EDITOR: | October 10th, 2014 | 5 Comments

Mackowski on the race to rare earth production

| October 10, 2014 | 5 Comments
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Weslosky-MackowskiOctober 10, 2014 — Tracy Weslosky, Editor-in-Chief and Publisher of InvestorIntel, speaks to Steve Mackowski, Senior Consultant of PDCA Management Services Pty Ltd about his expertise in rare earths oxides (REO) extraction processes and the keys to success in the rare earths industry. Steve has written a series of columns on these topics for InvestorIntel, which have enjoyed immense success with readers. Steve has worked many years in the rare earths sector and he admits to having noted a great deal of confusion in the market if not, even, a great deal of ignorance and he has welcomed the chance to help people get a better understanding of the sector.

Tracy challenges Steve to identify a company that is “doing it right”, that is one that has covered all the right steps in both exploration and processing. Steve picks Alkane Resources (ASX: ALK | OTCQX: ANLKY). Alkane started as a zirconium-niobium business “then realized they had rare earths in their portfolio and at the time it became valuable.” Alkane concentrated on its core business and then extracted the rare earths during the separation process. Steve describes it as a ‘by-product model. Steve also discusses some of the mistakes that the emerging rare earth companies have made on the path to production. Perhaps the main mistake, he says, is made especially by supply side companies outside of China, which “are not acting together”. When the demand side observes the disunity, they become pessimistic about the chances of a rare earths industry from even developing because of insufficient supply. Therefore, Steve sees the mistake as stemming from secrecy: “I think the key to success is for people to get together”. Tracy leads the chat toward Steve’s “keys to success” points.

Steve’s favorite ‘success factor’, albeit taking into consideration that he considers all factors important, is the basket price, by that he means the value of a ton of material going into the extraction process, because it spans the Heavy and Light rare earths spaces. It helps to give people an idea of the OPEX considerations and it gives a “today view of what really the rare earths space is all about.” The concept of ‘basket price’ was introduced to the REO space some 10 years ago in order to identify the distribution of the various rare earths and their values. According to this logic, then, as well as other success factors, Steve believes that Australia’s ‘Northern Minerals’ (ASX: NTU) is a good example.

For a number of years they had a good mineralogy (one of the success factors) but lacked the resource quantity. Now, Northern Minerals has sufficient resources, good mineralogy and it is all easy to process, which translates to a low CAPEX, adding to the fact that the results have been very favorable on both the resource and technical sides. Finally, Steve ventures to paint a general picture of the state of the rare earths sector today. He frames it into an interesting natural history framework to make the point that if the “demand side isn’t active; it’s not showing any signs of life, which is disappointing.” Indeed, it is all up to the demand side to get involved before the values of rare earths start to go up again.


Editor:


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Comments

  • Bill Keenes

    Steve Mackowski has done a wonderful job in educating the rare earth investor – 10 out of 10.

    It’s interesting to look back 4 years when rare earth developers were beating their chests with cries of “look at the size of my resource” … “it’s the (3rd, 4th, 5th, 6th, etc.) biggest resource in the world” ….. and look at them today – many still struggling with the metallurgy.

    By the way 4 years ago Northern Minerals didn’t even have a resource and many laughed at them.

    Look who’s laughing now.

    October 11, 2014 - 8:21 PM

  • Curious Shepherd

    One of the key factors that is missing from Steve’s list of key factors is the capability of management to hit the targets that they promise the market. Many of the companies had a lot going for them in terms of the factors listed by Steve but management has done a poor job on delivering on key milestones. Failure to deliver is one of the biggest issues facing RE companies

    October 11, 2014 - 11:06 PM

  • freethinking

    Curious Shepherd,

    Steve defiantly covered off capability of management see:-

    Part 4 – How the capability of the Board and Management can be viewed as a success factor

    http://investorintel.wpengine.com/rare-earth-intel/mackowski-success-factors-rare-earths-development-part-4/
    ________________________________________

    It was an excellent 6 part series – thank you Steve

    October 12, 2014 - 2:57 AM

  • Tracy Weslosky

    Thank you for the excellent feedback on Steve Mackowski and the several series that we ran exclusively on InvestorIntel…knowledge and experience is a natural resource, and there are very few on this planet that can discuss this topic with any understanding —- and his experience is even rarer.

    While I agree that leadership’s capability is always something that ranks high with me — the REE sector has challenged even the most capable of leaders. For starters, when I started following the “rare earth fight club” in winter of 2008, we had a sector with money and interest.

    Today, money is challenging to secure for these noble initiatives towards sustainability for the ROW…necessary for the advancement of the world’s leading technology. And technology is the enabler of some of the most prominent areas of prosperity on the planet.

    Thank you Steve for your efforts towards education of our investment audience in the technology metals.

    October 13, 2014 - 6:26 AM

  • Market Movers of the Week: Stria Lithium +16.67%, Energizer Resources +11.11% & Mason Graphite +10.71% | InvestorIntel

    […] was no news last week; NTU has had a half a dozen announcements in the last month and a half, plus Steve Mackowski singles out Northern in the race to rare earth production […]

    October 5, 2015 - 1:59 PM

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