EDITOR: | December 9th, 2013 | 2 Comments

Rare Earth & Critical Minerals Week-in-Review: the saga continues…have we finally hit the bottom?

| December 09, 2013 | 2 Comments
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Screen shot 2013-12-09 at 8.15.54 AMRare Earth & Critical Minerals Week-in-Review (for the week ending December 6, 2013): The ongoing trend continues…but for how long? The sector was down overall last week, with the REE Leaders Index (Bloomberg Ticker: REEL) down marginally -0.014% (293 to 289 points), while the InvestorIntel Rare Earth & Critical Minerals members’ average fell -0.23%.

The higher-value critical/heavy rare earths are key in long-term, profitable REE projects going into production. China, the world’s dominant source for all REEs, has a limited supply of the criticals and heavies (a 15-year supply remaining by some estimates, according to Jack Lifton) and is looking to tighten its resource-nationalization grasp on its own supply. And, rulings aside, the WTO and the rest of the world may be powerless to stop them. The rest of the world needs a steady, stable and secure supply of HREEs and magnetic metals (which includes LREEs). That undeniable fact is not really up for dispute (although we can argue about specific forecasts for demand). There is also a lot of sentiment among those in the REE industry that the demand will increase — sizably — when there is a definitive rest of world supply in place. Meaning, once China’s chokehold on the industry is loosened, demand will increase. If end users have a stable 20-year (and that’s apparently the ‘magic’ number for researchers, developers and manufacturers) supply of strategic REEs, demand will supposedly increase. And it makes sense. One cannot use what one does not have a guaranteed supply of (whatever it may be). The industry will create the market is a compelling argument on how the market will consume more REEs than it does presently — once the materials are proven to be readily available (again, a steady, stable and secure supply). And, of course, there’s also the need to address sustainability as common sense dictates that no country should be beholden to another country (solely) for anything, as this undoubtedly places us in a weakened and vulnerable state. The importance and value in super critical materials needed for national defense and vital high-tech strategic applications should serve as a reminder that our global reality and economics may value these technology metals more than we realize presently.

Why the urgent need of REE projects outside of China?

  • China’s resource nationalism
  • China’s geologic exhaustion
  • China’s increased domestic (and export) regulations
  • A lack of exploration funding (the hostile economic climate for juniors)
  • Global population growth, accelerating affluence in emerging markets, and an increasing number of REE high-tech and clean-tech applications

So… with all that in mind, have we finally seen the bottom? Logic and project/industry fundamentals indicate we should be looking towards brighter days ahead.

Focus Graphite Inc. (TSXV: FMS | OTCQX: FCSMF) gained +13.76% for the week on the American exchange. On December 4th, Focus announced exceptionally positive results from its most recent drilling program on its 100%-owned Lac Knife high-grade, large-flake graphite project in northeastern Québec. Focus’ Kwyjibo REE Project is also quite promising. The Kwyjibo Rare Earth Elements and Copper advanced exploration project is being developed in partnership with SOQUEM (La Societe Quebecoise D’Exploration Miniere), the Québec Government’s commercial mining corporation, and is on a fast track for development. The Kwyjibo Project sits in one of Québec’s historically rich iron ore, copper and gold (IOCG) mineralized zones. Kwyjibo, combined with Lac Knife, means Focus Graphite is well positioned to meet future demand with two sources of strategic/critical minerals.

Pele Mountain Resources Inc. (TSXV: GEM | OTCQX: GOLDF) was up +13.03% on the American exchange on no new announcements. Pele Mountain is focused on the sustainable development of its Eco Ridge Mine Rare Earth and Uranium Project in Elliot Lake, Ontario.

Shares in Critical Elements Corporation (TSXV: CRE | OTCQX: CRECF) were up +12.68% in the US last week on no new announcements.  Critical Elements Corporation is focused on the rare metals and rare earths, particularly tantalum, advancing its Rose Tantalum-Lithium in Québec and the company’s Rocky Mountains Rare Earths Project in British Columbia.

Australia’s Northern Minerals Limited (ASX: NTU) gained +11.11% on no news. Nothern Minerals, led by Managing Director and CEO George Bauk, is ‘driving a pathway to heavy rare earth production’ by advancing its flagship Browns Range Project in Western Australia. Brown Range has a number of prospects with high-value heavy rare earths (including high levels of dysprosium and yttrium) in a xenotime mineralization.

Crossland Strategic Metals Ltd. (ASX: CUX) was up +11.11% for the week. On December 6th, Crossland announced that it had received regulatory approval to commence Feasibility Drilling at Charley Creek. Located in central Australia, the Charlie Creek Alluvial Heavy REE Project is a joint venture between Crossland Strategic Metals (55%) and Pancontinental Uranium Corporation (45%).

Shares in Stans Energy Corp. (TSXV: HRE | OTCQX: HREEF) increased +9.09% on the Canadian exchange last week. On December 2nd, Stans Energy announced (an amended) management cease trade order. As most InvestorIntel readers are aware, Stans has commenced international arbitration against the Government of Kyrgyzstan to reclaim its mining license to the past-producing Kutessay II Rare Earth Project that it acquired in 2009 from the Kyrgyz Republic. In May 2011, Stans completed the purchase of the Kashka Rare Earth Processing Plant, the same plant that previously refined rare earths from Kutessay II ores. Kashka was the only hard-rock plant that produced all rare earth elements outside of China. On September 16th, Stans Energy announced that a Kyrgyz court ruled against Kutessay II’s previous license holder, citing that the Chinese company that claimed ownership of the mine had no legal claims to the license.

U.S. Rare Earths Inc. (OTCQB: UREE) gained +7.55% for the week on no new announcements. Led by President and CEO Kevin Cassidy, US Rare Earths has expanded its areas of interest, which now run to over 25,000 acres of mining claims in Colorado, Idaho and Montana. UREE has released a plethora of notable announcements over the last few months; namely that the 2013 exploration work in Lemhi Pass, Montana “confirmed that the company’s properties have the highest accessible critical rare earth deposit in North America.”

Orbite Aluminae Inc. (TSX: ORT | OTCQX: EORBF) was up +7.32% and +6.49% on the Canadian and American exchanges respectively on now new announcments. A cleantech company setting the new standard for alumina production, Orbite’s Aluminae’s proprietary technologies enable environmentally-neutral extraction of smelter-grade alumina (SGA), high-purity alumina (HPA) and high-value elements, including rare earths and rare metals. Orbite is currently finalizing its first commercial HPA production plant in Cap-Chat, Québec and has completed the basic engineering for a proposed SGA production plant, which would use clay mined from its Grande-Vallée deposit.

Highlights:

On December 4th, Texas Rare Earth Resources (OTCQX: TRER) announced an updated NI 43-101-complaint Preliminary Economic Assessment for its flagship Round Top Mountain in west Texas — one of the most promising heavy/critical rare earth plays on American soil. And the revised figures are outstanding. With one of the lowest projected CAPEX costs in the rare earth industry of $292.7 million, TRER has factored in a complete onsite rare earth oxide separation plant and a contingency provision of $58.5 million. Based on a 20-year Mine Life (predicated on mining a mere 18% of the existing Measured, Indicated and Inferred Mineral Resource Estimate), TRER’s resource consists of 525.4 million kilograms of rare earth oxides (REO), with an average grade of 634 parts per million (ppm) total rare earth oxides (TREO) — of which approximately 70% are comprised of heavy rare earth oxides, plus Yttrium.

Don’t miss InvestorIntel Publisher and Editor-in-Chief Tracy Weslosky’s video interview with Tumerk Komurcu of AMR Mineral Metal Inc. — a near-term production, low CAPEX, rare earth element and minor metals project. AMR Mineral Metal owns 100% of the mining rights to Heavy Mineral Sands-like REE & Minor Metals deposits in southern Turkey. As a member of the EU Customs Union, and having a modern mining legal system, not to mention offering mining incentives to encourage in-country investment, Turkey looks to be a good geo-political risk-to-reward bet for the kind of cutting-edge production effort envisioned by AMR.

Early last week, InvestorIntel published: Pioneering Rare Earths Producer Lynas is Years Ahead of Competition, in which we provided an update on Australian REE miner and producer Lynas Corporation Limited (ASX: LYC | OTCQX: LYSDY). Led by founder and Chairman Nicholas Curtis, Lynas is a pioneer in the rare earths space outside of China — mining rare earths from its Mount Weld Mine in Western Australia, concentrating it onsite and then shipping the materials to the Lynas Advanced Materials Plant (LAMP), in Malaysia, where the concentrate is refined into final end-user ready rare earth products. Past issues aside, moving forward, the fact remains that Lynas is years ahead of its Australian (and rest of world, outside of China) competitors, with an operational mine and processing facility. Should rare earths prices rise as demand increases (with consistent growth in existing and new technology product applications), Lynas could be a true opportunity for investors at current prices.

Here are your numbers for the week:

wirdec6


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Comments

  • Tracy Weslosky

    Thank you for running with this week’s Rare Earths & Critical Minerals Week-in-Review Ty — you did a smashing job. Now, have we hit the bottom? Anyone? I vote we have indeed and I will do one better: forecast or at least place a bid on what will probably happen this holiday season…

    I predict a scintillating holiday with the Chinese announcing an intriguing hard line on exporting of REEs and kick starting the year nicely…

    December 9, 2013 - 2:09 PM

  • Veritas Bob

    Tracy,

    You keep forecasting that we have hit bottom. Eventually, you’ll be right. 🙂

    December 13, 2013 - 2:16 PM

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