EDITOR: | September 30th, 2013 | 11 Comments

Tasman Metals’ Norra Kärr HREE Project: advancing one of the most significant dysprosium deposits in the world

| September 30, 2013 | 11 Comments
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sweden1jpgPointless denying it, rare earth elements (REEs) provide the ideal material properties for modern society. If you’re reading this article — on your computer or electronic device — you are directly utilizing rare earths. As one may expect, REE demand is increasing, due to the metals’ unique properties that make them so essential for high-technology and environmentally beneficial applications… which brings me to a rather unique heavy rare earths (HREE) play with real market differentiation and tremendous potential. Standing out from its competitors, Tasman Metals Ltd. (TSXV: TSM | NYSE MKT: TAS) is a strategic metals mineral exploration and development company focused on the discovery and development of rare earth elements (REE) in Europe, under the leadership of founding President, CEO and mining expert, Mark Saxon. Tasman’s flagship project is the uniquely situated Norra Kärr Heavy Rare Earth Project, located in southern Sweden — approximately 300 kilometers south of Stockholm. Tasman’s remarkable REE deposits present attractive supply options for European Union and Japanese REE consumers, as they are enriched in the high-value heavy REEs, lie close to established infrastructure (infrastructure which is second to none in the REE industry), and are within an active, mining-friendly and politically stable jurisdiction. It should be noted that Scandinavia is the real home of REEs, as many were first discovered there (for example, scandium, discovered in Sweden, is named after Scandinavia).

saxon

Tasman Metals Ltd. President and CEO, Mark Saxon

Thanks to the efficient Swedish Mining Act, coupled with the achievements of Tasman staff, Norra Kärr has progressed quickly since the first drill hole in late 2009, to now be secured by a recently granted 25-year mining lease and a Pre-Feasibility Study set to commence later this year. Norra Kärr is the fourth largest heavy REE project in the world and has been independently, repeatedly described as “the most important deposit in the world for high strength permanent magnets,” due to its unusual enrichment in the HREE magnetic metal dysprosium (note: the use of dysprosium is forecast to increase to the extent it is available; the greater the supply of dysprosium,  the greater the global demand of dysprosium is expected to be).

Due to a generation of gross underinvestment in REE exploration and processing technology in the Western World, REE supply is the subject of a Chinese monopoly. Greater than 95% (closer to 97%) of REE’s are sourced from Chinese mines, where the environmental and cultural impact is high and the operating conditions are recognized as unsustainable. The present critical nature of heavy REE supply has arisen due to strong consumption growth and a generation of under investment in mineral exploration.

The short-lived REE price spike of 2011 drew government, media and public awareness to the Chinese REE monopoly. During this spike, media commentators focused on the 400+ projects that were being explored by mining companies, suggesting “rare earths aren’t that rare,” without acknowledgement of the substantial technical and financial barriers to entry in the REE sector. Although the spike may have passed, REE consumers remain very active in their search for low-risk alternatives to Chinese-sourced REEs. Today, in a more challenging environment for junior mining, significantly less companies remain globally with legitimate projects and a chance of moving to production.

Tasman is one of those few REE companies that has survived, and is now one of the largest in the sector by market capitalization. With its second-to-none mineralogy, the Norra Kärr HREE project presents a long-term sustainable alternative to the current Chinese REE supply monopoly, being large enough to supply most of Europe’s REE needs for at least 50 years. As Tasman Metals’ President and CEO Mark Saxon explains, “with the appropriate investment, Norra Kärr can form an industry, skills and education hub that is virtually irreplaceable, due to the uniqueness of the raw materials found at the site.”

Tasman is now focused on development at Norra Kärr, and is working with all stakeholders to determine if the project can be mined in an environmentally sound and sustainable manner, and with a positive impact on the community. The company has engaged globally recognized consultants to provide world’s best practices and solutions.

nkNorra Kärr lies within the catchment of Lake Vattern, one of Sweden’s largest lakes. Lake Vattern is a very important site for the region and for Sweden, and water management is, obviously, a major focus for Tasman. Based on extensive research, Tasman is confident that Norra Kärr can co-exist with Lake Vattern without impact. However, it remains Tasman’s role and responsibility to prove that they can co-exist, using the best available science and information. Without that proof, Tasman will not receive the community and government support needed to operate, and Norra Kärr will rightly never be mined.

Tasman Metals is a small link in the long chain of Swedish mining industry history, and the company is very proud of the expanding role it hopes to play. Sweden is fortunate to have numerous mines that can be considered globally significant due to their size, quality, or the key role they played in the country’s development, including Sala, Kiruna, Boliden, Laisvall and Zinkgruvan. Tasman believes that Norra Kärr will one day sit on that list, as a sustainable provider of the next generation of metals.

And having REEs in a safe country like Sweden (they won’t be going to war anytime soon!) means that end users do not need to stockpile their REE supply in a warehouse is Stuttgart or Munich. When Norra Kärr goes into production, end users will have an almost on-demand stockpile sitting in the ground in Sweden.

Ty Facts about Tasman Metals and the Norra Kärr HREE Project:

  • Tasman Metals has the capacity to deliver high-tech metals that are in scarce supply to consumers in Europe, Japan and the rest of the world (including China). Germany will be a major market for Tasman. There is no transport risk, there’s no currency risk and there’s no political risk. Tasman will offer stability of HREE supply.
  • Tasman maintains 100% ownership of 2 of the world’s most significant heavy rare earth element projects in a safe and stable mining jurisdiction. In Sweden, Tasman will have access to the requisite chemicals, access to very skilled labor and, most importantly, access to market.
  • Tasman has the only NI 43-101 compliant resource in mainland Europe.
  • Norra Kärr is the 4th largest HREE deposit in the world and boasts one of the highest percentages of HREE (heavy rare earth elements) to TREE (total rare earth elements) at over 50%.
  • At 50%+ heavy rare earths, which is very unusual in the world, and the highest proportion of (and highest revenue exposure to the) the higher-value Critical REEs (dysprosium, terbium, europium, and neodymium) of all advanced REE projects. Critical REEs are ‘critical’ (due to restricted supply and low substitution potential) as determined by the US Department of Energy.
  • Norra Kärr’s two key metals are: yttrium and dysprosium (which are both in scarce supply and high demand).
  • NorraKärr alone will be able to fill much of the European demand for REEs for, at least, the next 40 years.
  • Operating in a supportive, stable and efficient mining environment — Sweden is second best on the Fraser Institute’s 2012/2013 Mining Climate survey.
  • Unique in the European Union – Tasman gains financial support from European Commission for research and maintains a high profile. Norra Kärr is one of only four deposits selected by the EC’s EURARE research project intended to “develop a sustainable exploitation scheme for Europe’s rare earths ore deposits.”
  • EURARE brings together the partners required for a complete European REE supply chain.
  • Since over 95% of REE supply is sourced from China, the European Union is actively supporting policy to promote domestic supply of REEs, to ensure the security of high-tech industry.
  • Tasman’s exploration portfolio is uniquely placed, with the capacity to deliver high-tech metals from politically stable, mining friendly jurisdictions with developed infrastructure.
  • The Norra Kärr project is unobstructed and comprised of 550 hectares. Power and water is on site. Port facilities and Sweden’s primary E-4 Freeway are located within close proximity.
  • Easy access to skilled mining, engineering and materials science personnel – highly trained in related industries.
  • Stable access to chemicals — northern Europe has all the major chemical requirements, reducing risk to Tasman.
  • Major markets on the doorstep with simple transport logistics (within 24 hours to most of Europe).
  • A long-lived resource, favorable for open-pit extraction.
  • Heavy REE pricing is stabilizing at 100% to 300% above 2010 prices. No Western world supply anticipated before 2016.
  • Low CAPEX advantage due to established infrastructure — one of the lowest amongst its peers at $266 million. Remote, high CAPEX projects appear less likely to be funded, leaving plenty of opportunity for modest CAPEX projects, like Tasman’s, to actually go into production.
  • Existing infrastructure allows production to be scaled up. Tasman’s strategy is simple: demonstrate its product quality on small scale and expand production with demand, as necessary. Scaling production is virtually impossible with remote high CAPEX projects that need to reduce unit costs by increasing scale.
  • Tasman has the highest percentage of heavy REE projects amongst advanced projects – separation capital and operation cost is directed to high-value metals, not low-value cerium and lanthanum.
  • Little exposure to the metals forecast for oversupply; cerium and lanthanum provide 3% of revenue.
  • Tasman has the opportunity to be the leader in HREEs.
  • Both Norra Kärr and Olserum are 100% Tasman owned, with a 25-year mining lease secured. In other words, there are no risks, payments or royalties.
  • Low strip ratio, very low radioactivity, and no significant impurities in rock; very good environmental brand.
  • Tasman’s recent very positive PEA on Norra Kärr had an after-tax Net Present Value (NPV) of $1.46 billion (at 8% discount rate), based on conservative metals pricing.
  • Opportunities for by-products, which are only possible due to good existing infrastructure.
  • All of the Norra Kärr project’s REEs are in one mineral; no unexpected complexity or mine planning required.
  • Low-energy consumption: highly acid soluble mineral, processing at room temperature and pressure.
  • Major processing issues resolved; silica gel and double-salt precipitation no longer relevant.
  • Tasman has two highly significant heavy REE projects (Norra Kärr and Olserum), which reduces project risk.
  • The Norra Kärr project is one of the most significant heavy REE resources in the world. The resource is unusually low in radioactive metals (relative to other REE juniors’ projects), with less than 15 ppm each of uranium and thorium (which are very low grades of uranium and thorium). Why does this matter? Because the mine site and transport of concentrates will not require any special permitting or monitoring for radioactivity.
  • Lean company structure, under strategic management with adequate cash on hand.
  • Tasman is well placed to contribute to the alleviation of the supply imbalance for strategic metals, by developing strategic metal projects in a region without domestic production.

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Comments

  • Tracy Weslosky

    Brilliant piece – long overdue coverage on Tasman…

    But Ty, it seems like the Ty-Facts have gotten out of control…

    Impressive story, good story.

    September 30, 2013 - 3:33 PM

  • Veritas Bob

    I know you got this from the corporate presentation, but I wouldn’t characterize the REE pirce deck assumptions in Tasman’s PEA to be conservative.

    Per table 22-1 of the Nora Karr PEA dated July 9, 2013, $/kg for oxides are:
    Lanthanum 10.00
    Cerium 5.00
    Neodymium 75.00
    Praseodymium 75.00
    Samarium 10.00
    Europium 500.00
    Gadolinium 40.00
    Terbium 975.00
    Dysprosium 520.00
    Yttrium 20.00

    Some of these are above current prices. What do you think will happen to the price of Yttrium if even one of these so-called HREE projects, which, as with Nora Karr are mostly Yttrium, comes into production, let alone two or more such projects? Yttrium will head South, that’s what, and that will have a non-trivial impact on project economics.

    September 30, 2013 - 4:09 PM

    • Ty Dinwoodie

      Hi VB, nice to hear from you. Overall, I would regard Tasman’s economic assumptions for their rare-earth-oxide price basket as relatively conservative.

      I obtained my information to base and write the article from a series of communications with Mark Saxon (I have to be honest… Saxon’s a truly impressive cat, leading an excellent, talented team), which culminated in an extensive interview yesterday (Monday). Further to that, I conducted research on Tasman’s PEA and other compliant filings, the sector, LREE and HREE pricing data (also spoke with a couple of analysts), EURARE, Sweden, etc., etc., etc.

      Regarding the flagship property — yes, you are correct — the highest percentage of total rare earth oxides in the Norra Kärr deposit is yttrium oxide at 34.55%. However, Y2O3 is anticipated to account for 13.60% of Norra Kärr’s TREO revenue. I’m way, way, way more interested in the economics pertaining to dysprosium (which I am excited about long term and Tasman’s uniqueness with Dy2O3 is why I wanted to incorporate ‘dysprosium’ into the title of the article). Dy2O3 is projected to represent 43.40% of TREO revenue from Norra Kärr.

      October 1, 2013 - 9:21 AM

  • Stephan B. Feibish

    Thank you. You provided a checklist for the evaluation of not just Tasman; but other miners as well.

    October 1, 2013 - 8:28 AM

    • Sue Glover

      Glad to be of help! Thank you for your contribution and glad to be of assistance. Please feel free to ask questions of the writers who do intensive research for their articles. Look forward to more of your contributions!

      October 2, 2013 - 4:32 PM

  • GoBucks

    Veritas Bob,

    Are you saying they should NOT commence mining, because it’ll drop the price of yttrium?

    If so, what are they supposed to do, then?

    October 1, 2013 - 11:44 AM

    • Veritas Bob

      I’m saying that you need to take account of price reaction to supply changes. Not doing so is not “conservative”.

      October 1, 2013 - 11:52 AM

      • Ty Dinwoodie

        With all due respect… seriously, what would you like them to do? Price out yttrium in the PEA @ $0.00, as — maybe — another producer may come online and — maybe — depress prices further? What if the larger projects don’t come online? What if the price of yttrium increases?

        October 1, 2013 - 2:21 PM

  • Rare Earths & Critical Minerals Month-in-Review: A sector back on its feet; major announcements affect stocks (very) positively; Texas Rare Earth (+68.52%), Quest Rare Minerals (+52.73%), Critical Elements Corporation (+52.67%)… |

    […] was up +20.79% in the US and +15.79% in Canada on no news; however, InvestorIntel’s Ty Dinwoodie interviewed Tasman founding President and CEO Mark Saxon earlier this week for an update on Tasman’s Norra Karr HREE Project and how the company is advancing one of the world’s most […]

    October 3, 2013 - 10:27 AM

  • Bill Keenes

    Hi Ty,

    how about providing an update on Tasman with specific focus on where they are up to with their metallurgy test work.

    What metallurgy test work have they completed to date, what have they achieved through testing, what are the current metallurgical tests presently underway.

    Thanks and regards
    Bill

    November 25, 2013 - 10:33 AM

  • phil

    and not a word from Mr. Saxon about the synergy between Flinders and Tasman announced in december 2013. Market don’t like this silence and the share goes quickly from 1,70 to 1,20… I hope these days news from the direction…

    phil.

    May 17, 2014 - 1:32 AM

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