The European Holy Grail for Rare Earths: Tasman Metals
Tasman Metals Ltd. (TSXV: TSM | NYSE MKT: TAS) is a Canadian company for jurisdictional and thereby regulatory purposes that just announced their Pre-Feasibility Study for the Norra Karr heavy rare earth element project in Sweden. Its rare earths’ deposit under development is in Sweden and the CAPEX now and OPEX in the future will therefore be payable in Swedish Crowns. The downstream operations of Tasman will be done by European Union companies that must be paid in the common currency of those companies, Euros, and the target European Union customers of Tasman will pay their invoices from Tasman in Euros. The Swedish crown is the currency of a stable prosperous but very small nation; the Euro is the common currency of an assemblage of the world’s 2d or 3rd largest economy (in aggregate) but this region is in stagnation so its currency is weakening rapidly against the US dollar, which is in recovery. Tasman is traded in NYC, so that Americans can directly buy shares in this company and those shares are a way for small investors to “play” the currency market now and for the foreseeable future.
In the Great Gatsby, F. Scott Fitzgerald famously has a character ask “Why are the rich different from the [rest of] us?” Fitzgerald puts contemporary America’s answer to that question in the response, “Because they have more money.”
“Why is Tasman different from all other rare earth juniors?” frustrated investors ask. “Because it is a European deposit,” is my American answer.
Tasman’s target market is Europe; its hydrometallurgy has been developed by a Norwegian group; its plan for a separation regime is to use an existing French European toll provider and then move if it becomes economical and possible to an in-house process to-be-devised-and-proven-at-scale in an undisclosed to this author European located, owned, and operated laboratory; and in the first instance to sell the clean mixed concentrate provided to it by the French toll contractor to any of several European rare earth metals/alloys makers that will supply any of several European rare earth permanent magnet alloys makers, the customers of which are European end-use component providers to Europe’s, the world’s oldest, electrical, automotive, lighting, and industrial machinery manufacturers situated variously in Germany, France, Belgium, Austria, Holland, the UK, Poland, and Romania. Mark my words: European high tech manufacturers must have a profitable Tasman in operation in order to be competitive in products depending on dysprosium, ytterbium, or yttrium. That short list is an extremely deep one. China’s Yuan is strengthening also against the Euro, and this only makes China less competitive in Europe with products made in China.
Pay attention to the Swiss Central Bank; it is protecting its national economy (its only reason for existence is this protection) by purposefully “correcting” the value of the Swiss Franc to the Euro. The spill-over from this action is what you need to understand. A sharp increase in the value of Tasman Metals is just one of those consequences, but it is the consequence of which I am writing today.
Europe has one or more longstanding companies able to provide each of the downstream services in a total rare earth supply chain. Europe even had the world’s first rare earths mine(s) in Sweden in the nineteenth century. Tasman’s deposit would be both the anchor of a European total rare earths supply chain but it would also complete such a chain.
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Europe’s main competitor is China just as is America’s. The difference is that European businessmen did not succumb to globalization as whole-heartedly as did American businessmen. Also, and this is key, both European manufacturing and also its rare earth supply chain companies consider American and Japanese companies to be competitors not allies! The Europeans therefore do not share their hopes, aspirations, or detailed future product and marketing plans with American or Japanese companies. The famed “alliances” of rare earth end-using manufacturing companies in Germany are in reality fact-finding organizations that do more industrial espionage upon each other than intelligence gathering for mutual benefit.
Yet pundits blithely talk about “global supply” and “global demand” as if they are inextricable intertwined, and, as if the numbers gathered by the various data miners were anything other than educated guesses based on very biased sampling.
To repeat for emphasis: Tasman Metals is a company with a deposit in Sweden, incorporated in Canada, the founder and CEO of which is a resident of Melbourne who was born in and remains a citizen of Australia. It can be traded not only on the TSX in Toronto but also on the AMEX in New York City. Citizens of either Canada or the USA can buy shares in Tasman in their own currencies. It is nonetheless as European as a baguette or a Wienerschneitzel, and will be just as nourishing to a European manufacturer’s appetite for a secure supply of crucial raw materials.
Below I have a description of Tasman’s advantages and business model that I hope will be seen as a prescription for the right way to approach the development of a producing rare earth mine. By no means are all separate deposits even in the same mine identical but there is a universal best practices approach to developing such deposits into profitable producing mines. Tasman is a poster for such an approach.
Tasman’s recently published Pre-feasibility study is a:
- A good study, which incorporates all costs from opening to the closure of the mine.
- It is a realistic plan to produce REE’s, because it uses…
- Conservative pricing rather than recent peer studies, and it is
- One of the major HREE projects
- One of the highest % of heavy REE’s of any viable project in development, and it has a
- Long mine life – 20 years used in this study but its unconstrained mine life is 60 years
Tasman will be a:
Major producer of dysprosium oxide – more than 200 tonnes per year for at least 20 years. The leading smaller projects focused on the heavy rare earths have mine lives only half that long.
Tasman will therefore be:
Unique in the European Union (Greenland is not in the EU, but it is in Europe) so it is very well positioned for EU support and for European off-take agreements, and as noted above:
Europe has separation facilities and REE magnet making facilities. This means the idea of a secure and integrated supply chain is achievable.
Tasman’s metallurgy is:
Based on a now well tested process developed for Tasman to recover REE’s from eudialyte. This alone gives Tasman potential to make a major contribution to the supply security of heavy REE’s around the world!
- Sweden is a mining friendly country with trusted environmental legislation – great sustainability protection for customers of REE’s.
- The mine is part of a region designated only for mining development as strategic for Sweden’s future!
- The leaching of the ore is at room temperature, no roasting or high pressure needed – benign processing
- The CAPEX is low due to the great infrastructure around the site,
- The project can use local labor and sulphuric acid. This minimizes both the cost and environmental impact, and it puts maximum benefit in the local region,
- Swedes are highly skilled – customers already believe that Swedish people can run a complex REE plant, and produce high quality REE products,
- The mine has a low stripping ratio, so little waste rock needs to be moved and stored – This adds to both financial and environmental efficiency,
- The mine presents the investor with a high exposure to the most critical REE’s, which have the best exposure to a potential rebound in pricing,
- Tasman has no requirement in its flow sheet or its economic model for proprietary or commercially untested technologies.
- As pointed out already, in house separation can be added later to increase margins.
- The project start up can happen in the lowest risk way – lowest CAPEX and trusted by customers
- Tasman down the road has lots of opportunities for optimization and addition of revenue.
- Zr, Hf and Nb are stockpiled in this PFS model, but will be the focus of future research
- Nora Karr is the least radioactive of all REE projects being explored. It therefore has lowest impact in this regard
- Nora Karr is in an attractive location with extensive transport/power/water infrastructure in place and is very close to major European REE consumer. Germany, for example, is accessible both by road and rail directly through Denmark, which itself is now physically connected to Sweden by bridge.
- Finally the Nora Karr project has only 2.6% of its projected revenue from cerium (Ce) and lanthanum (La) which are forecast to remain in long term oversupply. All the capital to be used goes to the production of commercially valuable metals, and none goes to competing with the materials that are produced as a by-product in China
To understand Tasman’s PFS it is absolutely necessary to place it in the correct contexts. Those contexts are the European market (and European geopolitics) and the future economy of China.
Tasman is Europe’s only way to remain competitive in rare earth enabled high-tech, and for the rest of us it is a very good bet.
Disclaimer: Jack Lifton is a well known rare earth expert, speaker and consultant and Tasman Metals is one of his clients. All of Mr. Lifton’s current Board and Advisory roles, along with his clients are disclosed in his biography on InvestorIntel.
Jack Lifton is the CEO for Jack Lifton, LLC and is a consultant, author, and lecturer on the market fundamentals of technology metals. Technology metals ... <Read more about Jack Lifton>