The Bloomberg Rare Earth Mineral Resources Index

by Gareth Hatch on January 10, 2011 · 16 comments

in Rare Earths, Tools & Metrics

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As I mentioned last week, at the end of December 2010 Bloomberg launched its Rare Earth Mineral Resources Index. This is a “modified market capitalization weighted index” comprising publicly-traded companies with advanced rare-earth projects.

The primary criterion for inclusion in the Index is that a company has a rare-earth project with a defined 43-101- or JORC-compliant mineral resource. The Index will be updated and re-weighted on a quarterly basis, so that companies with new mineral-resource definitions will be eligible for inclusion.

In the first iteration of the Index, Bloomberg chose the following companies and weightings:

Member Companies on the Bloomberg Rare Earth Mineral Resources Index
and their weightings (at Dec 21, 2010)
Company Ticker Symbols Weighting (%)
Molycorp Inc. NYSE:MCP 16.4
Lynas Corporation Ltd. ASX:LYC, PK:LYSCF 15.0
Avalon Rare Metals Inc. TSX:AVL, AMEX:AVL 11.4
Rare Element Resources Ltd. TSX.V:RES, AMEX:REE 11.2
Arafura Resources Ltd. ASX:ARU, PK:ARAFF 10.0
Greenland Minerals and Energy Ltd. ASX:GGG, PK:GDLNF 6.7
Quest Rare Minerals Ltd. TSX.V:QRM, PK:QSURD 6.3
Frontier Rare Earths Ltd. TSX:FRO 5.9
Alkane Resources Ltd. ASX:ALK, PK:ALKEF 5.0
Tasman Metals Ltd. TSX.V:TSM, PK:TASXF, F:T61 4.6
Great Western Minerals Group Ltd. TSX.V:GWG, OTCBB:GWMGF 4.2
Navigator Resources Limited ASX:NAV 2.1
Matamec Explorations Inc. TSX.V:MAT, PK:MTCEF 1.2

Subscribers to the Bloomberg information service can track the Index via its ticker symbol BNREMS BNREMRS. We’ll update the above list periodically, as and when Bloomberg makes changes to its composition. In the meantime, you can see the latest data for the Index, on its Web page.

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1 Aditya January 10, 2011 at 12:06 pm

Hi,

I think Great Western Minerals is under represented. All others seem in line.

Regards,
Aditya

2 RA January 10, 2011 at 1:13 pm

Not sure why Avalon and Rare Element have such high weightings and Great Western doesn’t. Great Western has a former producing mine whereas Avalon and Rare Element are still exploration projects. If Molycorp, which is restarting its mine, has such a high weighting Great Western should as well.

3 Don Ellwood January 10, 2011 at 1:56 pm

Whatever they have done to “modify” market caps appears to have compressed the very large differences between MCP and LYC and all of the rest. For example, based on Friday’s close, the market cap of MCP is over 13 times that of Quest. But the above weights MCP at only 2.6 of Quest’s weight.

Disclosure: market caps influence my investing. If I had a few billon dollars I figure I would rather have 13 Quests than 1 Molycorp, and I invest accordingly. I currently only have 4 REE companies: MTCEF, MLLOF, QSURD and TASXF.

4 Jim Bond January 10, 2011 at 2:28 pm

I tend to agree it does appear that Avalon and some other pure exploration plays are over weighted relative to some more developed companies which seem much further along in their corporate development such as Great Western

5 Garth January 10, 2011 at 2:29 pm

Once GWG owns all the shares of Rareco, nobody will be able to stop us. We will be #3 on everyones list behind MCP and LYC. With a market cap of 1.2 Billion.

6 Chux03 January 10, 2011 at 5:45 pm

That index is suspect already anytime I see a weighting with MCP like that. What do they own that makes their shares worth that price besides a broken down LREE mine that’s probably going to take millions of dollars and thousands of manhours to bring it back online to still have only light rare Earths in the ground there?? Molycorp more expensive than Royal Gold or Cameco, the huge uranium miner?? Please….you’re joking, right?? We’ve all heard of the REE bubble but in my mind anytime I hear that, the first thing I think of is that over-priced, one-trick pony Molycorp at over $50 a share. And I thought they were over-priced at their IPO at $16….
No thanks!

7 Tek January 10, 2011 at 6:21 pm

Re: GWG.
Remember, their primary focus is secure their own upstream, not necessarily to become a “major player” in the international REE mining and refining sector. So far it appears they are maintaining that original buiness plan and I for one am quite happy about that. Just because they won’t become one of the big boy miners doesn’t mean that they can’t see a continued and dramatic appreciation in SP and whole value. The value of a REE company is clearly going to be in its vertical integration, producing refined, value added products to a starving market. I’m looking now at companies who are wise enough to follow their lead and are demonstrating similar intentions.

8 fred January 10, 2011 at 9:23 pm

Put CIN.v on your radar. Soon will be moving to the top of the list. Tony Mariano, widely regarded as the leading expert geologist in the world of rare earth minerals has just agreed to come work for them. Drill results are pending and rumoured to be the makings of a world class deposit.

9 jose January 11, 2011 at 8:27 am

Good article. The question now is ¿How long will it take before bloomberg allows anyone to create an ETP based on the index?

10 grimaci January 11, 2011 at 3:46 pm

We should all recall the moly crisis of a score or more years ago.
The world went looking for it to capitalize on the shortage induced price, and a large number found some. does anyone recall what happened next?

Rare earths are not that rare at elevated prices. There was never a reason to spend the effort to develop new deposits to compete with existing production when they were not selling all available.

Now we have a “crisis” mostly caused by analyst hype and truth stretching.

Just a different version of the “weapons of mass destruction” scam.

REE investors should hone their when to sell skills well, especially when betting on exploration plays

11 chris January 11, 2011 at 4:50 pm

Molycorp’s HREE counterpart: Alaska’s Bokan Mt. former operating mine, UCORE (Jack Lifton)
Company: UCORE
Vancouver Exchange: UCU.V
NYSE: UURAF.PK

Industrial College of the Armed Forces, http://www.ndu.edu/icaf/programs/academic/industry/reports/2010/pdf/icaf-is-report-strategic-mat-2010.pdf

State of Alaska House of Representatives: House Resolution #16 http://treo.typepad.com/raremetalblog/2010/04/news-state-of-alaska-announces-support-for-expedited-permitting-and-production-at-ucores-bokan-heavy.html

DOE_CriticalMaterialsStrategy
http://www.energy.gov/news/documents/criticalmaterialsstrategy.pdf

News:H.R. 6160, the Rare Earths and Critical Materials Revitalization Act of 2010 (“the Act”), by the U.S. House of Representatives: “While these Acts together promise to give U.S.-based rare earth producers a remarkable edge in the race to replace specialty metals now dominated by China, very few domestic projects have the qualifications of Bokan as a strategic military and technological asset,” said Jack Lifton, a leading REE expert and a party to the initial drafting of proposed RESTART legislation. “As the largest historically documented Heavy rare earth deposit in the U.S., Bokan is a counterpoint to Molycorp’s primarily Light rare earth deposit at Mountain Pass in California. Together, these two deposits, located in relative proximity to each other and on U.S. soil, have the potential of liberating the U.S. from non domestic rare earth dependencies in the near term.”

Ucore Investor Presentation Aug 2010.ppt
http://treo.typepad.com/UCU%20Inst%20Presentation%20%20Aug%202010.pdf

12 prescient11 January 13, 2011 at 2:15 pm

Gareth,

Since you are in contact with Dr. Chen every now and again, it is my understanding that he will be presenting, at a symposium hosted by Cambridge House, a paper/presentation entitled “China to Join Buy Side.”

Any chance on getting a look at that or receiving an abstract that could be posted on RMB or here? Many thanks.

13 Gareth Hatch January 13, 2011 at 5:46 pm

@Prescient11: Jack will be speaking at that event – we’ll see if we can get some info as requested.

14 Gareth Hatch January 13, 2011 at 5:47 pm

By the way, the Bloomberg Index has now been updated and Hudson Resources has been added. We’ll have the updated weightings etc. shortly.

15 fran January 14, 2011 at 2:57 pm

JOSE–

the lack of liquidity in this junior mining area presents a problem of supplying “creation units” necessary to the ETF formation. search/learn ETF CREATION UNITS

16 prescient11 January 16, 2011 at 8:32 pm

Thanks Gareth.

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