chain outside of China.




Kozak’s #2 pick for Top Five Rare Earths for 2021 is …

Australian Strategic Materials Ltd. (ASM:ASX) is an emerging “mine to manufacturer” of critical metals. The company’s cornerstone Dubbo Project (100% owned) is a proven long-term resource of rare earths, zirconium, niobium and hafnium located in central-western NSW, Australia. While this description might not excite you, it should. Read on….

The company is our # 2 pick for Top Five Rare Earths for 2021. Created by a corporate demerger completed in July 2020, ASM came out of Alkane Resources as the company’s directors sought to unlock shareholder value in the then-combined gold/rare earths company. The value creation has been very successful, with ASM’s share price up by 400+% at year-end 2020, although there has been a general retrenchment in most rare earths company share prices since that time.

If you are not familiar with ASM, here are the key points:

  • 100% owned Dubbo Project – discovered more than two decades ago, this mining project is ready for construction, subject to financing. It has all major state and federal approvals in place and process systems design is complete
  • Metals Business – the company has successfully deployed a “mine to manufacturer” business model, first working with and then acquiring the majority interest in a Korean metals joint venture partner.

The Dubbo Project

This is a polymetallic deposit that is rich in critical metals. Dubbo is currently undergoing an optimization feasibility study (to be completed end of Q1-2021) as well as mining costs updates and optimization/simplification of processing circuits for zirconia, hafnium as well as the rare earths. In 2021, the company is planning to continue with the FEED/Basic Engineering work. Later in 2021, it is expected that the Board will meet to review and (likely) approve the Dubbo Project with a Financial Investment Decision. From the approval, after tendering the project development will continue through to late 2023/early 2024 when the project is expected to ramp up. Funding is a significant issue, but in early 2020, Australian Government-owned Export Finance Australia has confirmed interest in financing the Dubbo rare earths project.

Critical Metals

As exciting as a mining project can be, the company’s “mine to manufacturer” strategy is working well. ASM has a patented metallization which process produces high-purity metals from oxides using up to 70% less energy than conventional methods. Developed in Korea, ASM entered a joint venture with the South Korea’s Zirconium Technology Corporation (Ziron Tech) in 2019 and acquired a 95% interest in Zircon Tech in late 2020.

Through late 2020, the metals business had significant success including:

  • production of high-purity dysprosium metal (99.5% purity), confirming the metallization of all key rare earth magnet metals produced by the Dubbo Project
  • production of high-purity zirconium metal powder at 98% Zr and 1.5% Hf
  • production of titanium copper alloy (99.5% purity)
  • ferro-neodymium alloy (FeNd – Nd 80%, Fe 20%), a key constituent of strip cast permanent magnet alloys
  • a neodymium iron boron (NdFeB) alloy which was produced at the Korean Institute of Rare Metals (KIRAM) facility;
  • KIRAM certified the NdFeB alloy, derived from ASM’s FeNd alloy, is suitable for rare earth permanent magnet production

With these results, ASM is moving forward with plans for a 250 kg/d metallization plant (scoping study to be completed in Q1-2021). With the confirmation of the commercial scalability of ASM’s innovative metallization process, ASM will now progress detailed engineering of a 5,200t per year metals plant that will initially produce titanium metal, nickel-titanium alloy, copper titanium alloy, titanium powders, neodymium metal, dysprosium metal; and NdFeB strip metal alloy for permanent magnet production.

The Full Package – mine to manufacturer

The significant successes in the metals business as well as the status of the Dubbo Project are both milestones for this ~$600 million market capitalization company. At December 31, 2020, the company reported cash of AUS$12.4 million, down from AUS$16.5 million at the end of the previous quarter. No forecasts are available, but the company is funded (at the previous quarter’s spending rate) through most of 2021

A seemingly very good mining project and terrific success in a complimentary metals business make this company attractive for investors. Delivery on the business plan and no unanticipated process upsets are likely to be rewarded in the future. Watch this space!




Looking back at Bokan Mountain, Kozak ask whether Ucore can indeed move forward.

In the 1950s, the US government commissioned surveys looking for sources of uranium for civilian and military uses during the Cold War. One of these identified locations was Bokan Mountain, at the head of Kendrick Bay on Prince of Wales Island (the southern-most island in the state of Alaska).

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Enter Ucore Rare Metals Inc. (TSXV: UCU | OTCQX: UURAF) who acquired the property at Bokan Mountain (Bokan-Dotson Ridge) in 2006 looking for uranium. Approximately one mile away from the Ucore property, the Ross Adams open pit/underground uranium mine operated sporadically from 1957 to 1971. Other than a gravel road from the head of Kendrick Bay past the Ucore property, there is no longer any infrastructure to speak of. Notwithstanding old uranium mine workings, Ucore quickly realized the potential for rare earths.

The benefit of having a mine that close by is the extensive geologic mapping that was done – beneficial in identifying the Ucore rare earths deposit. Prior to the preparation of an NI 43-101 report in 2011, the company conducted field work through 2008 (drilling for uranium), 2009 (soil and silt geochemical testing) and 2010 (drilling to delineate rare earths deposit plus trenching) to confirm the potential.

The Bokan-Dotson Ridge project is 100% owned by Ucore and has a mix of both light and heavy rare earths. While the NI 43-101 report is now 10 years old and the Preliminary Economic Assessment is now eight years old, there is no question of the potential to mine rare earths from this site. Management of Ucore is of the belief that the project can be “near shovel ready” (engineering complete and permitting well underway) for construction in less than 30 months after receipt of development funding. But to make this a reality, Ucore has a significant capital requirement, estimated in 2013 at approximately US$220 million. There is much more work yet to be done on the project.

In the interim, not satisfied with just being a mining company, Ucore management has diversified into the value-add chain of rare earths. Of note is the 2020 acquisition of private Canadian company Innovation Metals Corp. (IMC) who are the developer of a proprietary rapid solvent extraction technology (RapidSX). The technology is being commercialized for the cost-effective bulk separation and purification of both heavy and light rare earths. The process is touted as an advanced, accelerated solvent extraction process. Theoretically, it is less expensive to operate than conventional solvent extraction of rare earths.

RapidSX could be a key step in becoming a low-cost producer of rare earths but is currently not exclusive to Ucore. IMC is in numerous advanced-stage negotiations for RapidSX Technology Testing Agreements with current and near-term rare earths producers in US-allied jurisdictions.

Ucore is also taking advantage of the US location of the project and the support of the Alaska state government to help facilitate moving forward. In 2014, the Alaska State Legislature authorized the Alaska Industrial Development and Export Authority (AIDEA) to issue bonds (up to US$145 million) to finance certain infrastructure costs for the Bokan rare earths project.

The company has also put together a plan entitled Alaska2023 with respect to creating a rare earths business in Alaska. It includes US-allied feedstock (outside of the Bokan mine), technology and market development as part of the “not-in-China” rare earths supply chain. A key part of this plan includes a Strategic Metals Complex in Ketchikan, Alaska to process US-allied heavy and light mixed rare-earth concentrates into commercial purity rare earth oxides, specifically for rare earths permanent-magnet applications.

In October 2020, Ucore and AIDEA commenced preliminary due-diligence process regarding a prospective US$3.5-million investment for the development and commercial-scale operation of the Strategic Metals Complex.

Miner, Processor or…?

There are a lot of elements in the company’s plans to execute on, not the least of which is developing a mine. Can they do it? That really is the question, as they are very ambitious. Ucore is only one of many nascent rare earths companies intent on being part of the supply chain solution. There are many pieces of the puzzle that Ucore has yet to put in place, especially the funding.

At September 30, 2020, the company had approximately $2.7 million of debt and $2.0 million of cash. For the nine months of 2020, the company had expenses of $4.2 million (including $0.65 million amortization). Ucore recently closed on an equity financing of $6.7 million, so that should fund them through much of 2021.

“Is Ucore up for the challenge? Just watch us” Pat Ryan, Ucore Chairman & Interim CEO is quoted as saying in the company’s January 2021 investor presentation.

Belief or bravado? Only time will tell.




MP Materials: It is Rare Earths Deja Vu All Over Again.

As we know, MP Materials Corp. (NYSE: MP), successfully closed the business combination with Fortress Value Acquisition Corp. in mid November 2020, amid a wild ride for shareholders. The share price has rocketed to more than a quadruple for initial investors in the $200 million PIPE. Current market capitalization is approaching US$7 billion – it looks like the stock is set for yet another record high today (February 16, 2021).

The company will be releasing Q4-2020 results after the markets close on March 18, 2021. The company had a profitable third quarter 2020 ($14.6 million Net Income and $11.6 million Adjusted EBITDA) and outside the accounting adjustments for contract changes with Shenghe Resources, should show annual results consistent with the quarter.

The company’s Mountain Pass mine and associated processing facilities are in California, just off the Nevada border at Mountain Pass. Production started about 70 years ago in the only rare earths mining and processing site of scale in the Western Hemisphere. By management’s estimates, MP Resources currently produces approximately 15% of global rare earths content. Recall that the mine was restarted in 2017, with mining and processing currently exceeding levels achieved prior to the current management team taking over.

The company has an offtake agreement with Shenghe Resources (Singapore) that was modified in mid-2020. MP Materials is now free to sell to whomever they choose, (are there other buyers?) but will still be repaying the Shenghe Offtake Advance (currently $78 million). Management of MP Materials has estimated that this would be approximately four years from the date of the modification of the offtake agreement, putting it sometime in 2024.

As reported in MP Material’s Q3-2020 Form 8-K (page 12) “The completion of our Stage II optimization plan and any development of Stage III is expected to be capital intensive. We expect to invest approximately $170 million to complete our Stage II optimization plan….”. While the company has stated that it has completed process redesign and engineering for Stage II, we all recall the problems Molycorp had trying to get Project Phoenix to work as designed and arguably being one of the elements that caused Molycorp to go bankrupt. MP Materials has a strong balance sheet, but rare earths processing is not easy – it appears that a North American rare earths supply chain (as far as MP Materials is concerned) may just have to wait.

MP Materials closed the business combination with Fortress Value Acquisition Corp. in November 2020 with the stated objective of the merger to fund MP Materials’ Mountain Pass mine Stage II optimization plan. The company “expects to become a fully integrated provider of separated rare earth oxides, with a focus on Neodymium-Praseodymium, one of the most crucial inputs for magnetics, by 2022.” There is substantial mining and processing infrastructure in place at Mountain Pass with a comprehensive plan developed to even become a downstream magnet producer (Stage III, 2025-ish)

Is this possible? There are numerous detractors who think that this is an unachievable game plan, but clearly the market disagrees. The company also announced on November 18, 2020, that the company had been awarded a Defense Production Act Title III technology investment agreement to establish domestic processing for separated light rare earth elements. Under the TIA, the US Department of Defense will contribute $9.6 million towards MP Materials’ Stage II optimization efforts.

According to the most recent update in the Q3-2020 results presentation, the Stage II Project remains on track for 2022. The front-end engineering design (FEED) is complete, all circuit designs are complete, long-lead procurements were expected to be complete by December 2020 with initial civil mobilization also expected the first week of December 2020 and full mobilization expected in January 2021. An update on these items in March or sooner will be important.

As I said before – it continues to look promising so far, but hang on, with the history at this site and the fast money in the markets right now, let’s hope history does not repeat itself.




Kozak makes a case for Fission as Canada’s next uranium development

Fission Uranium Corp. (TSX: FCU | OTCQX: FCUUF) is a resource company specializing in the strategic exploration and development of the Patterson Lake South (PLS) uranium property, which is located in the Athabasca Basin in Saskatchewan. This basin is home to some of the world’s richest uranium mines and is known for uranium grades 10-20 times the global average.

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On this 100% owned 31,000 hectare property, the company has identified the Triple R project as a “world class” uranium project which the company is moving towards potential mine development.

Uranium mineralization of the Triple R deposit occurs within the Patterson Lake Conductive Corridor and has been traced by core drilling over ~3.18 km of east-west strike length in five separated mineralized “zones” which collectively make up the Triple R deposit. Through successful exploration programs completed to date, Triple R has evolved into a large, near surface, basement hosted, structurally controlled high-grade uranium deposit. The discovery hole was announced on November 05, 2012 in what is now referred to as the R00E zone. Mineralization along the Patterson Lake Corridor trend remains prospective along strike in both the western and eastern directions.

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The company completed and filed an NI 43-101 report on the Triple R project in late 2019, which summarizes a Pre-Feasibility Study (PFS) for an underground-only mining scenario for the Triple R project. The study only considered the R00E and R780E zones. Further work, including additional drilling, some of which is planned for 2021 may provide sufficient data for future inclusion of the R1515W, R840W and R1620E zones into the Feasibility Study mine plan.

Of note are two key points:

  1. Strong economics with a projected operating expense of just US$7.18/lb, an IRR (pre-tax) of 34% and an NPV (pre-tax) at 8% of $1.33 billion, thus outlining the potential for highly economic production at PLS; and
  2. A clear path for growth with the ability to easily accommodate additional material from the three high-grade zones outside of the current mine plan. This could lead to a potential increase in resource size and mine life.

The company has continued to move towards mine development with a number of notable events. Firstly, key members at the Board of Director and management (particularly in operations) levels have been added as Fission proceeds with environmental approvals and a feasibility study for mine development. Secondly, it should also be noted that in 2020, the company successfully raised $24 million of new equity in two separate bought deal financings, both of which were larger than the originally planned raises. This means that the 2021 drilling program is fully funded.

Looking forward, the company has an active drilling program in place for 2021 to drill a 43-hole (12,640m) winter and summer program. The intent is to increase the Indicated Resource classification of the Triple R deposit’s R780E zone and to also upgrade to Indicated Resources the large R840W zone, located on land approximately 500m west of Patterson Lake. The R840W zone is at present substantially drilled to Inferred classification and thus not currently included in the resource used in the last PFS.

The winter program will focus on the R780E drilling, while the summer program will focus on the R840W drilling. Fission is planning to advance the PLS project with a feasibility study beginning in 2021 and the success of the planned drill program has the potential to increase the resource used in that study.

There is still a substantial amount of work to do as the company targets a 2026 construction decision. Yet to come is the Feasibility Study (including mine design, process plant design and site work), permitting and ESG as well as the planned (and future) drilling programs. However, this shallow and low cost deposit is potentially compelling for Canada’s next uranium development. Time will tell.




Scandium in Lithium-Ion Batteries? Now it gets interesting…

Scandium International Mining Corp. (TSX: SCY) says that it could have the world’s first primary scandium mine at Nyngan, NSW, Australia. The project has received all key approvals, including a development consent and a mining lease necessary to proceed with project construction.

The market should know this, so that’s really is not the story here. But let’s back up a moment.

As you probably know by now, scandium is a critical material that is used as an additive to aluminum alloys that hardens and strengthens the end product. Not unlike titanium alloys, a scandium alloy allows for lighter weight but equivalent (or better) strength components. The usage is being embraced by specific industries, but notably, two Russian jet fighters (MiG-21 and MiG-29) use scandium alloys in their construction. Other uses for scandium alloys include (but not exclusive to) automobiles, fuel cells, and other defense products.

While the company had an initial 50% interest in 2010, it closed the acquisition to become a 100% owner of the Nyngan Scandium Project in 2014. With an NI 43-101 report on the property in 2014, a Definitive Feasibility Study in 2015 and an updated NI 43-101/Definitive Feasibility Study in 2016, the company conducted process testing as recommended in the 2016 DFS prior to commencing detailed engineering on the project. An initial Mining Lease was granted in 2017 but due to a prior filing of objection by a local landowner, it was not until July 2019 that a revised Mining Lease was received due to local landowner objections.

Here we are in 2021 – that’s a long time to work on a mining project, but it is not uncommon. All the company needs is a product purchaser and capital to fund the mine development.

Now it gets interesting

In the interim, management also commenced work on the processing side of scandium. Like most resource business, the more of the value chain that you can capture, the more return for your shareholders, so that makes sense. The company was successful in its work and successfully demonstrated the ability to manufacture an aluminum-scandium master alloy (Al-Sc2%), from scandium oxide, using a patent-pending melt process involving aluminothermic reactions.

As an offshoot of the process technology work, the company has also developed ion exchange (IX) technology and knowhow to recover scandium, cobalt, and other critical metals from solvent extraction (SX) raffinate and other acidic waste streams in certain acid leach operations of the copper mining process. Copper ore bodies have a number of associated metals that usually wind up in the waste stream. Many of these “waste” metals include nickel, beryllium, scandium, and zinc to name a few which are in low enough concentration to not necessarily be economic to recover. Some might notice that these metals are “critical materials” and can be used in batteries.

As a follow on to their work in metals recovery technology, the company announced in September 2020 that it had filed a provisional patent application with the US Patent Office seeking patent rights on various applications of scandium in lithium-ion batteries. The patent application covers a number of scandium enhancements, including doping potential for both anodes and cathodes and for solid electrolytes.

So you can see that with Scandium International Mining Corp., investors have exposure to a project-ready scandium mine in Australia. But they also have exposure to critical metals recovery technology and potential usage in lithium-ion batteries as well as solid oxide fuel cells.

It’s not just a mining company anymore….and potentially more valuable as a critical materials or battery technology company.

Watch this space!




Making a case for Appia’s monazite hosted rare earths

Appia Energy Corp. (CSE: API | OTCQB: APAAF) released news on January 25 that many investors were waiting for. The drilling results from the 18 hole, 2,500 meter, mid-2020 core program confirm the visual assessments of the core announced in October 2020 and provided valuable mineralization information.

Of the 18 holes drilled, 15 holes intersected the rare earths mineral system which is characterized by over 875 meter strike length, as deep as 340 meters from surface, open in all directions (3D space) and is in two sub-parallel trends.

Of importance to the deposit, the drilling confirmed that high-grade mineralization with grades consistently over 8 wt% total rare earth oxides (TREO) have been intersected over 145 meter strike length along the WRCB zone (Wilson, Richard, Charles and Bell zones combined). The WRCB zone outcrops at surface and starts as shallow as 10 meters beneath the surface, representing an easily accessible high-grade monazite asset.

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The Richard zone drill holes (RI-20-004 and RI-20-005) were of particular significance in confirming the mineralization. Total rare earth oxides ranged from 6.546 wt% to 11.035 wt% in RI-20-004 and 5.268 wt% to 10.322 wt%. A third significant hole at HN-20-001 intersected three separate uranium occurrences; (a) 0.046 wt% U3O8 over 0.1 m at 265.5 m drill hole depth, (b) 0.046 wt% U3O8 over 0.1 m at 265.5 m drill hole depth, and (c) 0.046 wt% U3O8 over 0.1 m at 265.5 m drill hole depth. These results will require further exploration for continuation of both the rare earths system and these new uranium occurrences, according to Vice President of Exploration & Development, James Sykes.

“Saskatchewan is a very mineral-rich province. But in terms of rare earths, we were surprised to find world-class grades,” Tom Drivas, President and CEO said in August 2020 when interviewed by local Saskatchewan media. It is rare to find these elements in large quantities, but the company is finding a lot of them at the Alces Lake property in northern Saskatchewan, especially key electronics rare earths neodymium and praseodymium. When you see some of the pictures that have been posted by the company, it is quite a deposit with large monazite intrusions at surface.

The Alces Lake property has been called a world-class rare earths deposit. Between 2017 and 2020, the company has:

  • Discovered 74 rare earth and uranium-bearing surface zones and occurrences;
  • Completed a total of 64 short diamond drill holes (end of hole average 25 to 50 m depth) for a total of 2,276.2 meters;
  • Completed a total of 14 long diamond drill holes (end of hole >50 m depth) for a total of 2,615.5 meters; and
  • Has over 95% drill hole success rate intersecting rare earths-bearing pegmatite system

Of note, the high-grade WRCB zone exposed at surface continues to within 10 m of surface, presenting an easy mining scenario. It is especially relevant that to date, less than 1% of the property has been explored with diamond drilling, giving Appia significant future exploration prospectivity.

The Genesis of a North American Rare Earths Supply Chain?

Most readers are familiar with the “seismic shift” in the rare earths in the past year, as scarcity and security of supply have come to the fore. At the end of September 2020, President Trump signed an executive order regarding critical materials, declaring a national emergency as related to rare earths. Follow this with a December 1, 2020, China implementation of its Export Control Law, which is going to have impact on the export of rare earths from the country. The market is (and always has been) getting messy as the free market goes up against global dominator, China.

The Saskatchewan Research Council (SRC), announced in August 2020 plans to have an operational rare earths processing facility completed in late 2022. This probably took a lot of people by surprise, but the SRC has world renowned rare earths experts who have over 30 years experience in the sector.

The President and CEO of the SRC, Mike Crabtree, was recently quoted as saying that the SRC believes the demand is going to increase 20-fold because of people’s increasing reliance on renewable energy and electric vehicles. To their far-sighted credit, the SRC has now created the opportunity to build what will be the first of a kind processing plant, not just in Saskatchewan or Canada, but in North America as a whole.

The SRC has executed a number of Memorandums of Understanding with Canadian mining companies and will become a near-term go-to processor of rare earths in North America. Appia Energy is in their backyard.

The potential for Alces Lake development is compelling. The rare earths on the property are 100% hosted within monazite, which has proven simple extraction methods dating back to the 1950s. But more importantly, the monazite at Alces Lake occurs as isolated grains, 1 – 3 cm thin lenses and as isolated clusters with further metres thick massive clusters which have been found to be outcropping at surface. The monazite ore has critical rare earths neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb) which are necessary for the permanent magnet industry and represent approximately 85% of the potential value at Alces Lake.

There is much work yet to do on the Alces Lake property, but Appia is moving ahead with an active 2021 program. Notably, bench-scale testing on rock samples to produce a mixed rare earth carbonate with future potential neodymium and praseodymium oxides.

Step by step, the company is well on its way to being a leader in the global race to develop new rare earths supply sources outside of China. Watch this space!




Beneficial partnerships in place and identifying substantial resources, Search Minerals a contender in the NA race for rare earths

The market interest resurgence in the rare earths space has allowed companies that have been working hard and getting results to be able to showcase their results.

Search Minerals Inc. (TSXV: SMY) is one of those companies, whose exploration efforts currently focused in southeastern Labrador, have generated real results for the company’s shareholders. Management remains diligent in their efforts to move the asset base forward, while minding the financial condition of the company. Most notably, they recently announced a small but oversubscribed private placement financing in January 2021, after importantly converting debt to equity in late 2020.

Recall that the company has a 100% interest in an approximate 70 kilometer long by 8 kilometer wide region in the Fox Harbor volcanic belt located in the Port Hope Simpson area of southeastern Labrador. Exploration commenced in 2009 and it quickly became apparent that the district was rich in rare earths. The Foxtrot deposit was discovered in 2010 followed by Deep Fox in 2014 and Fox Meadow in 2016. While all of these discoveries have significance, there are more than 20 additional exploration prospects identified in the immediate area, providing future exploration inventory. The company now has five major discoveries in this area with excellent road and power infrastructure with deep-water port access nearby that would support a low-cost development scenario.

The company has a Preliminary Economic Assessment (PEA) on the Foxtrot prospect and an NI 43-101 report prepared in 2016. The PEA highlights a 14 year mine lifespan on Foxtrot (8 years open pit, 6 years underground) that would recover approximately 7.4 million tonnes of Indicated and 2.0 million tonnes of Inferred Resources. The deposit contains the key rare earth elements neodymium, praseodymium, dysprosium and terbium, necessary for permanent magnets used in electric cars, wind turbines and many high-tech products.

But rather than just being a mineral exploration company, management recognized the importance of leveraging the cost advantages provided by the physical location of Foxtrot as well as the subsequent discoveries. Search Minerals committed early to look at extraction metallurgy as an opportunity to do more to position as a low-cost supplier. The development of a patented proprietary extraction process was accomplished with support of provincial and federal governments and has been tested in two separate pilot plant operations. The company successfully produced highly purified mixed rare earth carbonate concentrate and mixed rare earth oxide concentrate for separation and refining.

While their technology has been proven, scaling up to a plant will require significant capital and the company now needs to securing funding and/or a partner to further refine the process in a demonstration plant. In addition, the company will require further funding to continue infill drilling to take the discoveries to feasibility study stages.

However, the company continues to look to the future and enter into additional beneficial partnerships. Recall that Search has a Memorandum of Understanding with the Saskatchewan Research Council (SRC), signed in late October 2020. The ability of the SRC plant to process rare earth concentrates positions Search as a potential supplier in the North American rare earths supply chain. The company has also entered into a Technical Collaboration Framework Agreement to govern initial cooperation between USA Rare Earth, LLC and Search in a number of important areas of mutual interest.

The company has done a great job of focusing in an area and identifying substantial resources to take to the next level of development. By creating processing methods, they will be able to take more of the value chain in their relatively low-cost operating environment. The next step is (always) more money. The results speak for themselves, hopefully the cash will follow.




Beating the path down to become a “Vital” rare earths producer in 2021

Vital Metals Ltd. (ASX: VML) targeting to be the largest independent supplier of clean mixed rare earth feedstock outside of China. That’s a lofty goal, but absolutely necessary because China still counts for about 80% of the world’s rare earths production while only sourcing about 30% of their rare earths domestically. While the initial impact from Vital’s rare earths production may be small in the future supply-chain for rare earths, they are an important part of the global movement for the diversification of rare earths production and are an early entrant into a new supply chain. This has already been recognized with the contract that the company announced in late December 2020 for a binding term sheet signed with REEtec AS, (a Norwegian rare earths separation company) for supply of 1,000 tonnes rare earths oxide (ex-Cerium) per year for a period of 5 years. The supply can be increased up to 5,000 tonnes per year for a period of 10 years.

Vital Metals is on track to produce rare earth oxide in 2021.

That is the first thing you will read when you go to the company website and it is real and it is happening. The production will come from the company’s Canadian Nechalacho project in the Northwest Territories on Thor Lake, close to Yellowknife and near the edge of Great Slave Lake.

In fact, preparations are currently underway at the Nechalachco rare earths project to commence the production of rare earth oxide sometime around May 2021. Everything is on track to meet this production schedule as a result of years of previous work on the project (and previous owner’s expenditures of more than $100 million) and the design of the project parameters ensure early cash flow (and low capital costs) of a production stream that is highly desirable to end users.

The company has two shallow zones on the Nechalacho asset – the T Zone and the Tardiff Zone(s) as shown in the map below:

Vital is employing a very smart strategy – instead of developing the whole project all at once, they are going to first develop the smaller T Zone which will generate cash flow for further exploration and future development of the Tardiff Zones. Their strategy to develop the first mine in northern Canada requires less than A$20 million total capital cost for this first project (North-T, 100% interest), some of which can also be funded by future generated cash flow.

The company has been working towards 2021 production on the T Zone. Last year and into this year, the mining area saw site clearing above the planned pit, dewatering and geotechnical work to confirm the pit design and infrastructure construction for mining and production. Construction of the ice road to bring in the drilling rig and mining equipment has also commenced. We anticipate news in the near-term to confirm the timing of the arrival of mining fleet and delivery of the ore sorter at site. As reported today, at December 31, 2020 the company had approximately $6.1 million of cash and cash equivalents, so they should be well-funded through first production from Nechalacho.

Looking ahead, recall that on September 22, 2020, Vital announced a binding term sheet for the construction and operation of a rare earth extraction plant to produce a mixed rare earth carbonate product. The plant will be located adjacent to the Saskatchewan Research Council’s (SRC) planned separation plant which will be able to convert rare earth carbonate mixes to commercial grade rare earth oxides. Vital’s plant is expected to be operational in Q3-2021 and will use feedstock from Nechalachco– a second “customer” for the mining output. Most people do not know that the SRC has almost a decade of expertise in rare earths (associated with uranium mining in Saskatchewan) and recently announced the construction of a rare earth processing facility in Saskatchewan, the first of its kind in Canada.  The SRC facility is expected to be operational in late 2022.

The team at Vital are world experts in the global rare earth element arena including all necessary elements of mining, processing, geology and marketing and are recognized for this expertise. The devil really is in the details and Vital’s team has a cost and time effective strategy to deliver early production and cash flow. Remote locations require extensive planning and timing is everything as mining and processing equipment can only be delivered and setup during certain weather windows. Things can go wrong, but it appears that most contingencies have been accounted for. This is a key success factor

The global movement to diversification away from China as the global source of rare earth elements has been underway for a number of years. The world always knew that as technology developed, the rare earths would become more and more important, but it has become abundantly apparent that the development of electric vehicles in particular demands more rare earths and from more secure and friendly sources. Vital Minerals’ aim is to become a global player in the production of rare earths. Their expertise, projects and potential have put them squarely on this path and they will become a producer in 2021.