Drolet Stock Note: West Timmins Gold Explorer bordering IAMGOLD’s Côté Gold Mine

Mario Drolet President of MI3 Communications Financières Inc. (MI3) released his Stock Notes on Platinex Inc. (CSE: PTX) for exclusive distribution on InvestorIntel. In this note, MI3 highlighted the following points on Platinex Inc.:

  • Shining Tree Gold Camp is located in the southwest portion of the Abitibi Greenstone belt along the projected extension of the Larder Lake-Cadillac Break between the operating Young-Davidson (Alamos) Mine and the advanced development Côté Lake (IAMGOLD) project.
  • Acquisition of Treasury Metals Inc. property creates the largest combined gold focused property package in the Shining Tree district in northern Ontario.
  • The geological environment the Company is exploring in Shining Tree could yield one or more deposits containing over 10,000,000 ounces of gold. The platinum group metal prospects the Company is targeting each have the potential to contain over 100,000,000 ounces of platinum group elements.
  • PTX surge following IAMGOLD announcement of opening the Cote mine neighboring PTX gold project
  • PTX traded over 35 Million shares over the last six months between $0.01 & $0.05
  • Support: S2; $0.03   S1; $0.04   Resistance:   R1; $0.045   R2; $0.05

About Platinex Inc.

Platinex is currently focusing efforts on re-establishing its mining business, assembling a very large property in the Shining Tree gold camp, which has received little modern exploration compared to other gold camps in the Abitibi Greenstone Belt and forming alliances to move property exploration forward. The Company utilizing its proprietary data is also seeking financial backing to secure and advance major Platinum Group Element properties in North America.

PLEASE DO YOUR DUE DILIGENCE

Disclaimer: This MI3 Technical Note produced by MI³ Communications Financières is neither an offer to sell, nor the solicitation of an offer to buy any of the securities discussed therein. The information contained is prepared by MI3, emanating from sources deemed to be reliable. MI3 Communications Financières makes no representations or warranties with respect to the accuracy, correctness or completeness of such information. MI³ Communications Financières accepts no liability whatsoever for any loss arising from the use of the information contained therein. Please take note that for compliance purposes, all directors, consultants or employees of MI3 Communications Financières are prohibited from trading the securities of the company and MI3 Communications Financières is a shareholder and do not intend to sell any shares during the distribution of this report.




Seismic Shift in the Niobium Space

We had to suppress a laugh when we saw the sale announced over the weekend of the Niobec mine by IAMGold (TSX: IAG) as “long-planned”. Yes, and the Second Coming has been long-planned too. Ever since we have been following the Niobium space this asset has been mooted for demerger or an IPO, though rarely for an outright sale as it was not clear who would acquire it.

IAMgold announced that it was selling its Niobec niobium mine in Quebec to focus on its core gold mining business. The buyer(s) is/are a group of companies led by investment company Magris Resources Inc and are paying $500 million in cash to get their hands on the only Niobrium miner outside Brazil. This is rather eye-opening in this day and age for being cash and being such a large number. Magris Resources, which is Toronto-based, is headed up by the  former CEO of Barrick Gold, Aaron Regent. As an aside we would note that once again we have a case of an ousted CEO doing better (and more imaginative things) outside the company that ousted them in the first place.

IAMgold picked up the Niobec assets as part of its acquisition of Cambior back in 2006. The mine is located in the Municipality of St-Honoré in the Saguenay-Lac-Saint-Jean region, 200 kilometers North of Québec city, is the only underground niobium mine in the world. Niobec currently employs more than 480 employees. Its production currently corresponds of 8–10 % of the worldwide volume of niobium depending on changes in supply and demand from year to year.

Apparently the sale includes an adjacent rare earths deposit. This is the so-called St Honore Carbonatite. Its metrics are:

Total Inferred Resource (NI 43-101) 466.8 tonnes
Total Rare Earth Oxide grade 1.65%
TREO contained 7.7 million tonnes
Heavy Rare Earth Oxides 2%
Light Rare Earth Oxides 98%
Key REE Mineralization Bastnaesite/Monazite
Host Rock Carbonatite

IAMgold will get an additional $30 million when commercial production begins at the adjacent deposit. However, looking at the state of the market for LREE-biased deposits, that could be a very long wait.

A Muddled Strategy

Talk in 2012 indicated that IAG intended to float this off in the public markets but then they seemed to be hanging onto it. This was probably because of weak markets but we also suspected it was because Niobium had a better outlook than IAMgold’s staple metal, gold. Dare we say it but Niobium has now an even better perspective while gold wallows in its pit of misery.

If the spin-off had gone ahead it would have given the metal a much stronger public awareness than hitherto where it had just been a bonanza cash-flow generator for IAG hidden in its closet.

The Magris Group – A Dark Horse in the M&A Space

We suspect that  a lot more will be heard of this group in the near future. The fact that so many assets still remain at bargain basement prices will aid its growth. With big dumb majors shedding assets in a bit of a “baby out with bathwater” style there should be much that a cashed-up predator can hoover up. Aaron Regent set up Magris Resources after he was ousted as chief executive of Barrick Gold in 2012. He was one of a cluster of industry figures who raised private funds to invest in mining, reasoning that public companies would sell unwanted assets at attractive prices during an industry slump.

The Magris-led group includes Singapore’s Temasek Holdings and CEF Holdings Ltd, a Hong Kong-based investment company owned by Canadian Imperial Bank of Commerce and billionaire Li Ka-shing’s Cheung Kong Holdings Ltd.

Magris is not necessarily mistaken in making its first major move upon a specialty metal mine rather than the old Bay Street object of desire, a precious metals mine.

The Niobium Landscape

There are only three producing Niobium mines in the world. Despite Quebec’s role with Niobec, the real player is Brazil, the world’s largest producer of niobium (92%), followed by Canada. There are also a number of Niobium explorers with ambitions to move to production.

Graph

Brazil has two of the largest niobium deposits in the world, the Araxá and the Catalão deposits. The Araxá mine is operated by CBMM, where decreasing grades are increasing operating costs at the mine. CBMM is owned by the Moreira Salles family, one of Brazil’s wealthiest groups. Their fortune has largely derived from a punt on Niobium back in the 1960s and interests in the banking sector. According to Bloomberg, CBMM generates more than $600 million in annual profit. They calculated it was worth at least $13 billion, based on the family’s sale of a 30% stake to a group of Asian steelmakers for $3.9 billion in 2011. The brothers are estimated to hold an equal share of the remaining 70% stake.

Company-and-Deposit

The Catalão mine in the state of Goias is owned by Anglo American Brazil. It has the smallest reserves of the three Niobium “majors”. There has been speculation that the mine may run out of ore if the deposit size cannot be increased.

Implications for the Up-and-Coming

The main contenders to be Niobium producers in the next few years are Alkane (ASX: ALK | OTCQB: ANLKY), MDN (TSXV: MDN) and Niocorp Developments Ltd. (TSXV: NB | OTCQX: NIOBF).

It was only last week that we wrote about MDN Mines (click here) and its Tantalum/ Niobium property. This Quebec-based company has two specialty metals projects in the province and one gold prospect in Tanzania.  Of most interest (and most advanced) is the Crevier Tantalum/Niobium project in Quebec. It is now relevant to speculate how things might pan out here as this project is owned 72.5% by MDN and 27.5% by IAMgold. While nothing has been said publicly on the implications for this stake of the larger Niobec deal, it would make infinite sense for it to migrate to Magris as well rather than stay with a largely disinterested IAMgold.

Then there is Niocorp which was one of the lucky ones that exited the REE space early. Its earlier manifestation had been as Quantum Rare Earths (ironically exploring the same deposit as now but with a focus on REEs.  Besides its sizeable Niobium resource, one of the interesting features of Niocorp is that the company is headed up by Mark Smith, the veteran CEO of Molycorp, who has been steeped in the world of specialty metals for many decades. Niocorp’s Elk Creek property in Nebraska used to belong to Molycorp when it was a much more diversified metals explorer, before it narrowed down to its current REE focus. And Molycorp had a relationship with CBMM with Mark Smith being the company’s representative on the board of the Brazilian giant. Niocorp could be viewed as a large company trapped in a small company’s body… for now.

Conclusion

I can’t help but notice that while Mick Davis has rustled up billions for his X2 vehicle to replicate Xstrata, the new entity has been remarkably sparse on action and newsflow. Not so with Aaron Regent and his Magris play. It seems that it must have had Niobec in its sights for a while and has now pounced.

Besides our long-held desire to see a standalone Niobium producer trading on the markets, another advantage of having Niobec set free from IAMgold was that it gives some measure of value for such deposits. This then rebounds (positively) on those juniors holding assets in the Niobium space such as Niocopr, MDN and Alkane.  Any publicity is good publicity and those in the investment community should dust off their old notes on Niobium and ask themselves what Magris knows that they do not…




MDN developing two of the world’s most critical metals: niobium and tantalum

On June 18, MDN-Mines (‘MDN’, TSX: MDN) announced that it will soon launch a niobium and tantalum exploration program at its 100% owned Samaqua property, in the Saguenay-Lac-Saint-Jean area of Quebec – close to Niobec’s Crevier project. The initial geophysical survey and drilling program (1,500 meters) aims to confirm the presence of niobium and tantalum mineralization. The evidence certainly suggests it. The property has shown a magnetic geophysical signature similar to that associated with Iamgold’s Niobec’s niobium rich carbonatite deposit.

Niobium (Nb) is mainly used in steel alloys to create high strength low alloy steels (called “High Strength Low Alloy Steels”), stainless steel and heat resistant steels. Niobium’s properties have generated considerable demand from advanced industrial sectors because it helps increase steel’s resistance to high temperatures, corrosion while raising superconductivity. Niobium has, therefore, become essential in the automotive industry, heavy engineering and infrastructure (i.e. bridge construction and earthquake resistant buildings), the petrochemical industry, power plants and oil & gas pipelines. A smaller percentage of high grade niobium is used exclusively to make superalloys used for the manufacture of aircraft engines.

The highest niobium grades (over 99% purity) are used in optical and electronic devices. However, niobium is going to be growing in demand, because it allows for weight reduction, which in automotive and transportation ‘language’, translates to higher energy efficiency. There are only three major niobium producers worldwide. CBMM in Brazil owns the world’s largest niobium deposit and its Araxa mines supplies some 83% of niobium consumed around the world. Anglo American (UK) also extracts niobium in Brazil but no more than 3% of the world’s total, while IAMGOLD in Canada, thanks to its Niobec mine, is the second largest producer of niobium in the world, accounting for 9% of global supply. There is a potentially rich source of niobium in Tanzania as well. Clearly, Brazil enjoys an overly dominant – one might say hegemonic – position over niobium. Given that the European Union and the United States consider niobium to be a critical metal, they are both interested in reducing reliance on Brazil and identifying new sources closer to home. The limited supply and number of plays – and the long supply routes – simply adds too much pressure on prices while CBMM is the only niobium producer that is able to deliver all the varieties, including the highest grades. Therefore, MDN’s new niobium venture will be welcomed by the market.

The market for tantalum is equally critical but more complex. MDN and Iamgold have already been working on a tantalum resource at the Crevier project (MDN owns 72.5% of it). Tantalum is crucial in the manufacture of electronic capacitors used in mobile phones, digital tablets, green technology (wind turbines, solar panels, batteries for electric vehicles). Less than 1,000 tons of tantalum is produced each year – worldwide. Tantalum, like so many other critical metals has largely been produced in China. In order to reduce reliance on Chinese tantalum, western countries have developed tantalum resources in Africa. The Democratic Republic of Congo has been one of the leading global tantalum producers; however, tantalum extraction in Africa involves coltan, a so called ‘conflict mineral, which has gained more fame for its geo-political risk rather than its industrial applications. Western companies must now prove that the tantalum meets certain standards of extraction, particularly human rights standards. Any company that uses potential conflict minerals to must disclose its supply chain in order to reduce the amount of coltan mines (and tungsten) operated by rebel militias in the Congo. Meanwhile, in 2013, the Geological Society of South Africa claimed that tantalum would be ever more difficult to find. As in the case of niobium, he European Union and the US Department of Defense have classified tantalum at the top of their list of critical metals. By developing a tantalum resource in Canada, in the mining friendly district of Quebec, MDN Mines will control a very high demand mineral, whose demand is increasing and whose global competition has been hampered by geopolitical risk.