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Lynas Bets $500 Million on Rare Earths Market Expansion

Lynas Rare Earths Ltd.‘s (ASX: LYC) August 3 announcement that it will invest an additional $500 million to rewrite its own already aggressive growth plan is risky, sure, but then, when it comes to rare earths, what isn’t? Managing Director Amanda Lacaze appears to be reading the demand-pull market for Lynas’ main products, neodymium (Nd) and praseodymium (Pr), as further accelerating, despite some hits to the “green” economy from the war in Ukraine. There are sound reasons supporting such a view, including the commitments by EU auto manufacturers to cease all gasoline production by 2025 and recent (surprising) political developments in the US, especially passage of the CHIPS Act (supporting redevelopment of a US-based semiconductor industry) and the current Inflation Reduction Act (also known as Build Back Better in disguise) likely to be approved this week by the House of Representatives and signed quickly by President Biden.

Lynas is particularly well-positioned to benefit from this latest legislation as it already has two agreements with the US Department of Defense for construction of two separation plants: a $30 million light rare earths plant (deal signed in January 2022) and also in June a $120 million deal for a heavy RE plant. This in addition to Japan’s ongoing demand, a not insignificant factor as Lynas self-identifies as controlling 80% of that market.

So, if all looks positive on the demand, where are the risks? Well, unvarnished success will require the split-second timing of a juggler. Expanding output at Mt. Weld should be a green light: the deposit and its characteristics are well known and should present few obstacles to an experienced team (with the usual caveats about the weather which these days can be a real Devil).

But, there is a problem with Malaysia. Despite winning an unprecedented two EcoVadis awards, political and public concerns about radioactive materials led the Malaysian government to refuse to extend Lynas’ cracking and leaching permits. (ESG Comment: this goes to show how history haunts even companies who had nothing to do with previous problems, and how hard it can be to gain and retain trust.)

Lynas announced in February of this year that it has received Ministerial approval for its Kalgoorlie rare earth processing facility, clearing the way for construction to begin. This new facility will strip and store the radioactive elements (uranium and thorium) and then ship the “clean” material to Malaysia for final processing. Thus the timing issue. If the processing plant can be constructed in record time with no unexpected issues, it could dovetail nicely with the increased output from the mine. Otherwise, lower through-put or possibly storage of mined materials could be necessary, providing a cost hit. And even if the timing is impeccable, there will be some increased product cost due to shipping to and processing at Kalgoorlie and then onwards to Malaysia.

Nonetheless, kudos to Lynas for a bold move, going for market share in a booming market with positive political signals and economic momentum. As Christopher Ecclestone said to InvestorIntel: “Lynas just goes to show that it is a doer when so many others are just talkers in the Rare Earth space.”




MP Materials is riding the rare earths tonnes per year train

MP Materials Corp. (NYSE: MP) emerged from the Chapter 11 of Molycorp and is the only producing rare earths mine in the USA. At one time the in the 1990s it was producing upwards of 40% of the world’s rare earths.  MP has a current market cap of US$5.6 billion, which puts it slightly ahead of Lynas Rare Earths Ltd. (ASX: LYC), which is the biggest producer of separated rare earths outside of China. Combined their market caps exceed the annual revenue of separated rare earths globally.

MP has made some interesting news this year. Q1 revenues of US$166.3 million which is 50% of their revenues from all of 2021. This is due to the high pricing of Neodymium (Nd) and Praseodymium (Pr) in Q1 of this year. Based on Roskill’s report of 2015, MP’s content of NdPr is 16.3% of the total volume. This may vary a little but it is likely to be the two elements that set the pricing for their concentrate as the balance of the materials are of little value. Looking at a basket price, NdPr will account for 93-94% of the total value, assuming all elements were sold which is doubtful as the Chinese have lots of the remaining elements, especially Cerium and Lanthanum. Gross margins in Q1 2022 were 88%, up from 81% in 2021, but I expect this will fall for the balance of the year as NdPr prices are now 20-25% lower than Q1 peaks. Either way, MP is poised to improve its Net Income to US$168.4 million. MP has done a good job in their sales price to China for their concentrate. I calculate they are getting somewhere in the range of 40-50% of market value, which is high versus traditional pricing for concentrate which I have seen at 25-30%.

In April a definitive supply agreement was announced between MP Materials and GM to supply rare earth alloy and magnets for GM’s EV program. This is significant as it would restore NdPr rare earth metal, alloy and magnet production. The USA does produce Samarium Cobalt magnets but these are typically used in military applications. There is no indication on what technology will be used to produce the metal, which in China is a messy process. Planned capacity is 1,000 metric tonnes of NdFeB magnets. This will require 280-300 tonnes of NdPr. The previous Molycorp plant was designed to produce 20,000 tonnes of REO of which NdPr would account for over 3,000 tonnes.

This does leave the question as to where MP will sell the remaining NdPr. Europe has one metal/alloy producer and one magnet producer, and Japan is the other logical market, but Lynas owns 80% of the Japanese market and has a shorter supply line. What is left is China. Also to supply other US car producers MP would have to expand capacity, and it is not clear what limits or exclusivity GM has with MP Materials.

The challenge is that the original plant was designed as a single train of 20,000 tonnes per year. Nowhere in China is there a single train much larger than 5,000 tonnes per year (TPY). Lynas built four 5,500 TPY trains. This allows flexibility should there be issues like reduced demand during COVID where one or two trains can be shutdown to allow matching with demand, or if one train has operational issues. I would expect that MP, with the input from Shenghe Resources (a related party of MP whose ultimate parent is Shenghe Resources Holding Co., Ltd., a rare earth company listed on the Shanghai Stock Exchange, and as of its March 31, 2022 quarterly report, a buyer of MP’s rare earth concentrate that accounted for more than 90% of MP’s product sales), will reconfigure the plant to be more flexible. Also MP, like anyone else, will not go from zero to 20,000 TPY overnight. There will be a qualification process and time to acquire accounts so multiple trains makes sense as one penetrates a market as they can be brought on as the business grows.

The other news was that the US Department of Defense (DOD) granted MP $35 million to build a heavy rare earths at Mountain Pass. I find this interesting as Mt. Pass has 98.6% of its content in light rare earths. This would mean at a run rate of 20,000 TPY the total output of the heavy rare earths would be 280 TPY. The only real valuable heavy rare earths are Terbium (Tb) and Dysprosium (Dy) which would total about 10 TPY combined. At today’s pricing, which for Tb is high, in my opinion, this plant would generate revenues of $10-11 million per year.

Overall MP has been doing well – selling concentrate to China. What will happen to profits as they move downstream only time will tell.




InvestorIntel Week in Review for July 11-17, 2022

Meeting with Jack Lifton and Stephen Lautens later today to discuss a Critical Minerals Summit this Fall. As we continue to work with global leaders in this sector, finding a way to share the data we secure on the ESG and Critical Minerals sector is a priority for our readership and audience always ready to be first to market with the benefits of our investor intelligence.

Speaking of intelligence, may I graciously recommend that you watch this interview I did with Cam Currie, who is a Sr Investment Advisor with Canaccord Genuity Wealth Management and the Principal for the Currie Metals and Mining Group that was published early morning Click Here. Seriously, before you enter the market seas today, grab onto this Baywatch lifeguard and hear his advice —- he offers to save us from the stagflation undercurrents with some real advice (Tip: #gold, #basemetals, and #preciousmetals).

Would like to thank our friends at Silver Bullet Mines on announcing the production of silver last week. It did not escape notice to me in reviewing the Top 10 items that are Trending for our last 30-days that someone is looking up #scandium and #ImperialMining (see #6 and #7)….

Top 10 Trending on InvestorIntel.com

  1. DoD awards Australia’s Lynas $120 million to build a heavy rare earths facility in the USA: I have questions https://bit.ly/3bqMHqX (June 28, 2022 – Editor, Jack Lifton)
  2. Dev Randhawa of Fission 3.0 talks about US reliance on Russian uranium https://bit.ly/3yi2Zv6 (June 23, 2022 – Interview Host, Tracy Weslosky)
  3. Byron W King talks to Energy Fuels and Ur-Energy about ramping up US uranium production https://bit.ly/3u0oLRn (June 24, 2022 – Interview Host, Byron W King)
  4. The Critical Minerals List is Becoming More Critical https://bit.ly/3a2XIOy (June 27, 2022 – Editor, Robert Scannell)
  5. Gold company Presidents and CEOs talk about the return of gold investments and investors https://bit.ly/3y0scZt (June 27, 2022 – Interview Host, Stephen Lautens)
  6. Peter Cashin of Imperial Mining talks about scandium’s importance and the need for domestic supply https://bit.ly/3yc3kzx (June 22, 2022 – Interview Host, Byron W King)
  7. Peter Cashin on the “earth shattering” PEA for Imperial Mining’s Crater Lake Scandium-REE deposit https://bit.ly/3n5CouN (June 21, 2022 – Interview Host, Tracy Weslosky)
  8. The Uranium Bull in the Room – Why the Excitement is Back https://bit.ly/3Ngjc8p (June 23, 2022 – Interview Host, Tracy Weslosky)
  9. Tungsten – the other critical metal and a way to play it https://bit.ly/3IK8B4S (July 1, 2022 – Editor, Byron W King)
  10. Jack Lifton talks with Dr. Anthony Mariano, “the most senior rare earths geologist on the planet” https://bit.ly/3yr7fIT (June 28, 2022 – Interview Host, Jack Lifton)

Other InvestorIntel Interviews published last week for your viewing enjoyment include:

  • July 15, 2022 – Peter Clausi of Silver Bullet Mines talks about its first silver production https://bit.ly/3citw2X
  • July 15, 2022 – Pierre Gauthier of Auxico Resources talks about recent off-take agreements and rare earths trades https://bit.ly/3cbRpZT

And in case you missed some of our InvestorIntel Feature Columns, I must confess that my personal favorite was the one done by Dean Bristow on the new S&P/TSX Battery Metals Index.

  1.  With a new PEA Search Minerals’ rare earths projects deserve a serious look https://bit.ly/3zarye2
  2. The new S&P/TSX Battery Metals Index – what were they thinking? https://bit.ly/3P9nbFA
  3. Graphite: The Top 5 North American Players to Watch https://bit.ly/3z11Kkg
  4. Friedland likes Fjordland’s chances of finding nickel https://bit.ly/3aw8UDP
  5. InvestorIntel Week in Review for July 4-10, 2022 https://bit.ly/3nW0VTu
  6. The Secret that Elon Musk and Twitter Share https://bit.ly/3P0Ou4H

I always start my Monday by reviewing some of the ii8 System client news releases for the week prior to today. If you see below, we had news from Imperial Mining – must call Peter Cashin for an interview….

 News Releases:

  •  July 18, 2022 – Zentek Files a Provisional Patent on the use of ZenGUARD(TM) as an Anti-Inflammatory Agent https://bit.ly/3PiFrMC
  • July 18, 2022 – Volcanic Presents Update on Plans for Guatemala and Proposes Extension of Previously Issued Share Purchase Warrants https://bit.ly/3IMAJEy
  • July 15, 2022 – Bald Eagle Announces Results of its Annual General and Special Meeting of Shareholders https://bit.ly/3odzjJU
  • July 15, 2022 – Romios Announces Appointment of Stephen Burega as CEO https://bit.ly/3IVAM13
  • July 15, 2022 – Awakn Life Sciences Provides a Business and Corporate Update https://bit.ly/3B0zNKG
  • July 14, 2022 – Nano One Annual General Meeting and Investor Update https://bit.ly/3Odsr9I
  • July 14, 2022 – Sixth Wave Commercializes Affinity(TM) System with $3.5M License to AESI https://bit.ly/3yEUARl
  • July 14, 2022 – Further Outstanding Drill Results achieved at Halleck Creek Rare Earth Project https://bit.ly/3AOlZmw
  • July 13, 2022 – Silver Bullet Mines Corp. Produces Silver https://bit.ly/3z4cSx2
  • July 13, 2022 – Azincourt Energy Identifies Uranium Enrichment at the East Preston Project https://bit.ly/3yAKHUH
  • July 12, 2022 – Silver Bullet Mines Corp. Announces Settlement of Debt https://bit.ly/3o23ROB
  • July 12, 2022 – Westward Gold Announces its Inaugural Drill Campaign is Nearing Completion https://bit.ly/3RuTdgA
  • July 12, 2022 – Imperial Mining Increases Scandium and Rare Earth Recoveries on Its Crater Lake Development Project, Quebec https://bit.ly/3NYOlxy
  • July 12, 2022 – Ucore Upscales its REE Demo Plant Capabilities and Streamlines the RapidSX Commercial Deployment Plan https://bit.ly/3O0dKXD
  • July 12, 2022 – Troilus Reports Metallurgical Recoveries of 95.5% Gold, 95.9% Copper and 92.8% Silver From Zone Z87 Pilot Plant Test Program https://bit.ly/3O1RVHd

Wishing everyone an outstanding week and thank you for reviewing my Week in Review. To follow me on Twitter, go to @TracyWeslosky.




Iluka Resources looks to join exclusive club of rare earths producers

Iluka Resources Limited, (ASX: ILU) an Australian mineral sands company, is poised to add rare earth elements to its portfolio of products. The company’s main products are zircon, titanium, plus iron and carbon materials from its processing plants in Australia. It also has recently announced the de-merger of its Sierra Leone company, Sierra Rutile Holdings Limited, to end up with two ASX listed companies.

The plan announced by Iluka is to start concentrating monazite and xenotime in the second half of this year from its mineral sands operation in Western Australia. Cracking and leaching will begin next year followed by separation to produce rare earth oxides in 2024 at Eneabba, Western Australia, which is a 3 hour’s drive north of Perth. According to public company information, the planned output is 17,500 tons per year of Total Rare Earth Oxides (TREO). They note the plant will have a full capacity of 23,000 TPY of TREO with all circuits fully utilized. It is reasonable to assume that they are looking for additional monazite to fill their plant as the capacity is more than they can produce themselves.

Based on the feed rate of 17,500 TPY TREO Iluka expects to produce 4,000 TPY of Nd/Pr plus 500 TPY of Dy/Tb. Typically, Dy:Tb ratio varies from 2:1 to 5:1. At today’s pricing of $135/kg USD for Nd/Pr oxide, Dy oxide at $362/kg USD, and Tb4O7 at $2.056/kg USD, Iluka’s annual revenue could be in the range of US$1 billion.

The projected capital costs are AU$170-200 million for the cracking and leaching, and AU$320-390 million for the separation and finishing. Additional costs include plant and infrastructure AU$110-140 million plus indirect costs, contingency, commissioning and miscellaneous costs of AU$400-470 million for a total of AU$1-1.2 billion. According to the company, there will be support from the Australian government in the form of a loan from the government’s Critical Minerals Facility fund and a risk-sharing agreement that would include non-recourse debt, royalty payments to Iluka, and flexibility in repayment schedules.  This is what is necessary to get these projects off the ground – government support and vision to see that risk sharing is very important.

Raising this amount of capital in the markets today is a challenge and also very dilutive as their current market cap is AU$3.8 billion.  An advantage Iluka has over many other planned entrants into the rare earth space is their existing cash flow from current operations, as it will take time to generate revenues from this operation after construction begins this year and until the first output is expected to be seen in 2025.

Source: Iluka Company presentation, April 4, 2022

Based on using their existing stockpile at Eneabba, Iluka could produce 12,400 TPY TREO with an operating cost of AU$13/kg or about US$10/kg which is competitive with Chinese costs. I am assuming they put no value on the feed material as it is in a stockpile.  They have not included any transfer costs from other sources in their expanded production estimates with other sources of feed. The stockpile feed would produce 2,700 TPY of Nd/Pr or about half of the capacity of 5,500 TPY of Nd/Pr. This stockpile would be exhausted in 9 years, so they are actively looking for other sources to fill the plant.

One question that is not clear is whether they will take a Molycorp plant design approach or the Lynas approach.  Molycorp originally designed a single train 20,000 TPY TREO capacity. Lynas built four 5,500 TPY TREO trains so that if supply or demand changed, or there was a problem in one train, they did not lose all their production.  This came to light over the COVID era when demand dropped.  This is a major consideration of any new plant design as economies of scale are limited or offset by potential operational problems.

Overall this may well be one of the players to cross the finish line in the race for more production of rare earths outside China.




DoD awards Australia’s Lynas $120 million to build a heavy rare earths facility in the USA: I have questions

Updated June 28, 2022: Lynas’ Managing Director Amanda Lacaze provides answers below

 

I was intrigued last week when the U.S. Department of Defense (DoD) made the announcement that it had awarded US$120 million to Lynas Rare Earths Ltd. (ASX: LYC) to build a 3-5 kta heavy rare earth separation system in the USA. This is in addition to the $30 million the DoD awarded to Lynas (to be matched by Lynas) in February 2021, for the same thing. My guess is that since Lynas built and operates the world’s largest light rare earth separation system in Malaysia where it processes ore from its Mt. Weld Australia monazite mine (the world’s largest worked deposit of monazite), it seemed like an easy decision for the DoD, provided it was prepared to overlook the skills of the domestic American market and the mandate to buy American and reshore. 

But, since the DoD had already agreed to provide US$30 million of an estimated (by Lynas) US$60 million to build such a facility in Texas, why, I asked myself was an additional US$120 million necessary? 

So, I drafted a set of questions for Lynas, the answers to which would be particularly important in a due diligence study for the project, in case the DoD either did not do a due diligence (my guess) or would not publicly answer the same questions citing national security concerns, or some such nonsense. 

Here are the questions I sent to Lynas at the beginning of this week: 

  1. What is the project’s location?
  2. What is the detailed CAPEX and the estimated OPEX for the system?
  3. When will the permitting be finished?
  4. Is the plant design finished (It would have to be for the permitting to be finalized)?
  5. What is the timeline for construction and first output?
  6. What exactly will be the composition of the plant’s output in individual rare earths and tonnages of each, and when will the (nameplate) target capacities be reached?
  7. Will the costs per KG of each individual rare earth and blend be competitive with the Chinese costs? 
  8. Will the US DoD be the only customer?
  9. Will any of the heavy rare earths be consigned to specific metal/alloy/magnet makers? and,
  10. From where, exactly, will the feedstocks be sourced? 

Question number 10 is extremely important since there is today no commercial production of heavy rare earths outside of China. Also of note is the fact that Lynas has never commercially produced any separated individual heavy rare earths, nor is its Malaysian plant equipped to do so. 

I am awaiting a reply to these questions from Lynas, but I will let you know when I get them. 

Publisher’s Update:

In response to the above questions InvestorIntel editor Jack Lifton received the following answers by email from Amanda Lacaze, Managing Director of Lynas on June 27, 2022:

1What is the project’s location?

Following a detailed site selection process, the facility is expected to be located within an existing industrial area on the Gulf Coast of the State of Texas.

Texas is an excellent location from which to serve our U.S. customers and support the U.S. government’s moves to strengthen its industrial base and make supply chains more resilient through a diversified supply.

2.  When will the permitting be finished? / Is the plant design finished? / What is the timeline for construction and first output?

The design of the Heavy Rare Earths plant was completed as part of the Phase 1 contract. The construction timeline will be confirmed following the completion of detailed engineering and planning. The plant is targeted to be operational in financial year 2025.

3.  What exactly will be the composition of the plant’s output in individual rare earths and tonnages of each?

A typical Heavy Rare Earths separation facility of this type would produce between 2500-3000 tonnes of heavy rare earths per year.  We would expect our Heavy Rare Earths production to be in this range.

We have publicly stated our expectation that the Light Rare Earths plant will produce approximately 5,000 tonnes per year of Rare Earths products, including approximately 1,250 tonnes per year of NdPr.

4.  Will the US Department of Defense be the only customer?

This will be a commercial facility and will be designed to serve both the U.S Defense Industrial Base and commercial manufacturers.

5.  Will any of the heavy rare earths be consigned to specific metal/alloy/magnet makers?

This facility is a positive step towards reinvigorating the domestic Rare Earths market, and we will work to encourage investment in value-added downstream processes including metal and magnet making.

6.  From where, exactly, will the feedstocks be sourced?

Feedstock for the facility will be a mixed Rare Earths carbonate produced from material sourced at the Lynas mine in Mt Weld, Western Australia. Lynas is building a new Rare Earths Processing Facility in Kalgoorlie to process the Rare Earth concentrate from Mt Weld. The material produced in Kalgoorlie will be further processed at the new Rare Earths separation facility in the United States. Lynas will also work with potential 3rd party providers to source other suitable feedstocks as they become available.




InvestorIntel Week in Review for June 13-20, 2022

Ever imagine what the world would look like if you closed your eyes and then saw the world 2 years later?

Last week’s PDAC 2022 was like opening a musty cupboard that has been closed too long. Likewise, it felt like a bad case of Back to the Future in that it was post-PDAC 2020 when the world shut down, I recall when we were all abuzz over who had spread COVID during that event.

Tired, and out of shape, there was an occasional dramatic betterment, as both George A. Brown and George Bauk of PVW Resources Limited (ASX: PVW) could attest to. Both confessed to substantial life changes and had left good solid poundage aside for exercise and nutrition. They both looked younger.

With our new Publisher and Editor in Chief Stephen Lautens onside this year, along with Byron W King, and Clint Adam Smyth on Stage 1, Level 700 for 3 days at the Metro Convention Centre: we completed 7 panels and we should have all these live by end of the week this week.

This morning? Jack Lifton has a story he is working on an opinion on the “USD$120 million by the U.S. Department of Defense to Australia’s Lynas Rare Earths Limited (ASX: LYC) to cover the costs of constructing what is referred to as a ‘heavy rare earths’ processing (separation) plant in the USA.” And I am tracking down the 3 companies that are referenced in Byron W King’s most recent piece on his highlights from PDAC. My favorite participants? I need one more week to drill through all the business cards, and do my research, and then, am happy to share some interesting facts that I surmised from my time during this event… including the resounding theme of  Copper, Gold and — uranium! Plus, when did Jamaica start advertising rare earths?

We have the benefit of news flow, analysts and journalists communicating with us endlessly. Starting this week and moving forward, let me send you some of the highlights I review, including re-reviewing this week’s upcoming InvestorTalk.com schedule, which includes:

InvestorTalk.com Schedule for June 21-23 (Click Here to RSVP):

  • Tuesday, June 21 from 9-920 AM EST – InvestorTalk.com with Brent Willis from Voyageur Pharmaceuticals Ltd. (TSXV: VM)
  • Wednesday, June 22 from 9-920 AM EST – Special Guest
  • Thursday, June 23 from 9-920 AM EST – InvestorTalk.com with Terry Lynch from Power Nickel Inc. (TSXV: PNPN | OTCQB: CMETF)

 InvestorIntel Interview Highlights for the Week of June 13-20th, 2022:

  • June 20, 2022 – Hubert Lau talks about TrustBIX entering a new growth phase with major agreements in place https://bit.ly/3O6l3xN
  • June 17, 2022 – Byron W King says it is time for investors to get back to “real things” like copper and gold https://bit.ly/3xrXKr6
  • June 15, 2022 – Frederick Kozak of Appia Rare Earths & Uranium talks about new REE discoveries at Alces Lake https://bit.ly/3zpUaAr

InvestorIntel Column Highlights for the Week of June 13-20th, 2022:

  • Stephen Lautens · June 17, 2022 – We’re Back – PDAC mood positive in spite of sagging market https://bit.ly/3O3L5BE
  • Dean Bristow · June 17, 2022 – Generation Mining looks to knock Russia off its palladium pedestal https://bit.ly/3xDdYOl
  • Byron W King · June 16, 2022 – Fresh from Toronto: Three Mexican Beauties https://bit.ly/3xxOwJS
  • Stephen Lautens · June 14, 2022 – InvestorIntel is digging for stories at PDAC 2022 https://bit.ly/39t2BjN
  • Bob Hanes · June 14, 2022 – Rare earths giant MP Materials invests heavily to rebuild a U.S. magnetics supply chain https://bit.ly/3xPTAuH

 News Releases* InvestorIntel Published for the Week of June 13-20th, 2022:

  • June 20, 2022 – Romios Gold Begins Field Work On 3 Projects Near Newmont’s Musselwhite Gold Mine, NW Ontario https://bit.ly/3beqVXg
  • June 17, 2022 – Awakn Life Sciences to Present in Upcoming June 2022 Conferences https://bit.ly/3y9e6GR
  • June 17, 2022 – Nano One Announces Closing of Rio Tinto Strategic Investment and Collaboration Agreement https://bit.ly/3xZwwtu
  • June 17, 2022 – Commissioning Commences at Vital’s Saskatoon Rare Earth Extraction Plant https://bit.ly/3tGEFAp
  • June 16, 2022 – Voyageur Pharmaceuticals Ltd. Announces Closing of Over Subscribed $1Million Private Placement and Issuance of Shares for Debt https://bit.ly/3MWLLHH
  • June 16, 2022 – TRU Signs Definitive Option Agreement for Consolidation of Final Contiguous Gold Property at Golden Rose Project https://bit.ly/3xUrDBD
  • June 16, 2022 – ePlay Digital Announces the First Pet Store in the Metaverse https://bit.ly/3aY9mKR
  • June 15, 2022 – NEO Battery Materials Signs a Collaboration Agreement with Applied Carbon Nano Technology Ltd. in South Korea https://bit.ly/3tDjyiq
  • June 15, 2022 – Alphamin Operations Unaffected by Recent Closure of Bunagana Border Post with Uganda https://bit.ly/3tFrLCy
  • June 15, 2022 – Nano One Appoints Lisa Skakun as Independent Director and Sets 2022 AGM Date https://bit.ly/3xRWTS1
  • June 14, 2022 – Kalo Gold Provides Vatu Aurum Gold Project Exploration and Geological Update https://bit.ly/3aZtfkG
  • June 14, 2022 – Valeo Pharma Reports Its Second Quarter 2022 Results and Highlights https://bit.ly/3Qr3PfZ
  • June 14, 2022 – Awakn Life Sciences Reports Results for Quarter Ended April 30, 2022 https://bit.ly/3b0L0Aj
  • June 14, 2022 – Appia Begins Trading on The OTCQX https://bit.ly/3xTc39E
  • June 14, 2022 – Romios Gold Reports High-Grade Assays Up to 17.9 g/t Au from Previously Undocumented Prospects on the Kinkaid Project, Nevada https://bit.ly/3MQdtFZ
  • June 14, 2022 – TRUSTBIX INC. Announces Release of BIX Origin https://bit.ly/3HjY7se
  • June 14, 2022 – Hemostemix Announces the Incorporation of PreCerv Inc. And a Global Field of Use License to NCP-01 https://bit.ly/3zzjTGH
  • June 14, 2022 – Appia Provides 2022 Drilling Update for WRCB and Augier and Confirms Continuity of Very Significant Augier Discovery at Alces Lake Rare Earth Property, Northern Saskatchewan https://bit.ly/3Oji05b
  • June 14, 2022 – Drill Assay Results Demonstrate Significant Expansion Potential of the 170 MT La Paz JORC Resource https://bit.ly/3O6Ojoh
  • June 14, 2022 – Metallum signs Negotiation Agreement with the Pays Plat First Nation https://bit.ly/39lji0B
  • June 14, 2022 – Fission 3.0 and Traction Drilling Intersects Additional Anomalous Radioactivity at Lazy Edward Bay https://bit.ly/3NSGwKz
  • June 13, 2022 – CBLT Options Chilton Cobalt https://bit.ly/3Hkp8vD
  • June 13, 2022 – Bald Eagle Unveils New Porphyry-Style Copper Anomaly on Consolidated Hercules Land Package https://bit.ly/3OgcAYB
  • June 13, 2022 – Kalo Gold Provides Vatu Aurum Gold Project Exploration and Geological Update https://bit.ly/3zF9ppn
  • June 13, 2022 – Ucore Hosts ‘Secure Supply Chains’ Panel at PDAC 2022 – Rare Earths and other Critical Metals https://bit.ly/3Odiolq
  • June 13, 2022 – Imperial Mining Receives Positive Results for the Preliminary Economic Assessment (PEA) for Crater Lake https://bit.ly/3xMMWFw

(*) The company news releases that are published are from ii8 System members. For more information, email me direct and special thanks to Assistant Publisher Raj Shah.




Lynas Continues Its Reign Under Amanda The Great

Look online, and you will discover that while Lynas Rare Earths Ltd. (ASX: LYC) is covered by 9 research companies, it is impossible to find one PDF Equity Research Report online. For Australian-listed companies, sometimes they publish the reports on their website; unfortunately, not for Lynas.

Dig deeper online and you may see a headline about whether Lynas has too much debt… these conclusions are in my humble opinion quite wrong, and underestimate this rare earths’ ruler outside of China, Amanda Lacaze.

I ran my conclusions by a semi-retired analyst, who requested anonymity and wrote me back promptly in agreement: “Saw their balance sheet and they are running just over 1x debt: cash flow and their cash flow is strong based on growing sales and commodity prices.”

The media loves to tout Chinese control of rare earths, but it is a woman with an iron fist that rules the rare earths world. Proud of how she likes to watch the pennies, it is unquestionably the reason why she has held the role as a Non-Executive Director for ING Bank Australia Ltd. for over 11 years.

Now let’s start with some prenuptial notes on Lynas, before you decide to make a commitment to this industry giant.

Lynas Rare Earths Ltd. is listed on the Australian Securities Exchange (ASX: LYC). The company also has a sponsored Level 1 American Depository Receipt (ADR) program through the Bank of New York Mellon (Code: LYSDY). On June 6 (Australia), the shares closed at AUD$ 9.35. There 902.4 million shares outstanding, giving the company a market capitalization of approximately AUD$8.4 billion (US$6.1 billion. At December 31, 2021, Lynas reported six month results including AUD$741.7 million positive working capital (including AUD$674 of cash and short term deposits) and AUD$156 million long term debt. Cash and short term deposits increased to AUD$768.4 at March 31, 2022.

Lynas’ quarter ended March 31, 2022, had the following highlights:

  • All necessary approvals received for the Kalgoorlie Rare Earth Processing Facility (Australia based processing facility)
  • Site clearing of the Kalgoorlie facility location is complete
  • Delivery of major equipment to Kalgoorlie site with foundation and building work underway
  • Kalgoorlie should be on track as part of the company’s 2025 Foundation Project program
  • Planning is underway for the US Rare Earths Processing Facility including contracts signed with the US Department of Defense
  • Record quarter for operations including:
    • Sales revenue of AUD$ 327.2 million (AUD$ 202.7 million previous quarter)
    • Sales receipts of AUD$ 262 million (AUD$151 million previous quarter)
    • Total REO production of 4,945 tonnes (4,209 tonnes previous quarter)
    • NdPr production of 1,687 tonnes (1,359 tonnes previous quarter)
  • Lynas noted quarterly price strength for NdPr contributed to record financial results
  • Automotive demand for rare earths “remains strong”
  • Exploration drilling under the existing Mt. Weld extraction pit revealed continuous rare earth element mineralization along 1,020 metres of drill core. Further targeted exploration is to be conducted “with the goal of meeting accelerating customer demand”.
  • The company targets to be operating four sites in three countries with global sales in 2025

Having heard Amanda speak on several occasions in her early role as Managing Director nearly eight years ago, I recall believing that her reign would be short-lived. Her valiant commitment to the bottom line above all else seemed conservative and backward compared to the charismatic marketing styles of other leaders I quite like in the market. Commenting that weekly meetings would necessitate accountability for every dime spent, seemed dismal and droll to me, it seems, however, she was quite right.

As down winds from the recession are upon us, or gales of a correction are indeed in full force, I look to the critical materials sector for which many experts harbor no fears. And with the demand for rare earths continuing to exceed supply, it seems that the noble Australian woman whose fearless tactics took me by surprise is now the one championing it all.




China’s Rare Earth Industry’s Big Advantage is not Just in Mines

China’s Real Rare Earth Infrastructure is based on a dedicated, and educated, specifically Experienced, and Skilled rare earth industrial and R&D workforce, financed, where needed, and supported by the State.

There is a debate among Western economists on the value and effect of industrial policies, set by governments, on the marketplace. It’s argued that when governments, instead of the markets, pick winners and losers in industries it never ends well.

China’s admittedly authoritarian central government does exactly that; it defines an industrial policy for the long term, and it picks winners and losers. But, unlike the American government, it does not careen from policy to policy based on the politics of the moment. China’s government’s long-term focus is on the growth of the overall economy, price stability, and domestic social harmony.

I think that it is the issue of price stability that has caused the Chinese central government to step into its domestic rare earth’s industry lately. Stable, or at least predictable, prices allow the long term planning characteristic of the Chinese industrial economy.

Just before Christmas China announced that it had formed a large and state-supported vertically integrated rare earth products’ company called, eponymously, China Rare Earths. This event, a merger of the rare earths operations managed by three mostly state owned and state controlled  companies has been widely reported. What journalists seem to have missed is that this will be a well financed rare earth company from the start. The Peoples’ Bank of China (the PBOC) is the lender of last resort to any State Owned Enterprise (SOE) and if that enterprise is producing anything required by the current industrial policy then profit and loss take a back seat to security of supply. In rare earths, for example, mining and separation are today rarely, and then only barely, profitable especially in any country with strict worker health and safety and environmental management regulations. The profit is in downstream products, metals, alloys, and magnets, phosphors, and catalysts. This is why stand-alone rare earth ventures even with separation capability and capacity, such as Lynas Rare Earths Limited (ASX: LYC), make relatively little profit, while by contrast China’s vertically integrated, and so far, mostly private Shenghe Resources, which is vertically integrated from the mine to the magnet does much better in sales volumes and profits than Lynas.

China’s rare earths industry has had a long learning curve, and this has generated the world’s largest rare earth R&D, rare earth mining, and rare earths production (processing and manufacturing) engineering reservoir of skilled and well-educated individuals dedicated to rare earths, in the world.

China Rare Earths inherits this human infrastructure, and, unlike, an American venture, such as MP Materials Corp. (NYSE: MP), does not go far to seek out specifically educated, experienced, and skilled engineers and workers from outside of the new company.

Each year China has a ruthlessly competitive national exam to determine admissions to its top universities. Last year some 15 million sat for the national exam. The top tier was selected for China’s most prestigious universities. Those chosen were mostly directed to what we call the STEM curricula, (the hard) sciences, technology, engineering and mathematics. This choice of direction is made in accordance with and support of China’s Industrial Policy, of being independent of the West in 10 technologies by 2025, and becoming a permanent center of technological innovation, superior to any other nation.

The United States, where social forces are denigrating college admissions’ qualification through the cancellation of blind testing, and where even mathematics may be branded as “racist” by half-witted college faculty and administrators, is surviving today as the top tier innovation nation through the work of legacy researchers, many of whom are foreign born, and most of whom are already in their peak productive years.

The American military pretends to be surprised by Chinese prowess in modern weaponry, and the American mainstream media simply does not report on China’s astounding space program. Both are described as based on stolen intellectual property by a smug American media. Can they say the same about China’s dominance in rare earths and battery materials and the end-use consumer products mass produced in China based on those groups of metals?

The United States can and will supply its military needs for rare earth and battery metal enabled products from domestic sources or through domestic processing of imported ores, and, perhaps, restrictive tariffs to politically level the price competition.

But such self sufficiency will not be possible for the entire civilian economy. Compromise and rationing are the future of the domestic supplies of technology metals for green energy purposes. The best we can hope for is a hybrid energy supply, green where possible, but mostly from fossil fuels and nuclear, if the US intends to retain a domestic industrial economy.

More than ever now, the domestic production, processing, and fabrication of the critical metals and materials needed for a broadly prosperous technological society is itself critical. Depriving ourselves of STEM graduates to ensure those skills survive chosen is a step towards the national suicide of America’s standard of living.




Welcome to the Future, Critical Metals’ Ventures Discover Reality

Way back in 2011 there were nearly 250 rare earth themed junior mining ventures looking at 400 “deposits” mainly in Canada and Australia. Today, just two of them are producing, Lynas Rare Earths Limited (ASX: LYC) and MP Materials Corp. (NYSE: MP) (the successor in interest to the bankrupt Molycorp of yore). These two ventures, even then, stood out from the pack by their common purpose of delivering a value-added product, individual separated (or blended) rare earth chemical forms, in the case of Lynas, and “magnets,” in the case of Molycorp. All of the others, without exception, stated that their saleable product would be a “mixed con.” This was the great “con” of the rare earths’ boom and bust of 2010-2013.

A concentrate of a mixture of all of the rare earths, from which the chemical elements that interfere with the separation of those rare earths into individual, or purposely blended combinations, of individual rare earth salts, is what is targeted to be produced at a mining operation where the ore is “mined,” concentrated, cracked and leached, and then is chemically processed to remove elements that interfere with the next step, selective separation of the individual elements in a form required for the next step in the supply chain that ultimately results in a finished product for sale to consumers.

For the rare earths this concentrate is, for practical purposes of safety and economics, a mix of rare earth carbonate solids. This should have been the initial target of 2011’s 250 rare earth juniors. It wasn’t. They overwhelmingly (other than Lynas and Molycorp) did nothing to advance towards this target. That turned out to be a good thing, because the only non-Chinese customers for this “mixed con” before 2017 were Solvay in France (9,000 tpa capacity to produce individual rare earth salts), Silmet in Estonia (2,500 tpa), and assorted small operations in Asia, outside of China, with a combined capacity of perhaps 3,000 tpa. All of these bought their feedstock from China or (a tiny amount) from Russia at the time.

No 2011 junior sold a single gram of mixed con to the marketplace prior to 2017 (Lynas)

Why was the first 21st century, rare earth boom, such a bust?

Because none of them had the knowledge, education, experience or skill in processing or mineral economics to see that integration into a total rare earths supply chain targeted to a final product is necessary for profitable operation. Almost without exception the profitable part of the rare earth supply chain is concentrated in the metals, alloys, and magnet making end, and the only way to make a mine and separation system profitable is to distribute costs along a total supply chain. (America’s Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR), which is operating on a total supply chain model through magnet alloys, is an exception, because it is able to make a profit selling a mixed carbonate due to the skill of its administrative and operation management and a unique, for North America, existing processing infrastructure).

If there is to be a domestic American, or European, total rare earth permanent magnet supply chain then there will have to be in place operating commercial rare earth separation systems, rare earth metals and alloys production, and rare earth permanent magnet production capability and capacity to support it.

In fact, if there are to be total domestic supply chains for any critical metals, then, not just a mine, but also all of the downstream elements of the supply chain have to be in place before that can happen.

I note that for the cobalt chemicals necessary for the production of lithium-ion battery cathodes, the Canadian integrated cobalt processing junior, Electra Battery Materials Corporation (TSXV: ELBM | OTCQX: FTSSF), has entered into a supply agreement for cobalt concentrates from the world’s largest non-Chinese producer, Glencore, to process that concentrate into fine cobalt chemicals for the battery manufacturing industry in its existing Canadian facility. When and if Electra can produce cobalt concentrates from its company-owned deposits there will already be in place the downstream operations to support that. In the meantime, it will buy feedstocks from others, and/or also toll them for others. Electra’s management looks also to have given considerable thought to pricing, so as to ensure profitability.

This business model, to have in-house as much of the total final product supply chain as is necessary to be profitable, is the only practical business model for the production of critical metals and materials.

As of December 31, 2021, America’s Energy Fuels (rare earths) and Canada’s Electra (cobalt) are setting the pace for the future development of a North American critical metals’ industry by commencing operations.

Happy New Year!




The Post-COP26 World Looks To Australia For Future Non-Chinese Rare Earths Production

To achieve U.N. climate change management goals the world needs to shift rapidly to clean energy, and that means we need to build or secure, reliable sources of rare earths. While the USA and Canada have made some progress in this direction, Australia will also be needed to play a key role.

When looking at a chart of rare earths reserves by country, China shows the largest reserves followed by Vietnam, Brazil, Russia, India, and Australia, in that order. The USA is ranked 8th and Canada is outside of the top ten. Given Australia’s stellar track record as a reliable supplier of raw materials, it should not be surprising to know that the West is looking towards Australia to step up production of rare earths, especially those needed to support the surging cleantech sectors of electric vehicles, wind energy, and solar energy.

ClearWorld.us says it well, stating:

“Renewable energy development relies upon sufficient quantities of rare earth minerals, specifically neodymium, terbium, indium, dysprosium, and praseodymium. These are used in the production of solar panels and wind turbines. If the world is to meet the greenhouse gas emissions targets sought in the Paris Climate Agreement the availability of these minerals must increase by 12 times by 2050.”

(Emphasis by the author.)

Rare earths are key elements in the cleantech revolution

Australian listed rare earths companies:

Producers

Lynas Rare Earths Limited (ASX: LYC) (“Lynas”)

Lynas is the second largest neodymium and praseodymium (“NdPr”) producer in the world. Lynas owns the Mt Weld rare earth mine, which is one of the world’s highest grade rare earths’ mines, and the Mt Weld ORE Concentration Plant, both located in Western Australia. Lynas also owns the Lynas Advanced Materials Plant (LAMP), which is an integrated manufacturing facility, separating and processing rare earths’ materials in Malaysia. The Lynas 2025 growth strategy encompasses plans to build the Kalgoorlie Rare Earths Processing Facility (cracking and leaching) in Australia and an LRE/HRE separation and specialty materials facility in the USA. Lynas trades on a market cap of A$7.3 billion.

Iluka Resources Ltd. (ASX: ILU) (“Iluka”)

Iluka is a relatively new (April 2020) producer of rare earths at their Eneabba Project in Western Australia. Iluka intends to ramp to selling 50,000 tpa of a 20% monazite-zircon ore concentrate for further processing offshore. Iluka has an offtake agreement for 50,000 tpa. Iluka is working on developing a Phase 2 of the Eneabba Project which involves investigating techniques to beneficiate and purify the monazite to an 80% concentrate for sale further down the value chain. Iluka is mostly known for being an Australian heavy mineral sands, zirconium and titanium, producer. Iluka trades on a market cap of A$3.5 billion.

Vital Metals Limited (ASX: VML) (“Vital”)

Vital recently began mining ore at its Nechalacho’ Mine in Canada’s Northwest Territories (NWT), with commencement of ore processing at Vital’s, under construction, Saskatoon cracking and leaching facility expected to begin in 2022. The Nechalacho Mine is a high grade, light rare earth (bastnaesite) project with a world-class resource of 94.7Mt at 1.46% REO (measured, indicated and inferred). Nechalacho’s North T Zone, which is being mined by Vital, hosts a high-grade resource of 101,000 tonnes at 9.01% LREO (2.2% NdPr). Vital has a non-binding MOU with Ucore Rare Metals Inc. for the supply to it of a mixed rare rare earth carbonate, beginning H1 2024. Vital Metals trades on a market cap of A$250 million.

Explorer/Developers (in alphabetical order):

Arafura Resources Limited (ASX: ARU) (“Arafura”)

Arafura 100% own the Nolan’s Bore rare earth project 135kms from Alice Springs in the Northern Territory, Australia. Arafura states: “The Project is underpinned by low-risk Mineral Resources that have the potential to supply a significant proportion of the world’s NdPr demand. It is a globally significant and strategic NdPr project which, once developed, will become a major supplier of these critical minerals to the high-performance NdFeB permanent magnet market.”

The deposit contains a JORC 2012-compliant Mineral Resources of 56 million tonnes at an average grade of 2.6% total rare earth oxides (TREO). 26.4% of the total rare earths contained are  NdPr. The Project is supported by Export Finance Australia (EFA), and the Northern Australia Infrastructure Facility (NAIF), via non-binding letters of support for a proposed senior debt facility of up to A$200 million and A$100 million respectively. Arafura is looking to raise further funds to get the project started. Arafura recently stated: “The momentum with offtake discussion has enabled engagement to expand to include the options for strategic investment as part of the Nolan’s project funding.” Market cap is A$379 million.

Australian Rare Earths Limited (ASX: AR3) (“AREL”)

AREL is progressing in the exploration of a significant deposit of valuable ‘clay-hosted’ rare earth elements, located at their Koppamurra Project spread over ~4,000km²  of tenements in South Australia and Victoria. Past exploration of the Koppamurra region has shown it contains mineralization containing the rare earth elements neodymium, praseodymium, dysprosium and terbium. The Koppamurra Project is an ‘ionic clay’ rare earth opportunity with a 2021 JORC Inferred Mineral Resource of 39.9Mt @ 725ppm TREO. AREL trades on a market cap of A$98 million.

Australian Strategic Materials Ltd. (ASX: ASM) (“ASM”)

ASM owns the Dubbo Rare Earths Project in NSW, Australia. The Dubbo Project is a 100% owned ‘construction ready’ poly-metallic and rare earths project with potential to become a key global supplier of specialty metals and rare earths. ASM’s goal is a “mine to metal” strategy to extract, refine and manufacture high-purity metals and alloys, supplying directly to global technology manufacturers. Market cap is A$1.92 billion.

Northern Minerals Limited (ASX: NTU)

Northern Minerals own the Browns Range heavy rare earth minerals project in Western Australia. Northern Minerals has built a pilot plant to test a number of deposits and prospects that contain high-value dysprosium and other Heavy Rare Earths (HREs) such as yttrium, hosted in xenotime mineralization.

The Company states: “Northern Minerals is positioned to become the world’s first significant producer of dysprosium outside of China. Accounting for 60% of the Browns Range Project’s (the Project) revenue, dysprosium is the key value driver of the Project and is at the core of Northern Minerals’ marketing strategy. With a high value, high purity, dysprosium rich product, the Company is set to become a long term and reliable supplier of dysprosium and other critical heavy rare earths to world markets.” Market cap is A$339 million.

Peak Resources Limited (ASX: PEK)

Peak Resources 75% owns the Ngualla Tanzania rare earth project, which the Company states is one of the world’s, largest and highest grade, undeveloped rare earth projects. The Ngualla Project has ore reserves of 18.5 million tonnes at 4.8% REO; 22% of the total mineral resource is NdPr, with an expected 26 year life of mine. The Project is currently at the funding stage having completed a BFS in 2017. The BFS summary details are here. About 90% of the Project’s revenues will be coming from NdPr. Peak Resources state: “Operating cost of US$ 34.20/kg NdPr* Oxide, demonstrating potential to be the world’s lowest-cost fully integrated rare earth development project.” Market cap is A$135 million.

Closing remarks

With rare earths demand set to grow strongly this decade as the world moves towards cleaner energy and technology, investors would be wise to take a second look at the rare earths sector.

Australian critical minerals projects were recently in the news after the Government announced that they would receive an A$2 billion boost (via a loan facility), to support the sector. This bodes well for the Australian rare earths junior miners to join Lynas as producers. Stay tuned as this sector looks set to shine this decade.