Pensana Acknowledge Radioactive Materials Issue; REIA Webinar; Prices Weak; Lynas Trouble Continues; Russia Makes Diamonds From REE

2021 Rare Earth May 19

May 19

We posted about core issues with Pensana’s Longonjo deposit on January 20 and April 25.

The company approached us asking for a chance to respond to our readers via CEO Tim George or COO Rocky Smith.

Anticipating a thorough expert rebuttal of all and any points raised, including offering documented facts and figures, we agreed to publish Pensana’s response after having run it by our contributing experts - who wish to remain anonymous for reasons we find acceptable.

This is Pensana’s message to our readers:

The Longonjo carbonatite mineralisation contains low NORM (Naturally Occurring Radioactive Materials) broadly similar in tenor to (for example) the Mount Weld deposit mined by Lynas Corporation in Western Australia.

In conjunction with the Wood Group, Pensana's metallurgical consultants in Australia have successfully developed a proprietary process route which provides for the deportment of NORM to permanent tailings storage in a stable and non-leachable form.

Received from Paul Atherley cc: Tim George, Rocky Smith on May 12, 2021, at 21:48 Singapore time

Along with finally acknowledging that there is in fact a radioactive materials issue, they pass a message that is supposed to soothe everybody’s mind.

Wood Group must have worked at warp-speed, as there was no mention of proprietary process route for NORM and a NORM-suitable tailings storage mentioned in the Pensana Preliminary Feasibility Study dated November 15, 2020.

What is Pensana’s “NORM”?

NORM basically include radioactive thorium, uranium and potassium.

In terms of NORM we focus on thorium, resp. thorium oxide, the bulk of NORM material in most rare earth deposits.

We assume that Pensana want us to refer to the Rift Valley Resources - Pensana’s previous name - ASX announcement of January 24, 2014, ⦤850 ppm of thorium for Longonjo and compare it to Lynas’ Mount Weld CLD thorium of 626 ppm (Australia Geoscience). A 35% difference, very broadly similar in tenor.

So, following Pensana’s implicit suggestion to compare this 2014 number with Lynas, the comparison should look like this:

Sources: Mount Weld - Australia Geoscience, Longonjo - Rift Valley Resources (Pensana’s previous name) ASX announcementJanuary 24, 2014 and Pensana Preliminary Feasibility StudyTable 14

Even if Longonjo’s thorium content was the exact same as Mount Weld’s, Pensana’s thorium oxide output would still be 7 times of Lynas’, because of Pensana’s comparitively low NdPr and high proportional thorium oxide:

Visualisation of proportional contents of thorium oxide (ThO2) relative to rare earth oxides contents

Assessment of NORM

According to contents of Pensana’s Preliminary Feasibility Study, p. 58, published November 15, 2020, there was a total of 233 drill hole samples which had been sent for analysis to Australia. Also the assays for thorium and uranium of these samples were measured, according to various information the company released over the years.

Consequently, Pensana should have a pretty good picture of the NORM contents of Longonjo.

Data limitation

Since the company practises data limitation, no-one can have a full picture and google the project’s Archilles heels, it is impossible to assess the facts.

Assumption

Based on the a.m. it seems reasonable to assume, that Pensana are looking at an output of at least 10,000 t of thorium oxide over the life of the mine, half of what the International Atomic Energy Agency high-end assessment of Angola’s entire thorium resource (IAEA (2012) Uranium and thorium resources: Evaluation and reporting issues).

Benign tailings

In Pensana’s Preliminary Feasibility Study, p.4., it is mentioned that plans and provisions have been made for storing benign tailings. The same study says, that Pensana plan to process 2 million tons per year - which would by and large come to 4,500 t of NdPr per year content advertised.

Pensana may argue that they extract the somewhat modest rare earth elements content and put the 2 million tons aside as tailings the way they found it, including the NORM materials - no damage done, theoretically.

A very popular concept among junior rare earth miners, even though it simply does not work like that in reality.

In a way, this is also what flew back into Lynas’ face.

We really don’t have a handle on what such envisioned practise would mean in terms of an uncompromising ESG policy of Pensana.

Longonjo history and what that means for NORM assumption

In 2010 two companies entered the junior miner scene in Australia:

Australian Angolan Resources Pty Ltd, established Dec 3, 2009.
Sable Minerals Pty Ltd, established Nov. 1, 2010, said to be owning 70% of Ozango Mining SA, Angola, remaining 30% held by private Angolan interest (Discovery Group LDA), a legal requirement for foreign investors during the Dos Santos regime in Angola.

Both companies were run by a Paul Williams and a John Jacoby. Sable had a number of different shareholders, including a Czech gold mining expert and a gentleman resident in Angola.

Sable offered the 70% share in the Angolan Ozango project as a copper, gold, iron ore, rare earth and uranium opportunity for sale, a supposedly exceptionally rich resource at an exceptionally low price.

You may remember that in October 2010 the rare earth crisis began and prices were scky-rockting, after the Senkaku Incident a month earlier. So it didn’t take long to find the first buyer.

February 28, 2011: Black Fire Minerals Ltd. acquire the 70% Ozango share from Sable for several hundred thousand dollars in cash for all kinds of expenses plus AU$1.75 mio in Black Fire shares. A consultancy agreement with Australian Angolan followed on June 1, 2011 for acquisition of further projects.

In October 2012 Black Fire withdrew from the Ozango project owing to collapsing rare earth prices and the unwillingness of Sable/Australian Angolan to renegotiate the terms.

The search for a buyer was on again.

A junior miner named Dromana Estate Limited executed an exclusive option to acquire the 70% of Longonjo around March 21, 2013. Dromana viewed this more of an copper opportunity. Price: AU$1.5 mio in Dromana shares.

Again Australian Angolan were retained.

However, the deal unraveled over large consulting fee bills from Australian Angolan and on September 13, 2013, Dromana announced the termination of the consultancy agreement, still hoping that the acquisition of 70% of Longonjo would survive.

It didn’t.

And again the search was on for a new buyer.

On November 20, 2013, Rift Valley Resources Ltd (the former name of Pensana) acquired the company Sable, seeing potential in 2 gold deposits and in rare earth. Price: AU$1,5 mio in Rift Valley shares.

Considering the sheer size of the Ozango area and the advertised enormous potential for mining, the price was a steal.

All the while Longonjo rare earth had been peddled as low NORM, but that would not include consideration of RE contents not being very high either.

Grab- and chip samples with really high TREO led to the ASX announcement of January 24, 2014, including the thorium and uranium values, which in relation to the high TREO of the samples may have been considered low.

At that time, however, no drill samples from Longonjo were available yet, so it is quite possible that the thorium 850 ppm and uranium 25 ppm published on January 24, 2014 may actually be on the rather low compared to the later drill samples.

In relevant scientific literature about Pensana’s Longonjo we find thorium values of up to 1,300 ppm, more than double of Lynas’ Mount Weld:

Source: Nb and REE mobilization at the Longonjo carbonatite, Angola, (Calvo, Melgarejo, Alfonso, Bambi - January 2011)

Other issues - commercial

Apart from the - in our view - rather serious radioactive waste issue, there are other commerical issues, that we described in our post April 25:

An Angolan 25% tax on revenue plus 2% royalty kicking in after year two of operation, agreed by Pensana: No word from Pensana on the commercial and feasibility impact;
Inexplicable “management calculation”, NdPr proportional contents miraculously increase from 22% to 36%.;
No publication of bankable feasibility study contents (see data limitation strategy), supposedly completed in January 2021.

The Angolan pro-democracy organisation Maka Angola can’t decide what is currently worse in Angola, corruption or government incompetence.

Nobody wants to see a repetition of Bukit Merah, and that certainly includes everyone at Pensana.

As the Financial Times wrote, it wouldn’t be the first time that Pensana’s Paul Atherley faces environmental issues.

Source: Financial Times “Hull proposed for rare earths processing plant”, January 25, 2021

Related literature:

International Atomic Energy Agency IAEA (2012) Uranium and thorium resources: Evaluation and reporting issues;

De Araujo AG, Perevalov OV (1998) Carta de recursos minerais Mineral Resources Map. Ministério de Geologia e Minas. Instituto Geologico de Angola, Luanda;
De Araujo AG, Perevalov OV, Jukov RA (1988) Carta geológica de Angola - Geological Map of Angola. Ministèrio da Indústria. Instituto Nacional de Geologia, Luanda;
De Carvalho H, Tassinari C, Alves PH (2000) Geochronological review of the Precambrian in western Angola: links with Brazil. Journal of African Earth Sciences;
Calvo A, Draper J, Abella A, Bambi A, Goncalves A (2011) Nb and REE mobilization at the Longonjo carbonatite, Angola;
Alberti A, Castorina F, Censi P, Comin-Chiaramoni P, Gomes CB (1999). Geochemical characteristics of Cretaceous carbonatites from Angola. Journal of African Earth Sciences;
Egorov KN, Roman’ko EF, Podvysotsky VT, Sablukov SM, Garanin VK, D’yakonov DB (2007) New data on kimberlite magmatism in southwestern Angola. Russian Geology and Geophysics;
Ernst RE, Bell K (2010) Large Igneous Provinces (LIPs) and carbonatites. Mineralogy and Petrology 98;
Lapido-Loureiro FEV (1973) Carbonatitos de Angola. Memorias e trabalhos do Instituto de Investigaçoes Científicas de Angola.

For the record: Noone here holds or ever held a position in Pensana shares, neither long, nor short. Pensana, for reason unknown, deem themselves in the same league with MP Materials and Lynas. Also in these two we hold no position, neither long, nor short.

REIA host another webinar:

Click on the image for the link. You really want to be there.

Prices are weak across the board:

The standoff continues, and so does the downtrend of prices.

The semiconductor shortage has an impact in so far, as the demand for permanent magnets may currently not be as high as forecast, i.e. automotive, being 50% of permanent magnet demand, which also affects the ability of magnet makers to pass on rare earth cost increases to their customers.

For example, Nissan’s Kyushu factory was down from May 9 to 19, two other assembly lines are down from May 10 to May 28. We hear from Daimler Benz, that, no matter if passenger cars of trucks, they live hand to mouth, depending on semiconductor-based parts availability.

China’s automotive output in Q1 was below 2019 numbers.

Thank you for reading! Have an enjoyable rest of the week.

//Market

Electric vehicle shift poised to transform Canada’s miners

On both sides of the US-Canada border, a regional electric vehicle (EV) supply chain is being created, with the potential to transform mining in Canada and loosen China’s grip on the minerals used in batteries.
While Canada has an abundance of nickel, cobalt, graphite and lithium, the country has little local production of EV batteries. But, as global demand surges, US and Canadian leaders have discussed a joint approach to benefit local miners and manufacturers, as well as cutting their reliance on Chinese imports.

Mining stocks outpace tech gains but valuation gap remains Escondida-size

With copper and iron ore prices hitting records with boring regularity in 2021 it behooves any rational investor to throw some money at mining’s majors.
Despite hot metals markets, and a rerating of the sector, the revenge of the miners, as Robert Friedland puts it, is still a dish best served cold.

//Politics

Rare earths elements and other critical raw materials: a geopolitical headache for the EU

The EU has recently adopted a more proactive approach to eliminating uncertainty in its supply chains. For example, the European Raw Materials Alliance, a collaboration of industry players, investors, the European Investment Bank, and EU member states aims to diversify and increase European CRM output. The EU has also unveiled an overarching CRM strategy primarily concentrating on boosting EU-based mining, but also on diversifying supply chains and promoting sustainable recycling.
However, compared to the United States, whose concerns about supply chain dependencies encompass geopolitical aspects, the EU’s approach concentrates solely on the geoeconomic outlook. Moreover, the EU’s efforts to increase CRM extraction within its borders are disappointing at best and disastrous at worst.

Comment: Well spoken! China is angry with MERICS, for the latter having spoken out on the tragic mistake that China continues committing in its Xinjiang province, the “internal affair” which may haunt the Chinese nation for generations to come.

So China sanctioned MERICS, and MERICS try to get back at China with something that hurts: Rare earth.

Unfortunately, MERICS use all the lame stereotypes that just don’t stick.

Russia, U.S. tout cooperation ahead of Arctic Council meeting

With a warming climate melting more Arctic ice cover and global industries eager to exploit the region for shipping, fishing, drilling and mining, the United States and Russia sounded a rare, cooperative note going into an Arctic meeting this week.
Russia is to take the Council’s rotating leadership from Iceland until 2023. Other nations on the Council are Canada, Sweden, Finland, Norway and Denmark, with indigenous populations also represented.
Chinese investors have bid unsuccessfully to open mines in Canada and Greenland, which the U.S. Geological Survey says has the world’s biggest undeveloped deposits of rare earth minerals.

//Companies

Decision on Lynas licence extension set for July 28

The High Court today set July 28 on the judicial review application by three individuals challenging the decision of former prime minister Tun Dr Mahathir Mohammad and his Cabinet and three others regarding the licence extension of the rare earth processing facility owned by Lynas Malaysia Sdn Bhd (Lynas).
The three individuals, among other things, are seeking a declaration that Dr Mahathir and the 27 Cabinet ministers’ collective decision as the federal Cabinet on Aug 15, 2019 to allow a licence extension for six months for the Lynas operation was null and void.
The first applicant, Tan, also filed his objection to the Environmental Impact Assessment (EIA) by showing there were breaches to the licensing conditions and underground water pollution as included in the Executive Review Committee report.

Comment: Very painful process, never ending.

DOE awards $3M to MP Materials for project to extract rare earths from fossil fuel waste streams

MP Materials has received a $3-million award from the Department of Energy (DOE) to complete a feasibility study, working with the University of Kentucky (UK), on a system to produce rare earth oxides, metals, and other critical materials recovered from coal by-products. This project is enabled by a DOE-exercised option of a previous MP Materials and UK conceptual study in 2020.
Pursuant to this DOE-funded project, MP Materials and UK will advance their design for a modular system to concentrate coal by-product locally, in Kentucky. The concentrate will then be delivered to Mountain Pass, California, where MP Materials will leverage its existing capabilities to refine and extract the individual rare earth elements from concentrate before reducing them to metal.
The collaboration seeks to minimize the system’s capital and operating costs, as well as its environmental footprint, while maximizing economic opportunities for coal communities.

Comment: So MP are testing to process someone else’s raw material, but why coal-based, of all options? As we described before, the mission to use MP’s bastnaesite to produce downstream products is a one-way street, as the doors to China for these products ex USA are not open and a substantial market for NdPr does not exist yet in the US. Too risky. But taking someone raw material and produce small quantities to market demand elminates the risk, as bastnaesite deliveries to China could continue. By the way, MP have a well-filled war chest.

Rare Element Resources Reports Progress

As previously reported, RER, along with partners General Atomics, an affiliate of Synchron, the Company’s largest shareholder, and its affiliates, and LNV, an Ardurra Group, Inc. company, as engineering and construction subcontractor, received notice on January 20, 2021 that it had been selected as a potential award recipient, subject to finalization of pre-award negotiations. Since that time, the DoE, General Atomics, and the Company have been progressing the pre-award documents required for the award finalization, including the final statement of project objectives, project budget, and accompanying timetable. Additionally, the Company confirmed the planned demonstration plant will be located in Wyoming, near the Company’s Bear Lodge Project. The DoE funding represents one-half of the total estimated costs for the demonstration project and is contingent upon the completion of definitive documents, which is expected to occur late in the second quarter or early in the third quarter 2021.

Northern Minerals set for new WA rare earth drilling blitz

The company last year tabled a $5m budget for some 16,500m of drilling to be completed by the end of June this year. About half those metres were drilled in the first phase of drilling completed in 2020 with other significant intercepts reported by the company including 13m going 0.43 per cent TREO, or “total rare earth oxides” from 23m and 4m at 0.63 per cent TREO from 41m at the Banshee West prospect.
Access road and drill pad preparation has already commenced for the second phase of the campaign that is set to start in the first week of June.
Some 8,500-10,000m of reverse circulation drilling is planned over a six-week period.
Follow-up testing at Banshee West is on the agenda, with the rods also set to turn at the nearby, newly discovered Toad prospect where a 6m interval going 0.78 per cent TREO from 49m was previously returned.
Some 9km to the north in the vicinity of the Brown Range pilot plant, Northern Minerals also plans to drill test areas around the Gambit and Gambit West deposits where anomalous results from past drilling and surface geochemical programs were recorded.

Comment: They’d better find something soon.

Ocean mining frenzy drives $2.9 billion merger

The World Bank estimates a 1,000% increase in battery metals will be needed by 2050, and cites research in Nature warning that “the world cannot tackle climate change without adequate supply of raw materials to manufacture clean technologies.”
Given that it can take 10 to 20 years to get a new mine permitted and in production, the world appears headed for a “peak metals” crunch, which may explain the sudden minerals rush in the Pacific Ocean.
A new international deep ocean mining code, delayed by the pandemic, is now expected to be in place by 2023, and several companies that have been in the exploration stage, including heavyweights like Lockheed Martin (NYSE:LMT), are now hoping to start commercial harvesting as early as 2024.
One of these companies is Vancouver’s DeepGreen Metals, which is merging with Sustainable Opportunities Acquisition Corp. (NYSE:SOAC), a special-purpose acquisitions company, in a deal valued at $2.9 billion. The new company will be called The Metals Co.

Rainbow: Appointment of Non-Executive Director Ambassador J. Peter Pham

Rainbow Rare Earths Ltd is pleased to announce the appointment of Ambassador J. Peter Pham as a Non-Executive Director of the Company.
Ambassador Pham, Distinguished Fellow at the Atlantic Council in Washington, served as US Special Envoy for the Great Lakes from 2018-2020. In this capacity, he was the lead US official responsible for shaping and coordinating U.S. strategy on cross-border security, political and economic issues in this region, including Burundi where he led U.S. diplomatic efforts to rebuild and restore effective relations with the current government.

Comment: Glaringly obvious, that Pham is to help Rainbow fix their problem in Burundi. No word from Rainbow on the issue.

Rainbow Appoints ANSTO Minerals to Advance Flow Sheet Optimisation at Phalaborwa

Metallurgical test work will then be carried out to produce an optimised process flow sheet for the preliminary economic assessment (“PEA”)/scoping study, based on the original Sasol bankable feasibility study-level flow sheet, which produced three tonnes of cerium depleted mixed rare earth carbonate directly from the gypsum.
Phalaborwa’s flow sheet is expected to be significantly simpler than those required for other rare earths projects around the world, as the rare earths exist in a ‘cracked’ chemical form within the two gypsum stacks, obviating the need for the costly and capital-intensive stages of first producing a concentrate and then ‘cracking’ it prior to beneficiation.

Comment: If Rainbow “crack” the phosphogypsum rare earth extraction, it will be a giant leap for rare earth. Still not word on the export ban in Burundi.

Tesla shifts battery chemistry for utility-scale Megapack energy storage system

Tesla watchers report that the company has shifted to cobalt-free lithium iron phosphate (LFP) batteries for its 3 MWh Megapack energy storage product. The shift to LFP cathode batteries could cut costs and ease demand for supply-constrained nickel-based battery production capacity.
LFP batteries are typically less expensive to produce, but they also are less energy-dense than the nickel-manganese-cobalt (NMC) cells used by Tesla in its electric vehicles.

Comment: This kind of tweaking we can also expect to continue in the permanent magnet and RE spcae. Already there are NdFeB magnets for low temperature application with a substantial part of NdPr replaced by cheap cerium.

Red Mountain pulls the trigger on Mt Mansbridge exploration

Red Mountain Mining (ASX:RMX) says the work will advance its various heavy rare earths (HREE) and nickel-copper-cobalt-PGE prospects to assist with target definition for drill testing later in the field season.
It had previously secured a $150,000 Western Australian state government grant covering up to 50 per cent of direct drilling costs to help defray the costs of testing the HREE targets.

//Science

Siberians synthesized diamonds in rare-earth metal melts

Synthetic diamonds have promising high-tech applications, for example, as registers and memory cells in a quantum computer or as sources of single photons. The latter are able to increase the efficiency of information transmission devices a thousand times and improve quantum encryption systems.
Experts have established what conditions are necessary for crystallization to occur in melts of rare-earth metals (scandium, yttrium and lanthanides), and in addition, determined the optimal parameters for the synthesis of single-crystal diamond.

New magnetostrictive material for more efficient computing

Recently, scientists from the University of Michigan have come up with a material that’s at least twice as magnetostrictive and cheaper than other materials. Along with computing, this new material could also lead to better magnetic sensors for medical and security devices.
Scientists developed this new material using a combination of iron and gallium.