EDITOR: | February 10th, 2017 | 31 Comments

The Search for North American Rare Earths

| February 10, 2017 | 31 Comments
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Since the last update we provided on Search Minerals Inc. (TSXV: SMY) (“Search Minerals” or “Search”), big steps have been taken towards perfecting their proprietary direct extraction process, which is expected to significantly reduce capital and operating costs by eliminating several stages of separation. As a result, the company’s FOXTROT prospect is now expected to achieve competitive low-cost production beyond even the 14-year mine life slated by its PEA.

Led by a proven management team and board of directors, including the recent addition of Leo Power as an independent director, Search is focused on finding and developing resources within the emerging Port Hope Simpson district of Southeast Labrador. The company controls a belt of land on Canada’s most easterly point measuring 70 km in length and 8 km wide, including its 100% interest in the FOXTROT Project. Although perfecting their extraction process is currently key, additional exploration efforts have revealed two other significant Rare-Earth Element deposits, “Deepwater Fox” and “Fox Meadow”.

The highly anticipated direct extraction process involves several stages, but can be summarised in two phases. Primarily, a finely crushed material is treated to produce a concentrated rare earth carbonate. This carbonate concentrate is re-dissolved and re-leached to produce a high quality mixed rare earth oxide concentrate product ready for shipping and refinement.

Identified as Neodymium (Nd), Europium (Eu), Terbium (Tb), Dysprosium (Dy) and Yttrium (Y), this valuable subset of the complete series of 17 rare earth elements is listed as critical (“CREEs”) due to high demand and/or constrained domestic supply. Possessing unique properties, which enhance the performance of a range of innovative technologies; CREEs are essential components in the development of permanent magnets and a variety of other components used in renewable energy, green technology automobiles, medical devices, electronics and agricultural production.

All bench testing of the bulk sample has now been completed during the pilot plant’s first ever continuous operation, providing additional insight into the steps of the extraction process. For example, Search has been able to demonstrate the ability to reduce, or even remove, the already small amounts of uranium and zinc in the rare earth material to levels that will permit it to be refined. The initial test processing also confirmed that sulfuric acid can be used in place of hydrochloric acid in the second phase treatment, which simplifies operations and further reduces extraction costs as sulfuric acid is cheaper than hydrochloric acid.

The Pilot Plant testing, including the second phase of the Direct Extraction Process, is expected to be completed early in February, with formal reporting of final results to follow soon afterwards. The company has arrived at a program with SGS Minerals for testing and assessing the contents of the residues and barren solutions associated with the direct extraction process. These tests will be conducted during Pilot Plant testing and directly after it concludes in order to answer questions that are likely to arise during the environmental assessment phase of the project.

The Pilot Plant is being funded through the Atlantic Canada Opportunities Agency (“ACOA”) and the Research & Development Corporation of Newfoundland and Labrador (“RDC”) for up to $1.25M of the $1.9M program cost. The Pilot Plant is using the patent-pending proprietary technology breakthrough developed by Search Minerals, which has eliminated grinding, flotation, and both magnetic and gravity separation from the process flow-sheet. The FOXTROT Project has a low capital cost of $152m to bring the initial project into production, a short payback period and enjoys scalability due to Search’s sustained efforts to arrive at a cutting edge proprietary processing technology.


Lara Smith

Editor:

Lara has been an analyst for over ten years, starting her career as an equity analyst at Foord Asset Management and more recently as the ... <Read more about Lara Smith>


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Comments

  • Dave

    Given the depleted REE prices and China’s cheap labor and loose environment law, Only UCore IBC can compete in the rare earth sector once their MRT machine comes online. Ucore expects revenue this year. Ucore is unique in the sense that they can pull REE’s from rock already above ground that other companies deem tailings. Not only does Ucore do Rue’s but HREE’s and many other technology metals. I dont know how successful other north american REE mines can be with such low REE prices. Ucore’s recycling MRT is a very strong candidate to propel any possible upcoming American REE as their MRT process is inexpensive, very low capex and opex, small footprint, and highly selective.

    February 10, 2017 - 3:56 PM

    • Tracy Weslosky

      Thank you for your comment Dave and visiting InvestorIntel as you have commented a few times here since the new year. This said, I find your conclusions dismissive and limited in your understanding of the rare earth market in NA. As such, I have asked both Greg Andrews – the CEO for Search Minerals to step in and reply and correct your limited understanding of the market, as well as Christopher Ecclestone, one of the top global analysts in this sector….additionally, please note that I would like to extend a discount to our CTMS2017 event to insure that you not only meet both Search’s CEO — but that you hear Greg present and several others on where we are today. We anticipate that Ucore will be present and of course, the technology metals expert, Mr. Jack Lifton.

      February 11, 2017 - 5:47 PM

  • Christopher Ecclestone

    I would remind of the adage that you cannot make bricks without straw. Where are these “above ground” tailings that UCore will be processing? Surely not Mountain Pass as that has been worked over and moreover that property has a most unattractive REE mix with very little in the way of HREEs so its tailings will have even less.

    Big fan of MRT here but it must have something to work with and the West does not have tailings worth talking about. Therefore this is not a “chicken & egg” issue. First we need the mines before we have tailings… Ever was it thus…

    There will be symbiosis between new producers and MRT rather than competition.

    February 11, 2017 - 6:12 PM

    • Jack Lifton

      Christopher,

      Once again you have hit the nail on the head, as it were. Symbiosis is an excellent term for the place of MRT in designing the downstream aspects of the metallic resources supply chain downstream of the mine.

      February 11, 2017 - 6:25 PM

  • Dave

    Tracy. Thank you for the recommendations. Obviously I keep your opinion in high regard as Mr.Ecclestone’s. Im going to stick to my gut with MRT over Search, but still very interested in a reply from Mr.Andrews. Can we not agree that China driving down REE prices along with the fact China has no green regulations while producing their commodities makes it very much of an obstacle for other REE juniors to bring their mine to market? Obviously I have been following Ucore for a while and even they are waiting for prices to rise for there to be any positive feasibility on the project due to low REE prices.

    Mr. Ecclestone, you ask where are the above ground tailings. This is what Jack Lifton had said in a video interview that can be found on investorintel videos dated April 20,2016 and thats what I am going by. On Part 1 at 5:40 Mr.Lifton mentions the tailings from around the world that can still have REE extracted. Sounds a lot cheaper than actually mining doesn’t it? Unless this is false information and investors are being mislead, I have no reason to believe what Mr.Lifton said in the interview is inaccurate.

    Ucore press release:(“Ucore” or the “Company”) is pleased to announce that it has partnered with an undisclosed Major Alberta Oil Sands Producer (MOSP), for the purpose of recovering rare earth elements (REE) and other technology metals from Alberta oil sands operations (the “Partnership”).

    This is one example of an interesting partnership that may (or may not depending on results to come public) be of extreme significant value not only for Ucore but for the Major Alberta OilSand company. Only until now can there Oil Sands realize even more major upside of these oilfields, especially as oil pipelines get rolling again in Alberta (keystone 1 of 3 to progress). On top of this, Ucore mentions many tier 1 customers already knocking on its door.

    I dont think IBC and its employees of Noble Prize scientist would waste their time pursuing this MRT with Ucore if it wasn’t the real deal. To add, Ucore has secured tens of millions of foreign and domestic investment into its company. Given Ucore’s website is also in German, gives the impression that this foreign investment is likely (but not certainly) from Germany, and we all dont need to be reminded how Germans are with manufacturing and more their high consumption of REE’s themselves.

    I have done a ton of DD on Ucore. Perhaps I am gullible to what Ucore has been telling me, but I personally believe Ucore IBC’s MRT can extract REE’s and other technology metals on an industrial level.

    February 12, 2017 - 12:52 PM

    • Tracy Weslosky

      Dave. Why not comment on UCORE on one of the many outstanding columns we have done on both MRT and UCORE? Instead, you have chosen to rally on SEARCH Minerals feature. Please redirect to one of Mr. Reed Izaat’s outstanding columns….thanks. Tracy

      February 13, 2017 - 9:35 AM

    • Lara Smith

      Dave – (1)China may not have had environmental stringencies in the past, but this is rapidly changing and the last 8 month at least has all been around environmental clampdowns and (2) China has no interest in driving down prices, as they have a mandate now, per their Five Year Plan, to invest in foreign resources, including rare earths. Going forward, we will see a lot more Chinese or partially-Chinese owned rare earth mines. So, unlike in the past, the non-Chinese sources, will be Chinese!

      March 3, 2017 - 8:47 AM

  • Michael

    Not to forget the Nechalacho REE Project, from Avalon Advanced Materials, located at Thor Lake, NwT
    – Large deposit enriched in the HREE
    – Very low uranium and thorium levels
    – Good rock mechanics and low depth, you can apply cost-effective underground construction
    – Completion of the Feasibility Study

    Recycling of REE from consumer products has been tried in Europe (Solvay), but there is a huge problem with collection of the consumer products, and many processes are uneconomical at low REE prices.
    Therefore, recycling processes will only focus on very few REEs. An advantage of recycling is, however, no radioactive waste.

    Thus, only mining projects that contain many HREEs and produce only small quantities of radioactive waste will be successful.

    February 13, 2017 - 6:52 AM

    • Tracy Weslosky

      Thank you for your comment but your links had to be deleted.

      February 13, 2017 - 9:33 AM

    • Christopher Ecclestone

      Michael. Thanks for mentioning that project however even Avalon have moved on from that now. The future will go to small capex (relatively-speaking) REE projects..

      February 13, 2017 - 9:38 AM

      • Greg Andrews

        Search Minerals is ready to become the next Rare Earth Producer in North America.

        Greg Andrews, CEO/President of Search Minerals and I am happy to discuss Search Minerals in this forum.

        Our pilot plant, using the Search Direct Extraction Process, is nearing completion with an expected report to be released in the upcoming weeks. The mixed rare earth concentrate product from the pilot plant will be crucial to provide potential refineries or new technology companies with actual product to further separate into individual oxides. Search has NDA’s with separation technology companies waiting to receive this concentrate to process into individual oxides. We will continue to engage with the current solvent extraction refineries for possible tolling arrangements and all other possible opportunities to enter the rare earth supply chain.

        A positive outlook for increased demand and reduced supply of the rare earth elements which supply the permanent magnet market, has put rare earth in the news again. Search has these critical elements in its resource.

        February 13, 2017 - 2:58 PM

  • Dave

    To Mr. Andrews.

    I look forward to your pilot plant results about the purity of the CREE’s your technology produces. MRT has nothing below 99% purity in its pilot plant demonstration.

    February 13, 2017 - 6:28 PM

    • Don

      Search had Excellent results from pilot plant. +99.9 %

      March 6, 2017 - 5:39 PM

  • wally

    I can’t understand why the American / North American companies don’t simply do as the Chinese did – go around the world and buy up the best rare earth companies available.

    February 14, 2017 - 4:07 PM

    • Christopher Ecclestone

      Chinese have some minority stakes in Australian REE assets but I haven’t seen them “buying up” REE companies around the world.. Care to elaborate?

      February 16, 2017 - 4:46 AM

  • Haydn B

    Why doesnt US just sign a looooong term contract with Lynas and or Alkane?
    Last effort a Molycorp failed miserably with lack of strategic support.
    Yes they are Australian but that sovereign risk is somewhat limited.
    Suggest asap with the Sth China Sea starting to boil.
    Comments re Chinese attitudes to environmental concerns..Nil…and the cheap labour has the US in a pickle. Some Uncle Sam….you will need to support those fromwhoever you obtain REE. $$.
    Think of it as running a fleet..No return but strategic interest.
    The REE world tries to perform on free market but the playing field inclines at 60 degrees at least.

    February 15, 2017 - 7:03 PM

    • Christopher Ecclestone

      Thanks Haydn… For a start the US does not have an authorised REE stockpile. So the US govt cannot (officially) buy any REEs from anyone. Secondly, Lynas’s product all goes to the Japanese (lesson here – early bird catches the worm) while Alkane is not in production and has not even started building yet. So nothing to buy there and whatever it sells is likely to go to whoever commits to help them build the plant. Even with the best will in the world (and the coziest relations with Australia) the US is not about to go funding building REE plants in other countries. You are more likely to see public money vainly thrown at an attempt to revive Mountain Pass (sigh..).

      I agree on South China Sea. However China has squandered a lot of its REE assets (as with other things.. such as Antimony) and no amount of cheap labour or environmental laxity will bring back what was washed downstream, and thus China is potentially vulnerable 10-15 yrs out, if not sooner. Then the boot will be on the other foot.

      Rather than looking for the government to “do something” about REEs what about US auto companies backing some REE projects because if they don’t have any REE magnets for the engines of Volts (for example) then the aspirations of the US in HEVs and EVs will be going nowhere fast.

      February 16, 2017 - 4:42 AM

      • Tim Ainsworth

        Christopher, Lynas is now producing NdPr in excess to Japanese requirements, and in recent times canvassed US OEM’s with virtually zero response. I’d add LAMP SEG/HRE would easily fill US import requirements bar yttrium, but is currently going to China spot sales. Can someone explain to me why, if Ucore is so advanced, they haven’t approached Lynas to purchase this clean material that would yield 2x US imports of DyO & TbO?
        Simple reality is US totally lacks the capability at scale to turn REO into anything useful other than FCC, with Chinese La making up c9ktpa of c12ktpa imports, with Ce compounds making up another 1.5kt.
        Compare that to the c1000t of Chinese NdFeB imported by US OEM’s each & every month. IMO the only way the US will break this nexus is developing advanced manufacturing technique, not raw material refining, a breakthru that negates 20yrs of neglect of sintered NdFeB development, itself moving quickly, as any glance at a Chinese presentation will show.
        One opportunity that I’ve noted here previously would appear to be the BAAM research by John Ormerod & others, 3D printing net shapes with huge cost efficiencies that would soon have OEM’s sitting up and paying attention.
        Until the US can develop a cutting edge MSC it has little need for RE beyond petrol refining & exhaust catalyst, and the largest OEM’s will remain almost totally dependent on Chinese NdFeB, some no doubt containing Lynas NdPr.

        February 18, 2017 - 3:28 AM

        • Alex

          Tim – Do you know what Lynas do with SEG ?
          Sale it to Chinese ?
          or process it at Japan Mitsui ?
          Do you know haw many persent Dy2O3 and Tb4O7 they have in SEG ?

          February 18, 2017 - 3:52 AM

          • Tim Ainsworth

            Alex, AL stated late Nov at the AGM that the SEG/HRE was again going to Chinese spot in response Eu/Luminescent appreciation, click the boxes: http://www.repe.com.cn/index.php?option=com_content&view=article&id=13&Itemid=155
            Guesstimate current annual quantities 80/90% x 960t x c5% Dy & c2% Tb, maybe fractionally higher with reduced Ce, dependent on recoveries.

            February 18, 2017 - 8:46 PM

        • Tim Ainsworth

          BTW, rather pleasing to again see a RE stock at the head of a RE ETF:
          http://portfolios.morningstar.com/fund/holdings?t=ARCX:REMX&region=usa&culture=en-US&cur=

          February 18, 2017 - 9:09 PM

          • Christopher Ecclestone

            It is indeed pleasing. But this ETF is frozen in time. We could have a fully fledged boom and this composition would look like a snapshot of some point after that last REE boom and before the current Lithium boom.

            The managers of this fund are driving by looking in the rear-view mirror.

            February 19, 2017 - 4:41 AM

          • Tim Ainsworth

            Have another look Christopher, when I did the numbers a few weeks back REMX was 40% weighted to Lithium, well ahead of the thundering herd.
            Hardly frozen in time, no longer a deadwood RE wannabe left in sight.

            February 19, 2017 - 7:56 AM

          • Christopher Ecclestone

            I am not seeing why Lithium should have a 40% weighting. Titanium is very overweight for a metal that is has little criticality of supply. There is way more to the strategic metals world than just the flavour of the day. Lithium Americas has a heavier weighting than Orocobre and Galaxy? Where is Neometals? This ETF is lacking objectiveness. La plus ca change…

            February 19, 2017 - 8:22 AM

          • Tim Ainsworth

            Lol Christopher, I agree with you, point I was making, it’s pleasing to see the remaining ROW foundation RE stock rise to the top of the pack, Lithium weighting speaks to anxiety IMO.

            February 21, 2017 - 7:24 AM

        • Tim Ainsworth

          US continues to do well with catalysts, Chinese export data showing La 9,614,759 kg last year, +20% 2015. Ce compounds 1.4kt 2015, will be interesting to see total growth over 11.7kt 2015.

          February 21, 2017 - 7:55 AM

      • Tim Ainsworth

        Christopher, neglected to clarify your statement “Lynas” product all goes to the Japanese”, in fact if you reference the last Annual Report you will find that by value 47% of Lynas product was “ice to the Arctic”, 37% went directly to Japan, and a further 10% via Vietnam.
        Irrespective of where you are domiciled fair chance there was a little bit of Oz in the last electronic gizmo you bought.

        March 1, 2017 - 11:23 AM

        • John

          “Ice to the Arctic”? Tim, cryptic comments like that may give you a sense of superiority but for the rest of us, they are not particularly helpful.

          March 1, 2017 - 10:24 PM

  • Christopher Eclestone

    Tim, I heard you the first two times. Let’s put it this way it goes to Japanese end-users or Japanese traders who may sell to non-Japanese end-users or it may indeed end up in one of the subsidiaries of a Japanese company based in a South East Asian country. Either way the Japanese have a headlock on it and good for them. Pity no North American or European trader can say the same.

    March 3, 2017 - 8:35 AM

    • Tim Ainsworth

      Christopher, I’ll put it more clearly, please refer Lynas 2016 AR page 62, bottom para Segment Reporting:

      “Revenues by geographical location, based on invoicing as a percentage of total revenues, comprise: Japan 39%, China 47%, Vietnam 8%, France 5% and other 1% (2015: Japan 51%, China 23%, Vietnam 16%, France 7% and other 3%).”

      With 70% of revenues flowing from NdPr, and negligible LaCe going to the Dragon, can you offer any explanation other than Chinese customers purchasing not only half LAMP NdPr in 2016 but the majority of the growth from 2015?

      You might also ponder the reference to “third party” contracts to fathom much of the final destination, but I think you can safely exclude USA.

      March 26, 2017 - 2:19 AM

  • InvestorIntel Rare Earths Monthly – Part I

    […] The Search for North American rare earths […]

    April 10, 2017 - 9:26 AM

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