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Rare Earth Deposits: A Simple Means of Comparative Evaluation

LONDON, ENGLAND / ACCESSWIRE / April 23, 2014 / Rockstone Research has just published a new research report on the rare earth element (REE) sector evaluating a total of 15 REE development companies.

The full research report can be downloaded as a PDF with the following links:

English:

http://www.rockstone-research.de/research/RockstoneREEupdate3english.pdf

German:

http://www.rockstone-research.de/research/RockstoneREEupdate3deutsch.pdf

http://www.rohstoff-welt.de/news/artikel.php?sid=48634#Seltene-Erden-Lagerstaetten-Ein-einfaches-Mittel-zur-vergleichenden-Bewertung

Excerpt:

Anyone looking into the REE space in-depth may come to the same conclusion that this industry is more complicated than typical commodities like gold, silver, copper, or iron ore. Although the overall market is less than 200,000 tonnes of total rare earth oxide (TREO) per year, the need is critical in just about every facet of our technological (‘high-tech’, ‘clean-tech’) savvy lives, and therefore, is important to understand.

The simple lack of expertise in the space, due to the small number of producing mines globally, coupled with the up to 15 pay elements + co-products (each with their own supply-demand fundamentals) and misconceptions about what are the most important factors to be considered – accompanied with “excellent” marketing and the significant variance in the REE price decks used – makes comparative evaluations a truly daunting task unless put into the proper context.

In a space that is so poorly understood and so technically challenging it is essential to stick to a simple method of comparison that relies on tangible data and historically proven methods.

Herein, I have ranked 15 REE deposits that are well-known in the space and/or subject to our reader’s comments. This rating is based on 6 criteria of evaluation (discussed below) and largely subjective in nature as there is no precise way to compare multiple REE projects in a definitive manner. As such, I have based my ranking on a comparison of deposit attributes, and on discussions with experts in the REE space. Please take this ranking as a guide that is subject to change based on a project’s internal developments.

A listing of these 15 projects and their ranking can be found in Table 1 at the end of this article as well as a detailed project attribute listing in Table 2.

The following 15 REE companies were mentioned in the research report:

#1: Commerce Resources Corp.

#2: Peak Resources Ltd.

#3: Frontier Rare Earths Ltd.

#4: Rare Element Resources Ltd.

#5: Tasman Metals Ltd.

#6: Great Western Minerals Group Ltd.

#7: Greenland Minerals & Energy Ltd.

#8: Arafura Resources Ltd.

#9: Matamec Exploration Inc.

#10: Namibia Rare Earths Inc.

#11: Quest Rare Minerals Inc.

#12: Avalon Rare Metals Inc.

#13: Ucore Rare Metals Inc.

#14: Texas Rare Earth Resources Corp.

#15: Geomega Resources Inc.

#16: Molycorp Corp.

The vast majority of present production is from China (>90%), and no major non-Chinese operations have existed in recent years with the exception of Molycorp Inc., and to some degree Lynas Corp. The REEs are not like iron ore, gold, or copper deposits where the metrics are easier to understand and comparative evaluation is more straightforward. There are factors that are comparative between all mining projects, but there are several additional factors that are specific to REEs and that play a dominant role in a comparative evaluation.

Thus, this article will endeavour to layout some basic metrics and criteria for comparative evaluation of any REE deposit for the retail or institutional investor.

As with any commodity, basic criteria exist for evaluating a project’s potential and comparing to one’s peers. For an REE project, a simple method of evaluation may follow the logic of assessing the following criteria in order of decreasing importance:

1. Mineralogy, Mineral Processing, and Metallurgy

Does the primary REE mineral(s) have a history of processing/recovery (present or past), and has a >30% TREO mineral concentrate been achieved?

2. Tonnage and Grade

Is there sufficient tonnage present with appreciable grade to support a reasonable mine-life and production scenario? Is there a consistency of mineralization in terms of TREO grade, as well as ore and gangue mineralogy?

3. REE Distribution

Is there a favourable and balanced REE distribution present and dominated by the 5 critical rare earth elements (CREE) that are in the highest demand, yet shortest supply; namely, neodymium (Nd), europium (Eu), terbium (Tb), dysprosium (Dy), and yttrium (Y)?

4. Economics

Has an economic evaluation been completed on the project and were the findings robust based on demonstrated data results and reasonable assumptions?

5. Infrastructure

Is the project reasonably close to power, water, and road access and/or is its infrastructure development plan practical?

6. Jurisdiction

Is the deposit located in a favourable jurisdiction?

If a project ranks highly in all these criteria (i.e. well-balanced across each), then it is immediately at the forefront of the space, at least to my way of judgement.

The full research report, including the ranking of the 15 REE companies evaluated (Table 1 and Table 2), can be downloaded as a PDF using the following links:

English:

http://www.rockstone-research.de/research/RockstoneREEupdate3english.pdf

German:

http://www.rockstone-research.de/research/RockstoneREEupdate3deutsch.pdf

http://www.rohstoff-welt.de/news/artikel.php?sid=48634#Seltene-Erden-Lagerstaetten-Ein-einfaches-Mittel-zur-vergleichenden-Bewertung

Disclaimer: Please read the full disclaimer on www.rockstone-research.com and within the PDF of the above mentioned research report.

SOURCE: ROCKSTONE RESEARCH LTD.

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