Medallion tops the charts at 61% while Australian Crossland and Alkane also gain Lift
Rare Earths & Critical Minerals Week-in-Review: The ProEdgeWire Rare Earth and Critical Minerals Index for the week ending on April 12 rose by 0.15%. However, there were some notable highlights. The best overall performer for the week ending on April 12 was Medallion Resources (TSXV: MDL | OTCQX: MLLOF), which experienced a 61.54% leap in share price in Toronto trading and 48.83% at the OTCQX. Meanwhile, as a group the Australians saw some strength as shares of Alkane Resources (ASX: ALK | OTCQX: ANLKY) rose 22.92% while Crossland Uranium (ASX: CUX), went up 30%. Indeed, most of the Australian rare earth miners witnessed increase last week, including Arafura Resources (ASX: ARU) +4.17% and Northern Minerals (ASX: NTU) +7.69%.
Medallion’s shares have essentially bounced back to their average trading price throughout most of 2012. What is surprising is the speed of that bounce. Medallion is rather different from the other companies in the Index and in the space because it does not own a mine. Medallion is exclusively targeting the processing aspect of the business. Medallion plans to process monazite from mineral sands, derived from other sources in expectation of avoiding traditional mining companies’ development risks. The favorable market response is likely the result of Medallion’s management preparations to locate the site for their intended sand processing facility. The rumors are pointing to the site being built in the Arabian Peninsula with Oman being a likely candidate – Oman being one of the sleepers of the emerging markets, offering a stable political and social environment with excellent infrastructure and strategic geography. In a sense it is almost as if Medallion is playing outside the mining space altogether. It does not have to make a case for the quality of its minerals’ grade, scoping studies, cushioning the cost of exploration preliminaries that absorb so much of today’s the limited project finance availability.
As for the Australians, Alkane Resources, Arafura Resources, Crossland Uranium and Northern Minerals which ended the week with solid gains cited above, they benefited from the Australian stock market’s good performance inspired by optimism over short term Chinese economic prospects. China’s low inflation rate reduced the fears of monetary tightening in China. Chinese consumer prices rose in March by 2.1 percent, which was well below the previous month’s increase of 3.2 percent. Overall, the Australian resources sector shook off concerns about the economic slowdown in China, prompting investors to rebuild positions. Nonetheless, even when viewed against this favorable overall sentiment, Alkane Resources’ 22% is noteworthy and related to the Company having published its definitive feasibility study (DFS) for the Dubbo Zirconia Project, foreseeing over AUD$ 5 billion in EBITDA earnings over a 20 year lifetime.
Alkane has managed to secure some very big financial players to arrange the investment banking and product financing support including Credit Suisse, Sumitomo Mitsui Bank and Petra Capital. The Dubbo project is very promising given that includes a combination of some of the most in demand rare metals including niobium, terbium, zirconium and dysprosium, for which the main Japanese processer of rare earths, Sing-Etsu Chemicals, has already signed a memorandum of understanding (MOU) for an offtake agreement for Dubbo. The Japanese ‘connection’ and the presence of Sumitomo Mitsui Bank suggest that any additional financing or project participation will also be Japanese. Japan, moreover, has been reducing its reliance on rare earths imported from China and it has looked to Australian suppliers with great interest. Crossland Uranium, meanwhile, rose 30% in expectation of the Company announcing the completion of the Scoping Study for the Charley Creek Rare Earth project in the Northern Territory. Crossland believes it can it can reach production stage quickly and efficiently using reliable and frequently used technology. The project is banking on a low relative low cost and large scale potential with a wide spectrum of products including a good suite of heavy rare earths, deriving 80% of its value from neodymium, dysprosium, terbium, yttrium and europium.
Get our daily investorintel update