Introducing The TMR Advanced Rare-Earth Projects Index

by Gareth Hatch on January 7, 2011 · 22 comments

in Rare Earths, Tools & Metrics

Bookmark and Share Print

Updated January 18, 2011: I have now set up a new permanent Web page for the Index, accessible from the menu bar above, via Metrics & Indices >> TMR Advanced Rare-Earth Projects Index or directly from here.

In the recent past I have published charts and graphs via the TMR Web site that were based on metrics associated with certain rare-earth deposits currently under development. I’m frequently asked why I include certain projects in such analyses, and not others. Despite mentioning them in a recent article, I thought I’d revisit the criteria that I use when selecting projects for attention, and to formally introduce the projects that form what we refer to as the TMR Advanced Rare-Earths Project Index.

Note that I am first and foremost interested in the rare-earths sector from the strategic point of view. I am interested in the potential value that specific rare-earth deposits and their development could have, in the furtherance of the needs and demands of the overall technology supply chain. In theory, projects that are good for the supply chain in this way, should also be good investments, or more specifically, the companies that own and operate such projects (if they can do so profitably). Obviously things don’t always quite mesh in this way, but you get the idea.

To put things in context, as of the beginning of January 2011, I’m tracking 275 rare-earth projects that are being worked on by 180 individual companies in 30 different countries. This does not include projects in China, India or Russia, or projects that are not at least partially owned or operated by corporations or other non-state-run entities. It also does not include projects whose information is not in the public domain, and / or are simply not known to me at the present time.

As you might imagine, the present status of these projects within the overall development cycle varies widely (and wildly!). Some are associated with properties for which there is only a minimum amount of rare-earth-related data available. Here we’re talking about grab samples, soil samples and perhaps the odd historical trench. Others have had some drilling work done on them, while others have been extensively drilled and explored, and have comprehensive datasets that can be used to model the deposit. In a few cases, properties have actually been mined in the past.

In order to narrow things down a bit, I focus most of my charts and data on what I consider to be advanced rare-earth projects. As I define the term, advanced rare-earth projects are those that have been either:

  • formally defined as a mineral resource or reserve under the guidelines of a relevant scheme such as NI 43-101 or the JORC Code; or
  • subject to past mining campaigns, and for which reliable historical data is available, even if not formally compliant with a relevant scheme.

The projects that meet the above criteria, form the TMR Advanced Rare-Earths Project Index. In the near future, we’ll be publishing We have now published a dedicated page on the TMR Web site, accessible from the navigation bar above, containing summary information about these projects. We’ll update the page on a regular basis. As companies publish 43-101- or JORC-compliant resource estimates, we’ll be adding those projects to the list too.

As of January 6, 2011, the TMR Advanced Rare-Earths Project Index includes 17 advanced rare-earth projects, being worked on by 16 different companies and located in 8 different countries. Those projects are:

Some of the projects above have only just recently been added to the Index. If the buzz in the rare-earths sector is correct, we can expect a couple of new additions to the list too, in the very near future. The absence of a project from the above list, is really just a reflection of the amount of public-domain information available for the project, not of any inherent “flaw” in the project itself. In time, we’ll see the Index continue to grow and to expand, and I’ll probably have to start to use tighter criteria to define what “advanced” actually means.

On December 21, 2010, Bloomberg launched its Rare Earth Mineral Resources Index, which is a “modified market capitalization weighted index” that includes most of the companies listed above (or will include them once the companies with the most recent 43-101-compliant resource definitions have been added). TMR assisted the folks at Bloomberg in developing the Index; they decided to use only the first of the two criteria above, for a slightly more-stringent requirement for inclusion than I use for the TMR Index.

I’ll be writing more on the TMR Index and its constituent projects in the near future, including some updates to previously published charts, as well as some new comparisons that will be of interest to some. We’ll also get into more detail on the Bloomberg Index as well. As always, we welcome your feedback on this or related topics.

Disclosure: the author is neither a shareholder of, nor a consultant to, any of the companies mentioned in this article, or any other publicly traded junior-mining company.

Bookmark and Share Print
1 Glen Nursey January 7, 2011 at 1:22 am

Where is Torch River Resources? TCR on the TSX Venture belongs in this index.
Glen…….an astute investor.

2 Gareth Hatch January 7, 2011 at 1:28 am

@Glen: correct me if I’m wrong, but to my knowledge the Mount Copeland property owned by Torch River Resources, does not have a 43-101- or JORC-compliant rare-earth mineral resource defined, and was not a previously producing rare-earth mine. It is therefore not an advanced project per the criteria described above.

Are you a shareholder of this company?

3 Geoff Alford January 7, 2011 at 5:14 am

I query the inclusion of GGG. With regard to Greenland, my understanding is that they have permission to do nothing.

I suggest the inclusion of China Yunnan Copper, which has just announced a heavy rare earth discovery.
http://www.cycal.com.au/irm/content/home.html

Regards,

Geoff Alford

4 Gareth Hatch January 7, 2011 at 10:28 am

@Geoff: Kvanefjeld does meet the criteria laid out above. In addition, Greenland Minerals & Energy received a permit in December 2010 from the authorities in Greenland, to engage in further evaluation of the project – including the uranium present. Whether or not it will go on to be developed or not remains to be seen.

I have two projects associated with China Yunnan Copper Australia, in my list of 275, but neither of them (including the one highlighted in the recent announcement) matches the criteria above.

Are you a shareholder of the latter company?

5 Jim Bond January 7, 2011 at 10:39 am

Hi Gareth:
Interesting index. JORC or 43-101 are a pretty good set of criteria for mining projects. But I still like infrastructure and actual mining and concentration cost data for my own evaluations. the definition of ore is still: **” can be mined and processed at a profit”. Still nitpicking. Very good Bloomberg index. I would like to see the companies and their weighting % in that index.

Jim Bond
a not very astute investor (LOL)

6 Gareth Hatch January 7, 2011 at 10:54 am

@Jim: I completely agree. I see having a defined mineral resource, or prior mining activity, as a useful minimum criteria when looking at the strategic value of a deposit – but with the emphasis on “minimum”. One can then delve into mineralogy, metallurgical processing requirements and their efficiencies, infrastructure and logistics, as well as environmental, political and other considerations, to hone in on the specific characteristics of each project.

Again – I’m looking at this from the strategic point of view. This means I’m naturally more conservative in my approach; there are other projects out there, not on the list, that no doubt have very promising deposits. Assuming that the goal of any junior mining company is to put a project into operation, then having a defined mineral resource is an obvious necessary step along the way to raising the required capital. Of course, in some cases one wonders if that actually is the goal of the company, but that’s a story for another time….

I do have the list of companies included in the Bloomberg Index and their weighting – I just need to double-check with Bloomberg that they’re OK with me publishing the information.

7 Aat Oskam January 7, 2011 at 11:06 am

Gareth,
please look at
http://www.byroncapitalmarkets.com/rare_earth_index.htm

Is it any use to you?

Greetings from Holland

8 Gareth Hatch January 7, 2011 at 11:13 am

@Aat: The Byron Index is certainly a useful guide for giving investors exposure to a range of companies operating in the rare-earths sector. I’ve tried in the past to download the PDF that (I presume) explains the Index in more detail, but the text is always garbled.

9 Geoff Alford January 8, 2011 at 12:42 am

Glen & Garath

For REEs, I hold LYC, ARU, ALK, NTU, NAV, CMY, CYU, ARV, GIP, ORM, GBE.

LYC, ARU & ALK are well-known. CMY & CYU are copper, gold & cobalt plays, but have discovered heavy REEs. The rest may not be well known, but GBE (for example) intends to produce niobium at its Kanyika Niobium project in central Malawi in 2013.

I used to hold GGG and RMR, but have dropped them because of Greenland government ‘s ongoing policy, opposing exploitation of mineral resources which contain uranium. GGG & RMR can get a licence to complete environmental impact assessments, but this does not bestow any licence to explore for or exploit radioactive elements.

Regarding GGG specifically, this was posted on Hotcopper which begs the question, does the emperor have clothes?

This is what was reported in Avativut Nunavut

Continuing a zero-tolerance policy toward uranium mining jeopardises a major mining project according to the director of Greenland Energy and Minerals Ltd

by Kurt Kristensen
Sermitsiaq NewsletterMay 25, 2009

reference http://avativutnunavut.blogspot.com/

“If parliament sticks to its zero-tolerance policy for radioactive materials the future of the Narsaq project will no doubt be in jeopardy,said McIllree. McIllree also pointed out that Greenland can not count on the company continuing to invest capital in a project without knowing if they will receive permission to use uranium as a bi-product.That makes a decision demonstrating Greenland official position on mining uranium as a bi-product of utmost urgency” said McIllree

Now go to the Greenland Governments actual web site and look at the latest announcement on its uranium policy it states

Zero-tolerance policy for uranium remains unchanged For further information, please contact:Ove Karl Berthelsen

Minister for Industry and Mineral Resources

Tel. +299 34 50 00 +299 34 50 00 .

E-mail: isiin@nanoq.gl

With the recent media coverage of Greenland?s uranium policy, Naalakkersuisut (the Government of Greenland) would like to clarify that the current zero-tolerance policy regarding uranium will continue to apply.

The press coverage seems to be related to the fact that on 9 September 2010 Naalakkersuisut approved a clarifying addition to the rules which regulate exploration for mineral resources.

This clarification means that companies which have found and demarcated mineral resources containing radioactive elements can apply for a licence to prepare assessments of the environmental impact and social sustainability.

In making this addition to the Standard Terms, Naalakkersuisut hopes to bring about more knowledge about the health and safety issues regarding radioactive elements in occurrences where the actual goal is other metals than the radioactive ones. This addition is in line with Naalakkersuisut?s ambition to secure more knowledge about the consequences of exploration and exploitation of radioactive elements.

The addition to the rules explicitly states that a licence to complete such environmental impact assessments etc. does not give right to a licence to explore for or exploit radioactive elements.

Greenland?s uranium policy remains therefore unchanged and the zero tolerance for exploration and exploitation of radioactive elements continues intact.

reference
http://uk.nanoq.gl/emner/news/news_from_government/2010/09/uran_no_tolerant.aspx

10 Rick Haffner January 8, 2011 at 2:38 pm

Hi Jim – It’s nice to see a list such as the one you put together. I currently amd a shareholder of TSM, GWG, and HUD. Another list that would be of great value for investors is one that shows when the listed projects will come online and what percentage of Lights and Heavies they each have. What value will each company supply to the markets for their materials.

Rick Haffner

11 Gareth Hatch January 8, 2011 at 6:23 pm

@Geoff: as I mentioned above, the permit for exploration granted to Greenland Minerals & Energy, which included uranium, was announced in December 2010, three months after the publication date of the latter of the two references you shared above. You can see the news release here: http://bit.ly/g0mZ8s.

@Rick: we’ll be sharing info of that sort very shortly – thanks for the feedback.

12 Jim Bond January 8, 2011 at 8:26 pm

Hi Gareth:
Quite a number of very successful junior companies operate on a business plan of: acquire a grassroots property add value by exploration work sell it or joint venture and move on to the next play. Their skill set is exploration and they have no intention of ever going into production. They know that mine operation requires an entirely different set of skills and capabilities and they are organized as explorers not operators. (LOL) off the subject of technology metals for sure.

Jim Bond

13 Gareth Hatch January 8, 2011 at 10:25 pm

@Jim: your description of “how things work” sounds a little like the one a well-known industry analyst recently shared with me too. He was a lot more cynical in that he felt that some companies get started without ever really intending to properly develop the project such that it could be handed off – all the while burning through OPM (other peoples’ money)… I know – “shock horror”, right?! :-) But of course this doesn’t apply to every company, and what you’ve described is a legitimate approach. People sticking to what they’re good at, and then handing off a project when it makes sense to do so. As you say, it can work very well.

14 blackjack January 10, 2011 at 7:23 am

i dont know if i am stupid or what
but i dont see any link for your report
all i see is a list of companies and their URL
please advise where the report is
thanks

15 Gareth Hatch January 10, 2011 at 9:20 am

@blackjack: there is no report to download at this time. We’ll shortly have a new Web page containing the information described above.

16 John Hall January 17, 2011 at 6:59 pm

Gareth,

Thanks for your work on the Index – it’s a great resource for generalists like myself.

I was under the impression that Medallion Resources had a proven resource estimate. Is that not the case?

Thanks again and best regards,

John

17 Gareth Hatch January 17, 2011 at 7:11 pm

@John: although Medallion has apparently done exploratory work on its Red Wine and Eden Lake properties, to my knowledge it has not yet published a 43-101-compliant mineral resource estimate for either property.

18 GH January 17, 2011 at 7:12 pm

Having read the 9-Sep-2010 clarifying statement of the Greenland government (“Naalakkersuisut”) here:
http://uk.nanoq.gl/Emner/News/News_from_Government/2010/09/Uran_no_tolerant.aspx
it is perfectly clear. The key sentences are:

“Naalakkersuisut hopes to bring about more knowledge about the health and safety issues regarding radioactive elements in occurrences where the actual goal is other metals than the radioactive ones. […] The addition to the rules explicitly states that a licence to complete such environmental impact assessments etc. does not give right to a licence to explore for or exploit radioactive elements.”

It seems to me that the announcement by GMEL simply starts off with a textbook example of wishful thinking (at best) or intentional misrepresentation (at worst). Here’s the first line: “GMEL is pleased to announce that it has received approval by the government of Greenland to fully evaluate the Kvanefjeld multi-element project (rare earths, uranium, zinc), inclusive of radioactive elements (uranium).”

[Disclosure: I have no positions in companies associated with any Greenland projects, nor do I intend to open any in the foreseeable future.]

19 Gareth Hatch January 17, 2011 at 7:22 pm

@GH: I have just invited members of the Greenland Minerals & Energy management team to respond to the comments here. Whether they do or not is obviously their prerogative.

20 Gareth Hatch January 18, 2011 at 1:28 am

FYI folks, the Index has a new permanent home at:

http://www.barnswood.com/tmr/wp/tmr-advanced-rare-earth-projects-index/

21 David Lowe January 19, 2011 at 8:35 pm

Gareth,
How can you the list you just put up show those very aggressive production dates when these companies have not figured out the metallurgy of their deposits?

My understanding is that before you can convert the raw ore into “production”, you must solve the extremely complicated metallurgy, which can take years. And before that can happen, the ore needs to be mined. Some of these companies don’t even yet have a PEA let alone a Prefeasibility Study or a Full Feasibility Study.

Based on the research I’ve done, Stans Energy Corp is the only company with a proven ore body that actually already has the difficult metallurgy solved. In addition, most of these companies haven’t even yet built the processing plants necessary to produce, other than Stans Energy. And yet you have “N/A” in their projected production date when the company has already stated their projected date is 2012.

What am I missing?
David

22 Gareth Hatch January 19, 2011 at 10:37 pm

@David: As stated on the new page for the Index ( at http://www.barnswood.com/tmr/wp/metrics-indices/tmr-advanced-rare-earth-projects-index/ ), the “First Production” dates are the estimates published by the companies themselves – no more, no less. We are simply reporting what those self-stated time estimates are. They of course assume a whole bunch of things besides just getting the metallurgy right, including the ability to raise the capital to build their facilities, to get permits, to deal with radioactive byproducts and to (presumably) complete their operations in such a manner as to make a profit.

We need to be really careful whenever we use the term “proven ore body” in the context of a mineral deposit. It implies that a) enough work has been done to define a Measured Mineral Resource for a given project and that b) at least part of that Measured Mineral Resource has been demonstrated to be economically mineable. While there is apparently a significant amount of historical data associated with Kutessay II, at this time I am not aware of any data in the public domain (at least to 43-101, JORC Code or similar standards) that defines any type of Mineral Resource for Kutessay II (Inferred, Indicated or Measured), let alone an Ore Reserve (either Probable or Proved) per JORC, or a Mineral Reserve (Probable or Proven) per 43-101.

Stans Energy is in the process of finishing up a Mineral Resource estimate that will be compliant to the Australian JORC Code, but that’s not the same thing as having a “proven ore body”. It’s the first step along the way to eventually having a defined Ore Reserve (per JORC) or its equivalent.

As for having “the difficult metallurgy solved”, again, there is apparently substantial historical data and process flow sheets for the previously used set up for the minerals at Kutessay II; however, I have seen nothing in the public domain that sheds light on the economics of those historical processes. Being able to do the separations economically is at least as important as being able to do them technically. This is by no means a knock on Kutessay II; I’m simply pointing out the lack of data points, whose existence or otherwise is important in evaluating Kutessay II just as it is for any other project.

Finally, regarding the projected production date for Kutessay II; I am not aware of any official target date for production in documents either on the Stans Energy Web site, or lodged with the Canadian Securities Administrators’ SEDAR system. I am aware that Stans Energy’s CEO, Mr. Mackay has been reported as saying that production could get under way by late 2012, but in more recent private correspondence with the company I was told (and I’m paraphrasing here) that a definite date would not be forthcoming for some time. This is why we’re using “N/A” in that column.

That said – if you can point to an official public domain document that does indicate a start date, I’ll be happy to take a look and to adjust our table accordingly.

Comments on this entry are closed.

Previous post:

Next post: