EDITOR: | January 21st, 2013

Rare Earths and Critical Minerals Weekly Review: More than highly magnetic, REE’s are Waterproof

| January 21, 2013 | No Comments

The Rare Earth Element Race to Mine the Sea Picks UpRare earths are highly critical to the development of future various technologies; however, demand for these already coveted minerals will surely grow as a result of an exciting discovery. Experiments at the Massachusetts Institute of Technology (MIT), published last week, have shown that rare earths are waterproof even under extreme conditions. Demand for REE’s had so far been driven by their highly conductive and magnetic properties, leading to the miniaturization of batteries and electric motors – as well as other applications – allowing for a series of energy saving advantages from transportation to popular electronic devices. Now, evidence that REE are waterproof, even in extreme conditions, suggests that they will generate interest from manufacturers of corrosion-resistant surfaces such as are needed in aircraft coatings to prevent icing or in the automobile industry to help improve corrosion resistance.

The MIT scientists attribute the REE’s ability to repel water to “their unique electronic structure that prevents hydrogen bonding with adjacent water molecules”. So far plastics have been used to improve the water repelling attributes of aluminum or steel. However, extreme conditions weaken the plastics ability to work as a water repellent, while rare earths, however, remain water-resistant. Interestingly, the REE’s used to achieve the groundbreaking results were among the most easily available such as cerium. MIT scientists experimented with combinations of cerium and aluminum as well as cerium and stainless steel, whereby the wear rate of cerium was significantly lower than that of aluminum, retaining water repellency even after abrasion. Water droplets bounced off the cerium surfaces altogether. In another experiment, the researchers compared cerium and a plastic silicon-piece water resistance enhancer, heating it for two hours in a hot air environment of 1000 degrees Celsius hot air. The plastic broke up, the silicon was hygroscopic. Cerium, however, remained waterproof. The MIT experiments suggest that rare science has just begun to uncover the technological potential and variety of applications that are possible with rare earth materials. Evidently, even while they do not lead to immediate valuation increases, such discoveries suggest that demand for rare earths can only increase in the near and long term.

Indications along these lines also came from China, where as noted in an article by our Chinese correspondent, China will likely cut back exports of specialty raw materials. Meanwhile the US Dept. of Energy has announced plans to fund a special rare earths research facility to reduce US dependence on Chinese REE supplies. The EU also announced plans to pursue a new strategy to promote rare earths. The number and variety of rare earth sources will have to expand. To this end, one of the most promising such sources is Malaysia where the Australian Lynas (ASX: LYC; OTCQX: LYSDY) has started processing activity at its LAMP facility toward the end of last year. Malaysia will have to hold an election by April, by which time the situation for the rare earth miner will become more stable. Adding to a favorable political risk outlook is the fact that Malaysia has been recording almost five percent growth annually and that economists predict that GDP could double by 2025.

Malaysia, despite the bickering and political opportunism that interfered with LAMP, is considered one of the most competitive economies in the world by the World Economic Forum, which announced its rankings last week. Malaysia actually ranks number 25, just behind France, no less than Germany’s most important trading partner. Malaysia also ranks ahead of China (29) and Italy (42); simply put, Malaysia is one of the most open economies in the world according to the WEF. The favorable long term prospects did not manage to move the stock valuations of REE miners and producers.

The ProEdgeWire rare Earths and Critical Minerals sponsors saw their valuations shift by an average of -0.79%, essentially remaining flat. Nonetheless, there were some highly visible exceptions.

TUC Resources (ASX: TUC) saw its stock price double from AUD$ 0.06 to AUD$ 0.12 after it announced that it has established a memorandum of understanding (MOU) for a “strategic relationship with an overseas investor”, which was revealed to be China’s Shandong Provincial Bureau of Geology and Mineral Resources. The strategic relationship itself was coupled with very encouraging results from its heavy rare earths drilling in Australia’s Northern Territory at the Stromberg Heavy Rare Earth prospect showing intersections of over 90% heavy rare earths (as a percentage of TREO) from clay host rocks, indicating a geological type comparable to the Southern China Clay deposits, boosting its confidence as the Company pushes ahead with its 2013 exploration plans.

Geomega Resources Inc. (‘Geomega’, TSX.V: GMA), which has been developing its 100% owned Montviel property in Quebec, did not see significant share fluctuations (-13.51%) even as it announced the signing of an agreement with Equapolar Consultants Ltd to acquire its REE physical separation process (‘Pearse Technology) in exchange for Geomega common shares and licensing fees. The Pearse Technology is said to offer significant savings in separating rare earths than the more common chemical separation processes used today. The Pearse Technology is being developed at Polytechnique Montreal’s engineering school and a prototype has demonstrated its feasibility in an experiment conducted by a prototype last year. Ownership of the Pearse Technology affords the potential for more efficient and cheaper processing operations as well as the ownership of pending patent applications filed in various districts.

REE numbers jan 21


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