January 2012 Updates To The TMR Advanced Rare-Earth Projects Index

by Gareth Hatch on January 23, 2012 · 31 comments

in Rare Earths, Tools & Metrics

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I recently updated the list of projects on the TMR Advanced Rare-Earth Projects Index, to reflect five new rare-earth mineral-resource estimates that were announced recently. I also made some other updates. The specifics:

  • Southern Crown Resources Ltd. (ASX:SWR) announced a JORC-compliant mineral-resource estimate for its Xiluvo project in Mozambique, on November 10, 2011. According to the associated press release, 1.1 Mt of the resource is at the Indicated level @ 2.03 wt% TREO (at a cut-off grade of 1.00 wt%).
  • MBAC Fertilizer Corp. (TSX:MBC, OTCQX:MBCFF) announced an NI-43-101-compliant mineral-resource estimate for its Araxá project in Brazil, on December 6, 2011. According to the associated press release, 2.7 Mt of the resource is at the Inferred level @ 8.39 wt% TREO (at a cut-off grade of 6.0 wt%).
  • Search Minerals Inc. (TSX.V:SMY) announced an NI-43-101-compliant mineral-resource estimate for its Foxtrot project in Canada, on December 20, 2011. According to the associated press release, 3.4 Mt of the resource is at the Indicated level @ 1.07 wt% TREO and 5.9 Mt is at the Inferred level @ 0.96 wt% TREO (both at a cut-off grade of 0.015% Dy2O3).
  • Australian American Mining Corporation Ltd. (ASX:AIW) announced an NI-43-101-compliant mineral-resource estimate for its La Paz project in the USA, on December 21, 2011. According to the associated press release, 16.2 Mt of the resource is at the Indicated level @ 0.04 wt% TREO and 112.0 Mt is at the Inferred level @ 0.04 wt% TREO (both at a cut-off grade of 0.03 wt%).
  • DNI Metals Inc. (TSX.V:DNI, F:DG7) announced an NI-43-101-compliant mineral-resource estimate for its Buckton project in Canada, on January 16, 2012. According to the associated press release, 250.1 Mt of the resource is at the Inferred level @ 0.03 wt% TREO (at a cut-off grade of US$7.50 / t mineral resource).
  • I have also updated the pricing used in the Index data, to reflect the average monthly prices for December 2011 and the moving three-year average price for separated rare-earth oxides.

In addition, to the new projects above, two companies with projects on the Index announced updates to their existing resource estimates:

  • Rare Element Resources Ltd. (TSX.V:RES, AMEX:REE) announced upgrades to its NI-43-101-compliant mineral-resource estimate for its Bear Lodge (Bull Hill Zone) project in the USA, on January 4, 2012. According to the associated press release, 1.9 Mt of the resource is now at the Measured level @ 3.95 wt% TREO, 4.3 Mt of the resource is at the Indicated level @ 3.67 wt% TREO and 22.0 Mt of the resource is at the Inferred level @ 2.73 wt% TREO (each at a cut-off grade of 1.5 wt%).
  • Lynas Corporation Ltd. (ASX:LYC, OTCQX:LYSDY) announced upgrades to its JORC-compliant mineral-resource estimate for the two deposits at its Mount Weld project in Australia, on January 18, 2012. According to the associated press release, for the Central Lanthanide Deposit, 6.9 Mt of the resource is now at the Measured level @ 12.2 wt% TREO, 7.0 Mt of the resource is at the Indicated level @ 8.1 wt% TREO and 1.1 Mt of the resource is at the Inferred level @ 4.6 wt% TREO (each at a cut-off grade of 2.5 wt%). For the Duncan Deposit, 4.5 Mt of the resource is now at the Measured level @ 5.1 wt% TREO, 3.9 Mt of the resource is at the Indicated level @ 4.7 wt% TREO and 0.6 Mt of the resource is at the Inferred level @ 3.7 wt% TREO (each at a cut-off grade of 2.5 wt%). This brings the totals for Mount Weld to 11.4 Mt of the resource now at the Measured level @ 8.4 wt% TREO, 10.9 Mt at the Indicated level @ 6.9 wt% TREO and 1.7 Mt at the Inferred level @ 4.3 wt % TREO (each at a cut-off grade of 2.5 wt%).
  • I have now broken out the Mount Weld project into its two constituent deposits – the Central Lanthanide and Duncan Deposits and added the details to the Index.

FYI, TMR is now tracking a total of 406 rare-earth projects under development associated with 251 different companies in 36 different countries.

You can access the updated details via the Index page.

Disclosure: at the time of writing, Gareth Hatch holds no shares or stock options in any of the companies mentioned in this article, or in any publicly traded rare-earth company, nor is he doing paid consulting for any such company.

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1 Milan Arvensis February 5, 2012 at 4:56 am

Hi Gareth,
I worked in antimony (gold) mine with output: antimony flotation concentrate (wt% 52-53) and waste mud/slime deposited on tailings. Heavy fraction of flotation mud/slime contents: Ce 0.153-0.458 wt%, La 0.1-0.263 wt%; content of monasite in heavy fraction from some drills is 0.2 – 0.9 – 1.2 wt%.
Bedrock is granite-granodiorite with porphyry K – feldspars (Xmm).
What do you think….?
Milan

2 Vakiss Luis February 5, 2012 at 9:35 am

Hi Gareth
I have been closely monitoring the Australian REEs market for several years now and noting the companies u r following here, it seems to me you have missed the most exciting advanced explorer here hitting highest paydirt values of HREEs, about to announce an initial JORC resource and already planning concentrates production in 2015, with interested global players already talking to them about future offtakes. The company code is ASX:NTU and LYC appear on their register at about 10% holding. The back of envelope $$$ numbers for proposed 2015 concentrates production (requiring relatively low capex) are seriously exciting cf market cap and IMO looks a multibagger in the making. Cheers

3 Gareth Hatch February 5, 2012 at 10:49 am

@Milan Arvensis: rare earths as byproducts are always an interesting possibility, from the economics point of view.

@Vakiss Luis: each time I do an update to the Index, I get comments or emails asking how I could possibly have missed Company X or why have I not included Project Y :-) I am of course familiar with the Northern Minerals Browns Range project, but until it has a JORC-compliant mineral-resource estimate (i.e. meets one of the criteria for inclusion, listed on the Index page), it remains off the Index.

4 Tekton February 5, 2012 at 11:21 am

Gareth, Thanks for the update.

It seems that every day a new mining player makes the news, but so far as I know, not one significant proposal has been made for a REE SX operation on the north american continent. To me, it seems like a matter of time and circumstance that will demand such an operation. And i’m not talking 20KTPA, or maybe even 10. I think there is a niche for a smaller pilot operation that should begin the process of developing the technologies and technicians here in North America. Both you and Jack have identified the needs for techinicians, technologies, and production facitlies for magnets and other end uses, none of which exist on the north american continent.
So, even if this post is a bit out of context, I do feel that there is merit in engaging some of these NA /REE producers in a discussion of processing North American REEs in North America.
I’d appreciate your comments and those of anyone else who might have an interest or knows of any such plans. (Jack L, Constantine K, otheres?)
Thank you

5 Gareth Hatch February 5, 2012 at 11:23 am

@Tekton: good to hear from you :-) At the risk of being self-serving, you may want to check out the work that we’re doing at Innovation Metals ( http://www.innovationmetals.com ), regarding separation capabilities in North America.

(Disclosure: I am a co-founder and shareholder of Innovation Metals Corp).

6 Tekton February 5, 2012 at 12:42 pm

Gareth, thanks for the website.
Frankly, this sounds much like the Wings proposal of a couple years ago for a multi source processing facility. And I seem to detect that the company is, and intends to remain a private business, which means they will be seeking huge expenditures from a few well heeled investors on the promise of making billions.

Then there is this extremely vicious, self serving attack on GWG:

“There is a popular belief in the industry that a “mine to market” strategy is the only way to succeed in this sector. This vertical-integration model is often based on flawed assumptions pertaining to value creation; in most cases, the jump from one part of the value chain to the next, cannot overcome a junior-mining company’s cost of capital. Pursuit of this strategy alone, has the potential to lead to shareholder-value erosion.”

This generated an audible two word expletive from me, which I will not post here. Sorry, but this does not look like a venture I would endorse at this point, even if my endorsement means nil to anyone but me.

7 Gareth Hatch February 5, 2012 at 1:26 pm

@Tekton: some strong words there, some of which significantly mischaracterize the Innovation Metals Corp. (IMC) model, which is distinctly different from that previously proposed by others on a number of fronts.

The feedstocks will be REO concentrates, absent of thorium or other undesirables. i.e. the initial processing (physical and chemical beneficiation) will be completed by the producers themselves, before their materials are sent to the IMC facilities. The handling of thorium storage etc. will remain the responsibility of the individual producers.

The materials will be processed into separated end products, for a low tolling fee, with title to the materials remaining with the original producer.

The capex for the separation facilities will be financed through a combination of end-use customers (not “a few well heeled investors”) buying production capacity for individual elements (the cost of which will be weighted according to the burden on opex / capex associated with each element), and the proceeds of an IPO. Participating producers will also have the option to acquire an ownership stake too. So no, this would not remain a private business, nor would it require a massive handout from the Government, as proposed by other plans.

I take strong issue with your assertion that the IMC perspective on ‘mine to market’ is an “extremely vicious, self serving attack on GWG”, and I reject it. We have a lot of respect for GWMG and the work that they are doing. The GWMG approach makes a lot of sense given the resources and capabilities of their EXISTING Less Common Metals (LCM) subsidiary, and the progress being made in South Africa. Speaking for myself, I believe that GWMG has a strong chance of success with their approach, from the supply-chain perspective.

The fact remains, however, that for many other companies, who do not have a division like LCM, the cost of capital really WILL be a major impediment to replicating such an approach. Simple mathematics! If a company can gets it materials toll-treated for less than the cost of capital, why wouldn’t it consider doing so?

(Disclosure: I am a co-founder and shareholder of Innovation Metals Corp).

8 Tekton February 5, 2012 at 1:46 pm

Good response. You generated much more information than I was able to extract from the website. The “mine to market” comment stood out because GWG has essentially coined this phrase for their marketing, though the same strategy has been used throughout the mining industry. So in essense, it did not appear to be an arbitrary choice of words. To me, this a PR faux pas, as much as my jumping to conclusions.

But I did spark your defense, and you provided a much more succinct and informative assessment of what is really going on with the company than the website. So, thank you. Perhaps YOU should write the Introduction on the company’s home page.

9 Tekton February 5, 2012 at 1:51 pm

PS As you know, such a plan will engender intense industry professional (which i am not) scrutiny for a long time, and you might as well get used to defending it. I’ll just shut up and watch for the IPO.
With best regards
Tek

10 Gareth Hatch February 5, 2012 at 1:52 pm

@Tekton: A critical success factor for any complex venture, is the effective communication and fine tuning of the underlying ‘message’, so constructive feedback is always appreciated. Thanks for sharing your thoughts :-)

11 Aat Oskam February 5, 2012 at 3:55 pm

Gareth,

maybe a typo, but Foxtrot is owned by Search, not by Hastings?

Greetings from Holland

12 Gareth Hatch February 5, 2012 at 4:00 pm

@Aat Oskam: oops – good catch! Correction has been made – thanks.

13 ellwodo February 5, 2012 at 5:16 pm

Your information is appreciated, as always. Will you be updating the data on Matamec’s Kipewa for the new PEA?

14 blackjack February 6, 2012 at 12:36 am

I see Lynas got its POL and will start in the next few months
Also not that Lynas is in the ASX 100 which means fund managers can now invest investors funds
Plus they have the HREE side covered I think
Plus they have Crown and some are suggesting that NIOBIUM is a REE as well and demand will increased along with steel production world wide

15 nicolas pietrangelo February 6, 2012 at 5:07 am

Far too often is way overlooked the NIMH battery with the lanthanum rare earth. Lithium becomes more and more and more of a practical disaster all the time/especially with recent Chevy Volt issues. Millions of HYBRIDS out in the world with NIMH safe and effective Toyota/Ford/Honda/Peugoet/etc etc etc. GWG also has the often forgotten Great Western Technolgies Troy Mich./with alloy developement for batteries(NIMH) and magnets smack dab in the MIDDLE of the car industry MICH. Toyota has jt ventures now with Ford and BMW-hybrid drive train and NIMH battery. Will Toyota and others move more production(use your imagination of exactly what) to N America to escape the floods of Thialand and the earthquakes-Tsunamis of Japan???? Expands their footprints in America and moves everything closer to markets for the HYBRIDS based on NIMH. GM and their foolish pursuit of Lithium powered(THE CHEVY VOLT) electrics is a SMOKE SCREEN-the future of transportation is the NIMH powered HYBRIDS with DIESELS and SSD THERMOELECTRICS. Add to that SYNTHETIC FUELS-synthetic diesel from nat gas and coal and BINGO!!!!!! North America has plenty of nat gas and coal. Watch the future unfold/Ford gets it along with Toyota/BMW and VW!!!!!!!!!

16 Andie February 6, 2012 at 6:17 pm

Have not known anything regardIng innovation metals …could someone explain this to poor lil ole me?
You see Iam just an amateur individual, wHo attended catholic school and was ot exposed to much of anything involved with science/geology. find it alll very interesting and desire to learn more? Help Gareth!

Thanx
Namaste
Andriette

17 Christina Chen February 7, 2012 at 8:27 am

Gareth, Thank you for the update. Always find your website very informative. Do you have any information about a rare earth workshop to be held in Japan in March 2012?

18 Gareth Hatch February 7, 2012 at 10:36 am

@ellwodo: I know that Matamec put out an in-pit resource, but have not updated their overall mineral-resource estimate.

@blackjack: thanks for that info – so being in the ASX100 is a requirement for a fund manager to be able to invest in the company’s stock? I did not know that. Certainly the Duncan Deposit at Mount Weld has very significant potential.

@nicolas pietrangelo: I hear what you are saying, but right or wrong, the current trend appears to be moving from NiMH to Li-ion batteries, in new vehicle models. As our friend John Petersen has pointed out on numerous occasions, NiMH-based EVs when viewed as an entire fleet, are a much more efficient use of battery production capacity AND reduce more CO2 emissions AND use less fuel than Li-ion-based vehicles plug-in EVs…

@Andie: I believe you’ve now found the other site – happy to share more on this via email :-)

@Christina Chen: Hello there :-) Thank you for your kind words. I did hear about a photoluminescence conference in Kyoto in March – is that the one to which you’re perhaps referring? Web site is http://www.pre12.org.

19 nicolas pietrangelo February 8, 2012 at 6:25 am

Garth I think you all in the metals industry have some glaring errors-jack lifton gets it though. Start thinking of life cycle of your metals. Who wants recycled lithium/what is it good for?? explosions ask TOXCO in their Trails BC recycling facility up in fire and smoke circa 2009. Do you use lithium based greases in the gears of giant windmills????? ergo wind turbine fires??? ask lubrizol on that one???? Ok you have your NIMH battery made in house by Toyota brilliant supply themselves and others-FORD?-BMW?-HONDA?-VW? NOW THEIR WHOLLY OWNED DIVISION ASIHI STEEL uses the nickel and small amt of cobalt to alloy stainless steel wow great supply of these elements Toyota and the above mentioned other car cos??????? from the recycled NIMH BATTERIES bazzillions of them. Stainless steel is everywhere as you know/but maybe you don’t know UNITED SOLAR a division of ENER(same co developed NIMH battery). These are thin film solar cellls on stainless steel-NOT GLASS- and there will be worldwide bazzillions of miles of these particular solar cells flexible very lightwt and proven over the yrs. They are in applications from the SOLAR KINDLE a few watts to the roof of the BOEING 787 dreamliner facility in S.C. ten (10) acres of solar cells 2.6 million watts-they will be used cost effectively all over the world. BAZZILLIONS OF NIMH BATTERIES from above car cos(brilliant Toyota ) recycled into BAZZILLIONS OF MILES OF THIN FILM SOLAR CELLS ON STAINLESS STEEL all over the world. Remember the substrate is stainless steel and the semiconductor is very very very thin less than one micron. Don’t forget these are in great part mich cos and the new mines in the upper penn of mich for COPPER/NICKEL/COBALT/TELLURIUM/maybe. You all are NOT looking at life cycle and life costs of these CRITICAL METALS. Gasoline going through the roof and a bit more slowly but electricity costs from your local utilities going to go through the roof!!!!! Solution explained above in addition to some thermoelectrics to capoture with a solid state device WASTE HEAT both in cars-trucks-buildings. Watch the future it is unfolding/solar/storage with safe proven battery/recycling/capturing of waste heat. To do all this you need basic metals NICKLE-COBALT-IRON-TELLURIUM-RARE EARTHS all here in N.AMERICA!!!!!!!!!

20 Gareth Hatch February 8, 2012 at 9:59 am

@nicolas pietrangelo: I’m not quite sure why you’ve lumped me in with “the metals industry” above… I already agreed with you that NiMH batteries make more sense from the fleet-wide perspective. My noting the trend otherwise, doesn’t mean that I think it’s the right trend. Please don’t shoot the messenger!

21 nicolas pietrangelo February 8, 2012 at 3:01 pm

My apologies if a bit caustic/I very much appreciate your efforts and forum/very very frustrated with THE WORLD view when it seems like one catastrophy after another with LITHIUM-enormous enormous amts of time effort and $$$$ going down this BLACK HOLE. Conversely ythe logic to support NIMH and real world data to support NIMH gets stronger and STRONGER all the time. I appreciate your input and this forum-THANKS.2

22 harald fischer February 10, 2012 at 7:07 am

Gareth, great blog – always worthwhile to read! Keep it going.

23 Tekton February 12, 2012 at 12:36 pm

With mining producers continuing to show up, and a finite market beginning to contract, there will be a significant shedding and consolidation of the number of mining and mine-to-be businesses who will survive in this sector. I think this has been clearly stated over the past few years by our industry professionals.

Now we will be coming to crunch time over the next few years, and though there are some clear frontrunners who have designed and maintained successful business plans, what will become of all those companies and their deposits who do not make the cut? Will they all be consoldiated through buyouts, or will some simply fall into neglect because they can’t be operated without extraction facilities. And, might something like the IMC plan become a model for various locales who are remote?
Strategic metals are going to require some strategic planning both for the surviving companies and their investors. This is information I and others need, and we need that information to come from the best connected, top of the industry professionals.

24 Paul Carter February 15, 2012 at 11:32 am

You have a typo of 2736% in the Bear Lodge resource.

25 ringo February 15, 2012 at 2:17 pm

to Tekton: there are professionals there if you pass me your contact details they will contact you

26 Roch February 16, 2012 at 10:28 pm

I was reviewing all the canadian companies and I am trying to make sense of the market cap versus their drill results so far.

For example, GMA seems to have 20 times more REE than most companies and yet , it has one of the lowest market cap. What am I missing?

27 Tekton February 17, 2012 at 10:00 am

Perhaps today’s news from Arafura Resources about 5 of its board member resigning is the first telltale sign of the demise of smaller REE companies. If this does devolve into a complete collapse, it will be rather disappointing since they did apper to have such a promising future just a year ago.

28 Cristina February 21, 2012 at 9:23 am

I see that in your calculation you refer to “average monthly prices for December 2011 and the moving three-year average price for separated rare-earth oxides”.

What is the source that you use for pricing? What are the key sources you recommend to look at for pricing RE oxides or concentrates?

Thanks

Cris

29 ringo February 23, 2012 at 11:16 am

for Chris : Gareth is most probably using private communications with all the companies they trust him somehow and most probably he gets some financial compensation for all this reports. he is trying to make his name by doing reports for the rare earth sector. he might add some more to it…

30 Gareth Hatch February 23, 2012 at 1:22 pm

@nicolas pietrangelo: no worries :-)

@harald fischer: thank you for your kind words.

@Tekton: I like to say that rare-earth deposits are happy to sit waiting to be developed by the right entity, even if their owners come and go. It is certainly a valid question to ask what will happen to the deposits currently optioned by companies who will disappear in the next few years. No doubt others will jump at the chance to add to their pipelines. No need to even look as far ahead as extraction facilities – if a non-state-owned entity is not able to define a resource, take the project through preliminary economic assessment and then complete pre-feasibility study, then they have a snowball in Hell’s chance of ever succeeding.

As for Arafura: I am currently still in Australia after attending a conference here and yesterday had the opportunity to visit their demo plant at ANSTO Minerals. I will be writing this visit up for the TMR Web site when I get a chance, but l can tell you that despite recent negative publicity, I do not share the opinion that this company is by any means down and out.

@Cristina: I use the data available from metal-pages.com for my calculations. Asian Metals also publishes pricing data. In both cases though, be aware that these are indicative, not definite prices, since they are based only on reported transactions; there is currently no open exchange for the trading of these materials.

@ringo: while TMR does provide detailed information to private clients, all of the information published in respect of the Index is gleaned from the public domain, and TMR receives no compensation for publishing it. We publish this info, and info such as the free Critical Rare Earths Report, simply as a public service to the sector in which we operate, to encourage the ongoing development of the sector through the use of independently gathered data.

31 Tekton February 24, 2012 at 9:45 am

I see Arafura is showing some good response right now, and I hope that continues. The fact that the resource remains in the ground is one reason I think there is long term promise for the sector in general, regardless who owns it. AS technology improves, it is entirely possible that self contained custom tolling facilities could be moved to remote locations after concentrates had been processed and stockpiled.

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