China’s Zhitong Financial Network forecast an NdPr price of >US$90/kg for 2021.

We are sceptical. It is normal, that in times of rising prices chartists get a bit exuberant. Watch out for China RE policy 2021-2025.

Prices for light rare earth oxide are holding, while heavy rare earth keep climbing, terbium above US$ 1,000/kg now, while we don’t really get why erbium should go up, unless it is the pull of overall shortage of all heavies. On the metal end neodymium and NdPr metal gave off 0.5-1% from yesterday to today.

Here the development since beginning November, so in case there is a correction, that is the correction potential:

And for removal of doubt about the overall trend, here pre-rare earth shock 2009 prices to 2019:

…and 2009 to 2020:

Banks are beginning to attend to rare earth. They have to, because of recent price-increase headlines clients ask the banks salesmen if they have research and recommendations on rare earth. There is no competence at the mainstream banks and brokers when it comes to RE, there hasn’t been for many years, after almost all of them had done away with mining as such.

GoldmanSachs, who successfully buried US$ 80 million in Molycorp’s demise, are leading the charge with an Australia Metals & Mining Virtual Rare Earth Forum, results of which their research put out this morning. GS only parrot contents of company presentations, because they just don’t know any better.

The only ones, who have been consistently working on the rare earth space, are Hong Kong’s CLSA, who had been acquired by China’s CITIC Bank in 2013. Once free-wheeling, CLSA are now being brought in line with Communist Party requirements, such as participating in China’s 5-year plan. Practically all key executives from 2013 have left, with them the clients. CLSA now focus on Chinese market and on mainstream brokerage, which may leave the rare earth space without competent research.

Hastings published this headline presentation sheet for the 2020 annual report (click through to download the presentation):

This presentation puts up one piece of data that is objectively, verifiably true, to sanctify all the unlikelihood that follows.

So, lets look at it.

Up to 52% NdPr:TREO Hastings have been emphasising high proportional NdPr for many years.

There is one deposit in Hastings’ documentation that fits the top end of the claimed “up to 52%” value:

As per the resource update of November 4, 2019, a regular mathematical exercise at Hastings usually followed by the issue of new shares, these were the announced values:

About 1/3 of explored world rare earth deposits sport a proportional NdPr rate of 20-30%. The average overall is just above 20%.

However, Hastings’ claim of proportionally highest NdPr would stand even at its average 34%, it would still be a valid claim. Subject to the underlying data being correct, they can still increase the “up to 52%” to “up to 53%” in the next presentation, something we really look forward to.

World leading benefication: In general, if as a junior RE miner you can’t reach a concentrate grade of minimum 30% TREO, then you are probably finished, done for, dead in the water in terms of feasibility, according Prof. Dudley J. Kingsnorth.

If mine grade is ~1.2% TREO just like Hastings’, then yes, you have got to improve the mine grade by at least 25 times to reach 30% TREO concentrate. That is the way it is, it is normal and this is unrelated to “world leadership in benefication.“

Low capex, world’s next, payback period: We are uncomfortable with all the other numbers and statements Hastings’ Malaysian executive chairman throws around.

The executive-summary-obscured definitive feasibility study covers 2 deposits, Fraser and Bald Hill (together only ~78,000 t TREO), and the capex for these two, that much seems certain. The executive summary generously adds other occurrences as “additional targets” to the executive summary of the definitive feasibility study, apparently in an attempt to make the whole thing look more feasible.

A misrepresentation in this regard:

The Definitive Feasibility Study actually was never published.

Redacted DFS contents in the pointedly inconclusive executive summary of the DFS was published by Hastings, that is all there is.

Same as the pre-feasibility study announced by Hastings with big fanfare on April 8, 2016 (“Final PFS documentation compilation is nearing completion with the full report to be presented in the next four weeks”) but never delivered, we’ll probably not hear of the Hastings definitive feasibility study ever again.

There is so far no 3rd party evidence to suggest, that Hastings or any of its RE-occurrences were feasible, however, the recent price jump may have improved this.

Start-up in 2023? Pay back in 3.4 years? The least desirable that could happen to Hastings’ executive chairman would be, if he ever had to walk the talk, which is, what the recently increased RE prices may actually force him to do.

More from Malaysia. Several months ago we were pointed to something rare earth related happening in a Malaysian minority area. But our usually well informed sources could not or would not find out, who was behind it.

Secrecy grows suspicion. Local environmentalists are on the case, but also they seemingly can’t figure out who is behind it. They refer to something that happened last year, involving China state-owned Guangxi Nonferrous Co., who since 2016 hold the title of the first ever bankruptcy liquidation among bond issuers in the China interbank market. China Aluminum took over the smoking rubble of the company.

China is desperately short of rare earth raw materials, Guangxi Nonferrous need a new raw material base and apparently they are determined to try Malaysia as quietly as possible, similar to what Minmetals pulled off in Myanmar. See links to related articles below.

Suspense is building around the contents of the new MIIT rare earth policy 2021-2025, if and how the changed situation is being addressed. That will be price-relevant.

We had a look at Vital Metals and some of their annual reports. For better understanding, here the details of Cheetah Resources before it was taken over by Vital:

In September 2017 Vital issued 263,938,807 New Shares to raise $1.98 mio for their tungsten project. In March 2018 Vital issued another 422.2 million new shares to raise $3.8 mio. At that time they had absolutely no connection to rare earths.

Cheetah Resources are established in April 2018.

Then in May 2018 Vital sold their tungsten mining rights for cash AU$ 15 mio (payment only came in August 2018, post financial year end).

At around the same time when Vital sell their tungsten rights, in May 2018, a Philip John Coulson, a so far seemingly unrelated party, begins buying Vital shares in different sized tranches several times per month, so that by mid September 2018 he holds 6.87% of the voting rights in Vital Metals. On January 7, 2019 he is appointed director.

Managing director Mark Strizek leaves Vital on January 29, 2019. February 6 Zane Lewis joins as non-executive director and company secretary.

March 27, 2019, Philip Coulson and Zane Lewis become executive directors in order to handle what follows.

On June 24, 2019 Avalon announce the agreement with Cheetah for the acquisition of near surface RE resources at Nechalocho, Thor Lake.

On June 25, 2019 Vital Metals announce the acquisition of Cheetah Resources for 400,000,000 Vital Metal shares plus 2 tranches of each 400 mio performances shares, and then award fat consulting contracts to 2 of Cheetah’s previous owners, who thereafter go on to become executive and non-executive directors at Vital.

With the retirement of Zane Lewis and Francis Harper in August 2020 the last of pre-Cheetah acquisition directors - except aforementioned Philip Coulson - are gone and with the appointment of James Henderson Cheetah’s members have completely taken over the board and management of Vital Metals.

Geoff Atkins and Even Cranston now could well be the highest paid in the rare earth junior miner industry, at least for 2020:

The “compensation” part of the 2020 annual report fills a whopping 8 pages.

But looking at the progress report, it may well be Vital Metals who are “the next rare earth producer”, however tiny, if they are not beaten to it by Geomega.

Thanks for reading and have a successful rest of the week!

//Market

VW holds back on electric supermini

In a product strategy seen by the Financial Times, VW outlined plans to bring at least a dozen new models to market over the next five years, including a supermini emissions-free vehicle aimed at drivers of its T-Cross or Polo cars.

That car, currently referred to internally only as “small BEV [battery electric vehicle]”, will be priced at €20,000-€25,000 — at least 30 per cent cheaper than VW’s flagship ID.3, which was launched this year.

//Companies

Namibia Critical Metals Confirms Significant Upgrades on Bulk Sample from Lofdal Heavy Rare Earths Project - Comments on Positive Developments in Rare Earth Markets

Lofdal is a joint venture between the Company and Japan Oil, Gas and Metals National Corporation ("JOGMEC") which is operating under a Term 1 budget of CD$4,100,000 (Company press release September 21, 2020). The Company recently reported an increase of 60% to the strike length of the Area 4 deposit and the inclusion of the first satellite heavy rare earth deposit (Company press release November 26, 2020). Highlights of the metallurgical test work program are reported here as follows:

• XRT and XRF ore sorting technologies successfully identified mineralized particles over a wide range of size fractions

• Test work completed on 8.6 tonnes of sample has achieved 1.5-3X upgrades with high recoveries for dysprosium and other heavy rare earths

• Increased grades and reduction in tonnage for milling will lower operating costs

• Gravity and magnetic separation test work nearing completion at Light Deep Earth (South Africa)

• SGS (Canada) appointed to continue downstream flotation and magnetic separation test work

• Strong price increases in key value drivers for Lofdal - 12 month prices up 24% for dysprosium and up 93% for terbium

With xenotime as its dominant rare earth mineral, Lofdal offers the potential to be a significant source of dysprosium and terbium. While the market has taken note of the recent increases in neodymium and praseodymium prices with regards to light rare earth projects, similar increases to dysprosium and terbium prices have not yet been factored into the heavy rare earth contenders."

Four mineral exploration projects get $100,000 under Mining Incentive Program

Of the total pot of $120,000, Cheetah Resources and StrategX Elements Corp. received $93,000 for their rare earth and cobalt projects.

Comment: The a.m. award may cover a fraction of the agreed “consulting fees.”

//Politics

‘Same rare earth claims made in 2019’

 The state government’s intention to exploit rare earth elements (REE) is still at the preliminary stage, with no mining activity carried out so far.

Mentri Besar Muhammad Sanusi Md Nor (pic) said the approval given to a Kuala Lumpur-based company was to carry out exploration work in Sik.

He said the process would involve checking the composition of mineral deposits in the area.

He added that the findings, still at their early stages, would involve various related departments and agencies.

“The state government sees this as another source of income for Kedah.

Meenakshi said similar claims were also made last year by the former Water, Land and Natural Resources minister over a deal between a China company – Chinalco GXNF Rare Earth Development – and the Perak government, for the exploration of rare earth minerals.

The ministry, in response to SAM then, claimed the Chinese company had the expertise to identify potential rare-earth sources in Perak, especially in ion-adsorption deposits, that did not contain thorium or uranium as by-products.

RELATED:

Malaysia: SAM cautions against promoting rare earth industry

Sahabat Alam Malaysia (SAM) is gravely concerned over the announcement by Kedah Menteri Besar Muhammad Sanusi Md Nor that the state had entered an agreement with a Kuala Lumpur-based joint venture company to explore rare earth elements (REE).

According to media reports, Sanusi had claimed that the REE found in Sik, Ulu Muda and Baling in Kedah, was not radioactive.

SAM president R. Meenakshi said similar claims were made last year by the former Water, Land and Natural Resources minister, over a deal between a China company and the Perak state government for the exploration of rare earth minerals.

The Perak venture involved the state government and a Chinese company, Chinalco GXNF[=Guangxi Nonferrous] Rare Earth Development to undertake the exploration of rare-earth minerals. The ministry, in response to SAM then, had claimed the Chinese expertise in identifying the potential of rare-earth sources in Perak, especially that in ion-adsorption clay, did not contain thorium or uranium as by-product wastes.

"SAM believes that the Kedah venture could be similar to that being undertaken in Perak. We call on the Menteri Besar to confirm this and as to whether the venture involves the same Chinese company.

"Our concerns are not allayed by the Kedah MB or the federal government that the venture does not involve radioactive elements.

"SAM's preliminary research on China's experience shows that there is very serious environmental damage and human-health costs related to the mining and leaching of ion-adsorption rare-earth clay resources," she said today.

Yesterday, a local company based in Kuala Lumpur had been awarded an approval permit to explore and extract REE in Kedah.

RELATED:

'Cancel EIA for rare earth mines size of 924 football fields'

A group of Orang Asli villagers from Pos Lanai, Pahang, wants the environmental impact assessment (EIA) for three rare earth mines to be cancelled.

Citing a letter they received from the Orang Asli Development Department (Jakoa), the group said permission has been given to carry out an EIA for three mines spanning 660ha.

The area of 660ha is roughly the equivalent of 924 football fields. The EIA covers Orang Asli villages around the Jelai forest, but it is unclear how much of the total proposed mining area is forested.

The Pos Lanai Orang Asli Land and Territories Action Committee had submitted a letter to Jakoa on Monday, protesting the plan to mine rare earth metal lanthanide in the area. It claimed the plan will encroach on Orang Asli ancestral land, destroy the environment and jeopardise the livelihood of hundreds of families.

Comment: This is of course political. Interest groups in Malaysia oppose rare earth as a matter of principle, leaning on the devastating impact caused by the Asian Rare Earth case. On the other hand, it seems as if somebody tries to clear the land of the protected minority Orang Asil without much noise.

Decision on Chinese purchase of Arctic mine delayed; former General against it

The Chinese state-owned giant, Shandong Gold Mining had submitted a purchase offer  in May for the TMAC Resources mine at Hope Bay, a site along the strategic Northwest Passage.

Quoted in the paper he said China has a stated goal of becoming a “near-Arctic power” and acquiring the mine and the port would give them access to the strategic passage and the Arctic.  He added, “If you look at what they’ve done in the South China Sea to extend their area of influence- what’s to stop them once they get squatter’s rights and get into this port, of doing the same thing up there?”,

Comment: Given the strained relations between PRC and Canada, this bid from a state-owned miner may only be possible because of the dual purpose of such acquisition. Else unthinkable in current China.