EDITOR: | May 11th, 2013

The Pulse: Rare Earth stocks come back to life; Europe still going nuclear; Niobium ready to roar

| May 11, 2013 | No Comments
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Pulse_FinalAre we on the way back? That is, has the rare earths sector finally bottomed out?

Too early to tell, but some stocks are again showing life and making gains, some in considerable percentage leaps. (Australian and Canadian share prices are in their respective currencies. Trading in dual listed markets, or over-the-counter, are excluded from the summary below.)

The tone for Friday was set by Molycorp (NYSE:MCP), which saw its stock just after the New York open headed for a 22% rise after reporting a smaller than expected loss. (The details are in the news column on ProEdgeMedia’s home page.)

In Australia, the Lynas Corp (ASX:LYC) ship righted after the Malaysian election result seemed to clear the way for the company’s plant in that Southeast Asian state to proceed without further speed bumps.

But the surprising thing about all the risers was that their considerable Friday gains were not the result of any news out of the companies concerned. So something got people interested: perhaps, to some extent, it is just the general resurgence of metals prices and sentiment that is spilling over in the REE space, just like the REE stocks were dragged down partly as other metal prices lost ground. But we’ll take the bounce-back whatever the reason.

Great Western Minerals (TSX.V:GWG) registered a 10.7% gain with 1.3 million shares going through the Toronto exchange.

The best gain of the day was Toronto-based Cache Exploration (TSX.V:CAY). Its stock saw a 100% increase but, like all the REE companies, it has a good way to make up what has been lost. The stock had seen a 52-week high of 9c and now it’s back to just 1c. And turnover on Friday was just 10,000. Cache’s REE Projects include the Welsford REE Properties near St. John New Brunswick, the Cross Hills REE Property near Grand Le Pierre, Newfoundland and the six prospecting permits covering 208,000 acres in Nunavut.

Quest Rare Metals (TSX:QRM) was up 50% to 75c (the gain in New York being a lesser but still impressive 38%).

Avalon Rare Metals (TSX:AVL) gained 11.43% to close at $1.17. Rare Element Resources (TSX:RES) added 36.07% to finish at $2.49.

And Stans Energy (TSX.V:HRE) seems to have survived its fright over the Kyrgyzstan. Its stock was up Friday by 57.14% to 27.5c, although it was 88c last June so there is much ground yet to be regained.

In Australia, and while TUC Resources (ASX:TUC) continues to languish after its jilting by Shandong, other stocks are fighting back. Lynas, which had been treading water at 48c on April 18, is now looking brighter at 66c.

Arafura Resources (ASX:ARU) has had its share of disappointments and is a long way from its $1.78 of 2010 when REE stocks were all the rage. But the company would be have been cheered with Friday’s 9.09% rise, even though only to 12c.The recent adjustments to processing plans, and a lower price tag for those, might also be helping.

Alkane Resources (ASX:ALK) added 5.6% to 56.5c.

Shareholders obviously liked the news from Northern Minerals (ASX:NTU), marking the company’s stock up 12% to 14c. NTU is addressing the problem with its rights issue of one-for-two at 20c. Since the rights issue was announced, NTU shares have consistently traded below the issue price. The issue was to close next Friday, but the deadline has now been pushed out to July 5. Shareholders will meet in June to consider an underwriting proposal, but it is clear that major shareholder Conglin Yue continues to back NTU.

Of course, Friday also saw some declines.

In addition, almost all stocks have suffered serious damage over the past 52 weeks.

But we might – just might – be seeing a turn in sentiment. Fingers crossed. The REE sector sure needs it.

NUCLEAR ENERGY: Europe is still going nuclear, even though the impression (helped by German cold feet) might indicate the reverse. The Platts agency, which since 1909 has been providing data on energy and metals, conducted a survey of those involved in the nuclear industry, and 80% felt that nuclear power would succeed in gaining a larger share of the continent’s power mix.

Platts noted that, as of January, Europe had 185 operating nuclear plants. Seventeen more are under construction, one each in Finland and France, two each in Ukraine and Slovakia and 11 in Russia.

CRITICAL METALS: Niobium is going from strength to strength, according to a 213-page report from British commodity analyst Roskill Information Services. The global niobium market rebounded quickly from the global slump in consumption in 2009 and hit a new peak in 2011. It was a little slower in 2012 but Roskill says a return to long-term growth is certain.

Niobium is used in high-strength steel. Yet some of the main steel producers, notably Russia, China and India, still use niobium in smaller percentages (in terms of the composition of the finished steel) than is common in the West. But the trend will be for steel makers in those countries to lift niobium content.


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