Update on one of the closest rare earths projects to production in North America
Search Minerals Inc. (TSXV: SMY) has been working on its rare earths elements (REE) site in Labrador since 2009. Back then, commodities markets were red hot and China had reduced REE exports for three consecutive years, causing unease among other major industrial nations.
The New York Times wrote at the time that global manufacturers would be forced to move to China, because of limited availability of rare earths outside of the country. Companies in the REE space got funded on the geopolitical theme, which went mainstream in world media.
Fast forward to 2018, and one of a generation of companies that went after REE deposits outside of China back then, Search Minerals, is still standing. CEO Greg Andrews has soldiered through the prolonged rout in REE prices, because he is convinced that the quality of Search’s deposits, and growing adoption of the metals in electric vehicles (EVs), makes his project viable.
“We are still one of the closest projects to production,” Andrews told InvestorIntel. “Long-term players have to be patient.”
Mining investor InCoR Holding PLC bought into this play, acquiring 25.2 million shares in Search Minerals priced at C$0.042 in a deal announced Dec. 29. The shares now trade at C$0.07, despite a wide sell off in all markets since U.S. President Donald Trump announced tariffs on steel and aluminum imports, triggering reprisals from China. At some point, expect that rift to impinge on the REE market.
Search Minerals released in March the results of three drill holes totaling 500 meters, a quarter of a 2,000-meter drill program, all showing high grades of valuable REEs including neodymium, praseodymium and dysprosium at the company’s Deep Fox project. The Vancouver-based company improved on Foxtrot, a REE deposit it has conducted 70 drill holes on, in the same Port Hope Simpson district of South East Labrador. Search Minerals found high grade zones at Foxtrot with what the company calls significant quantities of critical rare earth elements (CREEs). Deep Fox is higher grade than Foxtrot but they are both economic and can be started off at a smaller scale to other projects being developed, Andrews said. A third deposit, Fox Meadow, also could be at least as big as Foxtrot, according to the company.
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The discovery also gives Search Minerals flexibility with its mine development plan as it works towards completing a bankable feasibility study, Andrews said. The benefit of having worked on the project for some years ahead of a renewed up-swell of interest is that several milestones have been accomplished.
Search Minerals has rock samples obtained from a pilot plant built with assistance from the Newfoundland and Labrador government. Back in the REE gold-rush era, Andrews recalls that the company raised C$10 million of capital on the back of land claims alone.
The pilot plant “was huge because it really advanced our project in the down markets, which is what you want to do,” Andrews said. “If the geo-political side takes off again, you will have companies coming out of the woodwork. But they are behind, because they stopped working.”
Even though the interest for REEs is less dynamic than other EV-linked metals including lithium, cobalt and even graphene, REEs are starting to enter the radar of procurement managers, Andrews said. This is principally because spot NdPr oxide prices have risen to 3-year highs in the Chinese domestic market, according to Ryan Castilloux, an industry analyst at Adamas Intelligence. The price bump is starting to reduce availability of NdPr oxide on the spot market, which in turn is spurring the interest in long-term off-take agreements, he said.
All in all, a good time to take a look at Search Minerals.
Matt Craze works with New York-based management consultancy 10EQS and is the founder of Spheric Research, a firm dedicated to global seafood industry research. Matt ... <Read more about Matt Craze>