EDITOR: | September 17th, 2017 | 5 Comments

Northern Minerals’ Looming Rare Earth Success

| September 17, 2017 | 5 Comments
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Over the last six weeks, the value of shares in Northern Minerals Ltd. (ASX: NTU) (“Northern Minerals”) has jumped by almost 40% in response to multiple positive developments; the company received, from three sources, around A$48 million in financing, which, coupled with dramatically surging dysprosium prices and a fast-approaching first shipment to offtake partner Guangdong Rising Asset Management (“GRAM”), makes for a prospective fall portfolio addition.

With their Browns Range project in the northern territories of Australia, Northern Minerals hoped to become the first significant producer of the heavy rare earth element dysprosium outside of China; a goal that has since become a near-certainty. Equipment for the pilot plant is currently under construction in Shanghai and is expected to hit the waves early next month. Preparation of the site is also well underway, and financing of the pilot plant phase is going extremely well indeed.

Just last month, the company received a A$38 million R&D facility from a leading New York financier, a A$2.6 million government rebate, A$2.5 million through private placement, and a further A$4.8 million from the Australian government’s “Building Better Regions” fund; the fund aims to assist native people in securing meaningful employment through training-to-work programs, and Northern Minerals’ new project has the potential to provide around 700 jobs to local residents over its 11-year mine life.

What makes me most confident about Brown’s Range is the fact that offtake is 100% sourced; once the stuff is out of the ground and processed, it has already been sold. GRAM, via one of their subsidiaries, has agreed to take everything the project can produce at market prices. The last time this particular company got involved with an Australian miner, a $1bn+ takeover bid followed shortly afterwards, and so this relationship is certainly one to keep a close eye on.

Production now looms in the very near future, and in my opinion, this is one of those projects that has significant appeal since it has always appeared to be a thoroughly well run operation. It has progressed incredibly smoothly, while receiving excellent state, institutional and retail support, and is fully prepared to offer maximum benefit to the environment, the local people and the markets that it serves. The pilot plant will run at 10% throughput for three years while improvements are made to the processing flowsheet, but dysprosium will be coming out of Australia anew very shortly.

Dysprosium is critical in the production of permanent magnets, and so is a key ingredient in electric vehicles, wind turbines and many other modern essentials. Not only are these markets just coming into their peak, but the value of dysprosium has experienced a dramatic surge of late as a result of Chinese crackdowns on illicit mining practices having seriously impacted supply. China still produces the vast majority of rare earth elements, but the government’s new attitude towards pollutive industries is opening the door to others to supply the nation with the requisite ingredients of today’s consumer electronics.

With investment coming in from all sides, time is running out to take advantage of Northern Minerals’ impending success, and it’s a rare thing indeed to find a project with near-guaranteed fruition that has not yet been overbought. If I were the type to give investment advice, I would be pointing a large flashing arrow sign towards Browns Range right about now.


Lara Smith

Editor:

A Sr. Editor and Analyst for InvestorIntel and Managing Director and Founder of Core Consultants, Lara is an internationally recognized expert in the field of ... <Read more about Lara Smith>


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Comments

  • Chris

    Interesting. So what is NTU product (52% mixed concentrate) worth on the market? How much is it going to cost to produce said product ($/Kg)?
    Finer details are hard to come by and I have my suspicions why.
    Considering this is an R&D project being funded by the Australian tax payers, where is the value to potential investors?

    September 18, 2017 - 12:44 AM

    • Chris

      BTW Dy price has fallen just as fast as it went up after speculative buyers flushed through the system. Dy price now languishing at near multi year lows. The HRE story has not played out like many believed it would. Its all about the LRE ; )

      September 18, 2017 - 1:06 AM

  • RVR

    Well, I find the best comparative source of RE price history for the last 12 months is via the world’s largest producer of ALL REs: China. Just scroll the Dy price trend history on this site in comparison to all the other elements. That’s why Lynas is my pick….

    September 18, 2017 - 5:30 PM

  • RVR
    September 18, 2017 - 5:31 PM

  • Kelly Bird

    In case you missed it, don’t forget to watch our recent InvestorIntel interview with George Bauk, of Northern Minerals where he provides an update on the Browns Range rare earth project – https://youtu.be/nRGA3whag3w

    October 13, 2017 - 10:34 AM

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