EDITOR: | July 16th, 2013 | 6 Comments

Performance of REE Leaders confirms market turnaround

| July 16, 2013 | 6 Comments

2013-REE-Leaders-WKThe share performance of the only two producers of rare earths outside of China Lynas Corp (ASX: LYC) and Molycorp (NYSE: MCP) in the past few weeks has indicated that the REE market is experiencing a turnaround – and one for the better. The numbers from the REE Leaders index, which surged +17.18% certainly suggests that the REE market is undergoing a sustained recovery mode. ProEdgeWire Rare Earths & Critical Minerals Sponsors averaged up +9.18% and have confirmed this trend. The main reason for the overall gains can be traced to China’s intensified campaign to curb illegal rare earth mines, prompted by the government’s effort to increased regulatory and environmental rigor. The benefits have trickled quickly down to some of the most promising plays in the sector. The standouts of the week include Ucore Rare Metals, IBC Advanced Alloys, Tasman Metals and Great Western Minerals Group.

Ucore Rare Metals Inc. (TSXV: UCU | OTCQX: UURAF) gained 16.67% in TSXV and 16.96% in OTCQX trading. Ucore is currently developing a deposit of heavy rare earth elements at Alaska’s Bokan Mountain, the unique geological properties of which may serve as a case study for a greater understanding of how rare earth element deposits form. Knowing more about how REE deposits form, scientists and mining companies can more accurately target rocks that might contain mineable concentrations the minerals.

IBC Advanced Alloys Corp (TSXV: IB |OTCQX: IAALF) rose 6.67% on TSXV and massive 40.98% on OTCQX. Analysts have categorised this stock as a strong buy in the wake of the Massachusetts Institute of Technology validation of IBC’s patented beryllium oxide (“BeO”) nuclear fuel technology. IBC’s BeO, when combined with Ceramic Tubular Products, LLC silicon carbide (“SiC”) cladding, can help optimize fuel operating temperature and increase safety by vastly reducing the risk of meltdown. As a result of the Fukushima Nuclear meltdown Industry officials and governments are developing alternative strategies and increasingly reviewing the safety benefits of accident tolerant fuels.

Tasman Metals Ltd. (TSXV: TSM | NYSE MKT: TAS) jumped in both TSXV and OTCQX trading, moving 25.86% and 30.91% respectively after it provided amended and restated reports for its Norra Karr (the “Norra Karr Report“) and its Olserum properties. The Norra Karr Report and the Olserum Report were amended to address certain issues raised by the British Columbia Securities Commission as set out in the June 14, 2013 news release.

Great Western Minerals Group Ltd (‘GWMG’, TSXV: GWG | OTCQX: GWMGF) rose 11.81% in the US after it announced that its subsidiary, Less Common Metals Ltd (LCM), was able to process neodymium from oxide using an electrolytic reduction process. LCM ran the new electrolytic cell in full production mode meeting all environmental, health and safety compliance standards. GWMG said that the process would help LCM increase its metal and metal-alloy production capabilities.

As for indications of a new REE worldwide market trend, the Chinese continue to dominate the supply side and their market share in mining and processing is over 90%. This dominance is also partly in the downstream value chain, such as in the area of magnet production. However, Molycorp’s Mountain Pass in the US and Lynas’s Mount Weld in Australia are starting to show some strength, especially as Light rare earth production in China weakens due to the tightening regulations. As for heavy rare earths, there are still few players with such potential and this is where China will continue to dominate. However, there are REE juniors emerging with strong HREE potential in Canada, Australia and South Africa, to mention a few. The more favorable market situation will offer greater chances for them to bring their projects to production stage and address the fact that demand for rare earths is growing.  

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  • Dan

    With LYC losing all of last week’s gains right before QE2 reports are due; makes me think something is amiss. Lynas is notorious for leaking news early to good ole boys club (i.e. NC’s selling of 31mm share before its tank). I have been long LYC since ’08 so perhaps its the beaten dog in me that is seeing this in a negative light but the LYC technical chart isnt looking too good.

    July 17, 2013 - 1:38 PM

    • Tracy Weslosky

      Dan – you are going to love the new addition that will be launched on InvestorIntel.com next week which will allow you to see how LYNAS for instance is faring against the average of the top 15 players in the sector…will keep you updated. It is my plan to add a tech analyst onto our team or at the very least as a guest columnist shortly as we certainly have some interesting chart action in the REE sector. Thanks for visiting.

      July 19, 2013 - 1:10 PM

    • Jan Johnson

      Two weeks ago it was $0.385 closed last friday at $44.5. A healthy 2 weeks.
      NC selling when he did was, in retrospect, a pretty good move. He still has PLENTY of skin in the game.

      July 20, 2013 - 9:57 AM

  • Asher Berube

    Excellent news

    July 19, 2013 - 1:30 PM

  • Dan

    Anyone know anything about LYC halting payroll? Read it on another site, obviously, if true, spells disaster.

    July 20, 2013 - 6:57 AM

    • Jan Johnson

      Dan that rumour is absolute nonsense unless someone’s lost the cheque book.
      Look at the last quarterly cashflow statement. $193m cash reserves as of the end of March. Cashflow (out) for the 1/4 $26m: $13m operational, $10m investment. No sales yet at that time.
      At that rate they’d have cash reserves for nearly 2 years even without a single cent of income.

      July 20, 2013 - 9:35 AM

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