EDITOR: | February 28th, 2014 | 12 Comments

Uranium Stocks go wild: Northern Minerals releases dramatic news on heavy rare earth projects

| February 28, 2014 | 12 Comments
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We saw an unusual occurrence on the Australian Securities Exchange this week. The Japanese hinted they might restart their nuclear reactors — something that was not exactly “hold the front page” sort of stuff, as anyone who follows the nuclear story in Japan expects this will have to happen at some stage — and uranium stocks went wild, with individual shares rising; Deep Yellow was up 50%, Aura Energy 26%, Paladin Energy up 23%. That was news that wasn’t news. As Warwick Grigor at Canaccord Genuity noted, “anyone with an ounce of common sense knows that Japan will continue with nuclear power … it can’t keep spending 30% of its import bills on hydrocarbons”. Many analysts who follow the uranium story think along the same lines.

George-BaukThen we had Northern Minerals (ASX:NTU) with some dramatic news on its heavy rare earths (HREE) projects, and saying it would be in production within two years. The rise on Wednesday in NTU stock was just 5.88%, but then the shares fell back by 2.78% on Thursday.

The bottom line: the rare earth story has a lot of convincing to do when it comes to winning back investor confidence (although NTU shares had risen 17.2% last Friday on no news). They now stand at A17.5c compared with their 2011 high of A$1.08. Yet, as outlined below, it seems that the HREE story is getting better but few are listening.

The Northern Minerals news should have evoked a more positive reaction. At its Brown Range project, there was a doubling of the total resource at the Wolverine deposit. The rare earth resource at the Browns Range project now stands at 47,997 tonnes of total rare earth oxides. The company says the resource remains dominated by what it describes as high-value dysprosium and yttrium and 84% of the TREO is comprised of HREE. Moreover 66% of the resource has now moved from the inferred to indicated category, which gives a great deal more confidence.

This is a 71% increased in contained tonnes since October. And, presumably as a result of financing brought into the company by 45.5% shareholder, Conglin Yue and his Chinese connections, the drilling programs in 2013 have resulted in a 350%, or 37,497 tonnes of contained TREO, increase. That is an extraordinary achievement, and suggests how the whole non-China rare earth complex could have made much more progress by now if that the level of financing had been available to more companies.

Wolverine is clearly the key. Of the 47,997 tonne resource, 38,269 tonnes is contained in this area. Gambit West contains 4,177 tonnes, Gambit 1,204 tonnes, and Area 5 has 4,347 tonnes. But, while not uniform across all the four areas, the HREE content is high. Crucially, at Wolverine it is 88%. At Gambit it comes in at 96%, Gambit West 89% and the lowest is Area 5 at 69% — and even that last grade would be one that many an REE explorer would be very pleased to report.

But, while much of the comment so far has concentrated on details of the announcement and disputes about how valuable yttrium is, this suggests that the wood cannot be seen for the trees.

Northern Minerals’ accompanying presentation has some interesting points to make:

  • HREE suppliers are reporting upward pressure on pricing.
  • HREE prices are proving resilient and are above their pre-2010 levels (which you can’t say about uranium).
  • With Lynas and Molycorp shifting to the production phase, the LREE supply issue is now seen as resolved, with the focus moving to HREE availability.
  • The Chinese government is stockpiling HREE while prices are low.
  • The shortcomings of illegal mining are becoming apparent — there’s a glut of unmarketable product in Europe.
  • Industry consolidation is ongoing in China, creating an import market in that country for non-integrated producers of HREE.
  • Off-take clients are demanding a lower cost base in line with Chinese producers. Northern Minerals maintains this is possible only with REE in xenotime.

Now, all we have to do get is to get investors to understand the bigger picture.


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Comments

  • Al

    Robin, would you be able to explain what you mean by:
    “there’s a glut of unmarketable product in Europe”?

    February 28, 2014 - 12:54 PM

    • Robin Bromby

      As I stated, that was a point made by Northern Minerals in their presentation, not by me. There was no elaboration; however, I assume what is meant is that some illegally produced REE has arrived in Europe without being tailored to the specific requirements of end-users, something that would make it unusable. That’s my deduction from the comment, but only that.

      February 28, 2014 - 2:25 PM

  • hackenzac

    Anyone who is truly well informed and with an ounce of real common sense would know that Fukishima is so acutely serious that it’s the story of the century. I wish that you guys would shine a light on it. If swearing is ever appropriate, it’s now. It’s a seriously fucked up situation, perhaps the worst of modern times and people need to know about the current mind boggling state of this “accident” and cover up. Until then, let’s all make money on uranium stocks. Maybe the German model of no nuclear power at all is the common sense way. Maybe in the face of such disaster, common sense is thrown out the window. When the Pacific fishery is ruined, maybe some real common sense will set in and not be some cliche. Maybe the “eco nags” have a point? Pacific blue fin are now radioactive and worth more than all the neon lights and electric signs in Tokyo. Maybe the eco-nags are the ones with their eyes open? Maybe the eco-nags are the ones with the real common sense? Do a real unvarnished story on Fukishima without toadying up to the industry. I dare you.

    March 1, 2014 - 9:41 AM

  • GoBucks

    Classy, Hackenzack,

    None of us has ever heard or read that word before, much less used it…it really adds weight to your opinion.

    I think there is plenty of candid reporting out there covering the Fukushima situation.

    The owner gets to decide what she will cover.

    Yes, yes, we could all follow the German example…and build some new coal-fired power plants!!

    If the “eco-nags” had their way, we would all be freezing in the dark right now. Wind and solar will never be more than marginal producers, no matter how much we wish it otherwise.

    And it looks like the Germans agree with that assessment.

    Perhaps we should visit their neighbor to the west…..France, where ~80% of power is nuclear-generated. How do they do it? And then to India, where they are taking a serious look at thorium-based nuclear power. A neglected technology which offers a far safer avenue to nuclear power generation.

    I believe the overriding message of Fukushima is that we need to phase out old plants and, if we are to have nuclear power, to invest in the newer technologies. I don’t think we can build a totally safe “anything”, but we can build power generation plants not prone to such massive and messy failures.

    March 3, 2014 - 9:56 AM

    • monty

      I applaud Hackensac for bringing this out in the open . The reality is Fukushima has not been resolved not by a long shot and to hear that Japan is going to reopen more plants makes me cringe.Have you seen this in the news ,I know I haven’t . News on nuclear plants mishaps have been buried.
      4.4 MILLION Disintegrations Of Alpha Radiation’ Incl. Plutonium Detected At Leaking U.S. Nuclear Site; ‘Highest Recorded Level’
      Environment, Global NewsNo Comments »

      Japanese Prime Minister Had to Fly In to Fukushima In the Middle of the Night to Get the Scoop from Low-Level Nuclear Workers … Because Tepco Wouldn’t Tell Him the Truth
      Global News, PoliticsNo Comments »
      – Japanes

      Gundersen: ‘Nuclear Core Has Disintegrated’ At Fukushima Unit 3
      US: Emergency Plan Activated After ‘MASSIVE’ Crack Found In Dam Near Hanford Nuclear Site

      http://www.infiniteunknown.net/?s=nuclear

      March 3, 2014 - 10:35 AM

    • hackenzac

      GoBucks: Take that word and use it on yourself. I don’t care about your clucking virgin eyes and ears. Fukishima is a highly F’d up situation of historical proportion so address the issue or go away. It deserves F bombs all around and I will not apologize for it. It pisses me off quite a lot and I think it’s drastically under reported. I challenge Tracy to report on the current SNAFU. You do know what the F in snafu stands for right?

      March 3, 2014 - 6:04 PM

  • GoBucks

    What the editor decides to print is her business.

    The reason I, and I suspect most, people read it is for the current news on critical minerals and related subjects. I go elsewhere for general news.

    Under-reported? No shortage of Fukushima news on all the media I check.

    You’re pretty brave behind a keyboard. Better stay there.

    March 5, 2014 - 9:20 AM

    • hackenzac

      I doubt that you’re well informed on Fukishima Nobucks. What do you think about that decommissioned fuel rod removal operation that they’re undertaking? What do you think about confirmed radioactive blue fin tuna being caught off the US coast? What do you think about the giant ice wall they’re going to build to contain it, their Plan A? What do you think about the giant ruined swaths of land and water? This econag wants to know. This isn’t sic “general news”. When another editor here in his own rhetorical flourish throws around sic “common sense” for the Japanese to crank those nuke suckas back up, this econag thinks maybe he ought to call bullshit. Personally, I’m invested in magnets because I don’t like scut shale oil, coal exports to China and melted down nuclear reactors getting waved off as past tense. I’m an environmentalist where most of the rest of you guys here to paraphrase Will Rogers, never met a mine you didn’t love. Don’t insult me Alessandro. Fukishima in my opinion is still a more major event than Russians in the Crimea. Again, I challenge you to write the story here.

      March 5, 2014 - 2:13 PM

  • GoBucks

    Alessandro insult the likes of you? The earth’s savior?

    I’ll save him the trouble.

    Judging by the quality of your writing, I’m guessing you’re also invested in “Acapulco” gold… and you’re probably from Michigan.

    March 6, 2014 - 9:44 AM

    • hackenzac

      Since you can’t win or are even capable enough to approach an argument regarding serious and acute environmental issues and you’re only approach is to invalidate the “likes” of me as some sort of illiterate dope smoker, from Michigan (actually, Washington State where it’s legal and killer;)), you’re not worth my bother but if someone informed, educated and intelligent wishes to engage above the level of ad hominem attack, please proceed.

      March 6, 2014 - 11:02 AM

  • GoBucks

    Rest my case.

    (-:’

    March 6, 2014 - 11:19 AM

  • hackenzac

    I like coffee and tequila too. Invalidate stoner econags at your own risk. I for one am tired of blase dismissals of the biggest issues of our age. There’s more of us than you think and we raise some valid points. Whatever tipping points we’ve reached ecologically, you can thank the likes of us for being early adopters with our eyes wide open. Too bad the planet is screwed (the largest extinction since the late Jurassic) and the only fractionally mitigating saving graces are technology and educating myopic consumers as to their senseless ways. Meanwhile, expect food riots and massive dislocation due to droughts. I can back my rhetoric with science and I suggest that you attempt the same if you want to score some points but like I said, you ain’t got it in you Nobucks.

    March 6, 2014 - 12:13 PM

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