Market recognizes Geomega’s efforts to develop new REE separation technique
Shares of Geomega Resources (‘Geomega’, TSXV: GMA) rose 118% this week after the announcement on January 15 of a major technological breakthrough for the company. On January 16 , the stock climbed 28 cents when it was worth 11 at the close of the TSX on January 14 while the trading volume was 2.7 million shares in mid- afternoon on January 16. Geomega is developing its 100% owned Montviel Rare Earths elements/Niobium project in the southern part of northern Quebec. The project can rely on a number of local infrastructure advantages, including a steady Hydro Quebec power supply and the presence of logging roads. In addition, the Montviel project does not have any major environmental constraints to the installation of mining infrastructures as established in an independently conducted baseline environmental study. However, Geomega’s sudden jump in share price owes to its cooperation with an internationally recognized research institute which has allowed it to achieve the physical separation of three rare earth elements (europium, ytterbium, lanthanum) while significantly increasing concentration levels.
This is very significant because Ytterbium is harder to separate than other rare earths because of its many shared characteristics with other rare earths, which means that it takes longer to isolate. Ytterbium is crucial in applications related to fiber optics and high powered lasers. Europium oxide is used in ceramic structures, sophisticated electronics and low weight aerospace components. Europium oxide is also necessary for the development of fuel cells thanks to its advanced ionic conductivity. Geomega had invested two years in research and development to improve the separation and concentration of its rare earth ore from Montviel and it was last October when it announced having signed an agreement with FFE Service GmbH in Germany to enhance its development of a process called “free-flow electrophoresis” (FFE). FFE was developed in Germany in the 1960’s to separate proteins, cells or organelles. Its main benefit is that separation is achieved in a liquid, which delivers a higher recovery rate than more traditional solid based methods, which can sometimes cause some analytes to get lost.
The adaptation of FFE to rare earths is rather new. The method has allowed for the simultaneous separation of the three elements at 100% levels of purity. FFE, says Geomega, will allow for a significant reduction of the capital “required to build separation plants compared with those conventional techniques to optimize the recovery of ETR and improve the environmental performance of operations”. The development of new separation techniques is one of the main areas where rare earth miners in the ‘West’ have most to gain over the competition from China. Indeed, while China maintains a dominant market share, it has been imposing quotas on production (for a number of market reasons) also because its separation technology is polluting. This has left the market open to Canadian firms, in particular to those based in Quebec, which offers ideal geological, infrastructure and regulatory conditions to pursue rare earths and eventually capture some 20% of the global market by 2020. Most of this share will evidently develop at China’s expense.
Rare earths are essential in many key technologies. They came to market prominence in 2011, when China, which held a de-facto monopoly in global production, started to impose strict limits on exports. However, there is reason to believe that China’s monopoly is fading – quickly. Molycorp in California and Lynas in Malaysia have started to offer a steady stream of products, even if for the time being limited to light rare earths. China had previously covered 97 percent of the world production of light rare earths (LREE). Now, expectations are that China’s LREE production will drop to 80% and then no more than 60% according to a study by the German ‘Federal Institute for Geosciences and Natural Resources’ (BGR), because the western market will be well supplied ‘internally’. However, the real opportunities are in heavy rare earths (HREE) including europium and ytterbium, which are used in energy-saving lamps, hybrid engines, or as light sources in cell phones.
These metals will continue to be 100 percent control by the Chinese, which have continued to crack down on illegal mining, smuggling and low environmental standards. Even the massive, recently discovered Tomtor Russian deposit contains mostly LREE. Moreover, US regulatory changes owing to a House bill to accelerate mining approvals (to ensure access to strategic minerals like REE) and a Department of Defense recommendation to stockpile HREE, have started to alter rare earth market dynamics. Geomega’s focus on new processing techniques and successful separation of key heavy rare earth elements such as Ytterbium and Europium has come at an ideal period.
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