EDITOR: | November 6th, 2015 | 13 Comments

The Private-Public‎ Partnership of Rare Earths

| November 06, 2015 | 13 Comments
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Search-Minerals Inc (TSXV: SMY) is showing the industry how to enrol governments to help shoulder technological risks as it announced that it will receive research and development (“R&D“) funding totaling C$1,250,000 from the Research & Development Corporation Newfoundland and Labrador (“RDC“) and from the Atlantic Canada Opportunities Agency (“ACOA“) to assist in the construction and operation of a pilot plant for the testing of its metallurgical process. The total Project cost is approximately C$ 1,900,000: therefore the funding ratio is 65.8%, which is lower than the regulated 70% percent Canadian maximum.

In the hallways of academia this this is called a private-public partnership. These schemes are sometimes referred to as PPPs.

PPPs are necessary for speeding up the emergence of the rare earths industry, especially now as capital is tight.

In the rare earths industry there is a gap the size of the Grand Canyon between an exciting bench top flow sheet and a commercially feasible flow-sheet. This is a well-known problem to our readers who often comments on the inherent risks of new bench scale technologies. But to project promoters, the bench top flow sheet is a critical step to the cave of wonders. Alas, most often technology developers struggle with financial failure between bench scale and commercial ramp up.

Arguably the best approach to mitigate the risks associated with this often-fatal excursion across the Death Valley is to seek help from governments. But the announcement from Search Minerals implies a great deal of skills. I tip my hat to the management of Search Minerals for striking a partnership with both the federal and the provincial governments.

In innovation-favourable jurisdictions, governments establish non entitlement programs set up to help company support pushing their Technology Readiness Level from the bench scale to pre-commercial. Technology Readiness Levels (TRL) is an assessment scale of Critical Technology Elements (CTE) of development programs. TRL are based on a scale from 1 to 9 with 9 being the most mature technology. The use of TRLs enables consistent, uniform, discussions of technical maturity across different types of technology.

All things being equal, in bull markets investors tend to favour investments in companies and/or technologies with high TRL, though people rarely say “Hey, what’s your TRL?” Instead of using academic lingo investors, our readers, know when a technology is proven and demand to see proof that it withstands scrutiny.

So why should anyone worry about TRLs?

Because that’s government speak. And the only way to ever secure government funding is to speak governmenteese, which obviously Search Minerals can do.

Search Minerals is a TSX Venture Exchange listed company focused on creating value through finding and developing “critical rare earth element (“CREE“)” mineral assets in Labrador. CREEs (Nd, Eu, Tb, Dy, Y) have growing demand, constrained or restricted supply and are commonly used in innovative technologies.

Search Minerals is the discoverer of the Port Hope Simpson CREE District, a highly prospective CREE belt located in southeast Labrador, where the Company controls a belt 70 km long and up to 8 km wide. It owns 100% of the advanced CREE resource called the Foxtrot Project (“Foxtrot“), and a recently announced Foxtrot-like prospect called “Deepwater Fox”. The primary focus of Search is to continue to advance the Foxtrot resource, while evaluating other Foxtrot-like prospects. Several of the Foxtrot-like prospects require exploration drilling programs and may provide additional resources to a central processing facility that would be situated within the District.


Dr. Luc Duchesne

Editor:

Dr. Luc C. Duchesne is a Speaker and Author with a PhD in Biochemistry. With three decades of scientific and business experience, he has published ... <Read more about Dr. Luc Duchesne>


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Comments

  • Janet

    Good news for Search Minerals and good to see our tax dollars being used for R & D, resource development and true economic growth. I enjoyed this Dr. Duchesne.

    November 6, 2015 - 11:15 AM

  • Tim Ainsworth

    “CREEs (Nd, Eu, Tb, Dy, Y) have growing demand, constrained or restricted supply”

    That definition would appear well past its “use by” date to even the casual observer.

    November 7, 2015 - 1:17 AM

  • Storm Craft

    really Tim, why would you say that?

    I thought this was an excellent article, from a knowledgeable author

    November 7, 2015 - 2:00 AM

  • JJBeswick

    Hi Storm C,
    seems it’s been a while since you caught up on RE action and particularly the critical ones (CREE). Fact is “critical” is time dependant and things have moved very fast in the RE space.
    I’ll confess my personal interest in the historic CREE (after Nd/Pr) was mostly Eu. Lynas have very good grades of Eu which WAS to be their best earner after Nd/Pr.
    Sadly the phosphor space has disintegrated in the last few years. Y (the main one) is now about as sought after as Cerium. Eu, Tb and Dy demand in the phosphor field is virtually non-existant.
    Yes there is still demand for Ce/La for cracking & catalytic converters but other than that (low value application) the only current “main game” for REs is magnets.
    So forget Eu and Y. Dy and Tb are only relevant to the extent that HRE thrifting in magnets is a myth. It is NOT!
    So as I see it, the only CREE currently are Nd/Pr; they will make or break any supplier.
    It’s encouraging for Search that they have received CA$1.3m in govt support but let’s get real here. Check around and correct me if I’m wrong, but as far as I know no project (even with a concentrate product) will be running with a spend short of $500m. If correct, then the govt support amounts to about 0.2% of the necessary spend.

    November 7, 2015 - 10:41 AM

  • Storm Craft

    JJB thank you for your views. The world according to you then is if a project does not have significant Nd/Pr then it won’t get into production. Time will tell.

    November 7, 2015 - 1:02 PM

  • Jack Lifton

    All,

    The anchor of a rare earth supply chain that can grow to match demand MUST be a mine or mines. However no jurisdiction can ever be self-sufficient in “rare earths” unless is has a total supply chain capability, a source (mines or scrap); a separation and purification refinery; a metals and alloys making industry; and a magnet making industry. Neither junior miners nor government bureaucrats have enough vision or understanding to see the cart-horse issue that rare earths illustrate. Without a notional supply chain logistically present there is no point in producing rare earth concentrates. There may be reason to produced either purified concentrates (those with no impurities other than rare earths) or separated purified individual rare earths as feed stock for foreign industrial processors. You do not need to subsidize a refinery or metals or magnets maker, but you MUST subsidize a mine or at least fund it with long term equity. The mistake that each and every junior made was undercapitalization combined with an ignorance of locating supply chain partners or customers before they started. The goal was apparently to “mine the street for money” not to produce rare earth PRODUCTS for end use.

    Jack Lifton

    November 7, 2015 - 9:50 PM

  • Don

    Looks like Search has done their homework and are operating on facts not bs. They will produce rare earths for end-users.

    November 9, 2015 - 6:38 PM

  • Positroll

    “The mistake that each and every junior made was undercapitalization combined with an ignorance of locating supply chain partners or customers before they started.”
    Alkane made sure to be financed via its gold operations (25 mio cash on hand, 28 mio FCF for FY 2015) and got ShinEtsu (who do have a working separation plant) on-board as an off take partner early …
    Much of the funding will come from government export credits and (I believe) its (still undisclosed*) Hafnium partner(s).

    *Personally I consider Rolls Royce (think Eurofighter, not cars) to be the most likely one, given Alk is using one of their schematics in their newest presentation. But Boeing, Airbus, Siemens and GE all remain in the mix as potential strategic partners – each of them big enough to finance the DZP out of pocket change, just like Fidelity (major shareholder; 1500 billion assets under management), btw …

    November 10, 2015 - 7:52 AM

  • Tim Ainsworth

    “nor government bureaucrats have enough vision or understanding”

    Jack, I think it is safe to say Japan via JOGMEC would be the exception, particularly with the recent extraordinary level of support afforded Lynas in order to complete the first ROW magnetics supply chain, at least to circa 70% NdFeB grades.

    Interesting contrast to the dapper Dr from German OEM’s Rohstoff Alliance who very recently suggested upstream support was impossible as it would impact purchasing officer’s incentive schemes. Caveat emptor.

    November 13, 2015 - 7:30 AM

  • hackenzac

    I wouldn’t underestimate Alaska. With 40 billion in their Permanent Fund and oil revenues declining, they are looking for replacement with a bead squarely on Ketchikan, their southernmost city. They want to ship build, especially ferries that employ magnetic tunnel thrusters which they are one of the earliest customers for. The Alaska marine highway is going to build out and it’s going to be done in state with Seattle maybe getting a piece of it for old times sake. I believe that Alaska is Rolls Royce’s second customer for the technology. Here’s a picture of the test subject, the Olympic Octopus. Notice the front and rear thrusters in the keel.

    November 13, 2015 - 11:19 AM

  • hackenzac
    November 13, 2015 - 11:19 AM

  • hackenzac
    November 13, 2015 - 11:27 AM

  • hackenzac
    November 13, 2015 - 11:38 AM

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