Japan confirmed that it will launch a survey of its Pacific seabed in the hope of finding rare earth deposits large enough to supply its high-tech industries and reduce its dependence on China, according to a report from The Japan Times.

Researchers from the Japan Agency for Marine-Earth Science and Technology are scheduled to begin the probe later this month near Minamitorishima Island, which is located approximately 2,000 kilometres southeast of Tokyo.

The survey follows earlier findings by Tokyo University professor Yasuhiro Kato, who took mud samples from the area in July last year. Kato has told media sources that he estimates that the deposit, located 5,600 meters beneath the seabed, could host enough dysprosium — used in lasers and commercial lighting — to satisfy Japanese domestic demand for the next 400 years.

Finding large-scale proven reserves inside Japan’s exclusive economic zone would be a significant boost to Japanese industry, which currently relies primarily on REE imports from China.

Toyota issues fourth payment for stake in Canadian rare earth project

Toyotsu Rare Earth Canada, a subsidiary of Toyota Tsusho, paid Matamec Explorations C$1.595 million — the fourth in a series of payments for its committed equity of a 49-percent undivided interest in the Kipawa heavy rare earth element (HREE) deposit. Matamec confirmed the payment last week.

As per the terms of the agreement, the Japanese-owned subsidiary paid C$8.5 million for a 25-percent undivided interest in July. In order to secure the remaining 24 percent, Matamec agreed to receive successive payments to reach the agreed upon total. The third payment was issued last month.

The company’s press release notes that to date, Matamec has received C$12,155,019 of the maximum C$16 million for the completion of a definitive feasibility study on the deposit, which is expected in the second quarter of 2013.

Matamec’s president and CEO, Andre Gauthier, said, “[t]he partnership with Toyotsu provides Matamec with the financial resources to continue in the execution of its long-term strategic plan to become a leading global rare earth company.”

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The US Department of Energy (DOE) will allocate up to $120 million for the creation of a rare earths research facility aimed at decreasing the country’s dependence on rare earth elements (REEs) from China.

The new research center will be called the Critical Materials Institute (CMI) and will bring together leading researchers from academia, the private sector and four DOE national laboratories.

The new hub will focus on developing technologies that will enable the US to make better use of materials it has access to as well as on eliminating the need for materials that are subject to supply disruptions, according to a DOE press release. To do so, the CMI will “leverage … existing research programs into a larger, coordinated effort designed to eliminate materials criticality as an impediment to the commercialization of clean energy technologies.”

The center will also address challenges across the entire lifecycle of REE materials, from enabling new sources to improving the economics of existing sources to accelerating material development and deployment.

The move is partially a response to findings reported in the DOE’s December 2011 Critical Materials Strategy document, which notes that supply challenges for five rare earth metals (dysprosium, terbium, europium, neodymium and yttrium) are likely to affect clean energy technology deployment in the coming years.

Market round-up

Praseodymium/neodymium metal prices remained stable last week, but Chinese suppliers intend to increase offer prices in the near term, according to a report by Metal-Pages.

Market sources confirmed that prices for 99-percent praseodymium/neodymium metal are currently around $64,370 to $65,980 per tonne, while some suppliers have increased offer prices to as high as $69,200 per tonne.

A Beijing-based trader noted that praseodymium/neodymium metal prices have been rising recently. “It is difficult to buy the material at low prices and news has been heard that suppliers will adjust up offer prices,” he told Metal-Pages.

Lanthanum metal prices remained unchanged in response to persistently weakening downstream demand.

A supplier in Southern China said that lanthanum metal prices have been trading around $12,875 per tonne due to weak demand. “Sales of lanthanum metal have been poor and the market is quiet. Prices lower than 12,875/tonne are acceptable,” he explained to Metal-Pages.

Sources indicate that tightening supply means that REE prices are unlikely to drop again in the run up to Chinese New Year on February 10.

Company news

Pele Mountain Resources sold its Pigeon River project to Zara Resources for $700,000 (payable in Zara stock).

Al Shefsky, president and CEO of Pele, stated: “[i]n order to better focus on advancing development at our Eco Ridge Mine Rare Earths and Uranium Project, our goal is to find qualified partners to fund and operate our non-core projects or to sell them outright. We believe Zara and its team will capably explore the project and we are pleased to convert our stake into an equity and royalty interest.”

In 2009, Pele staked the Pigeon River project, which is currently comprised of 418 mining claim units in the Pigeon River area of Northwest Ontario, 80 kilometers southwest of Thunder Bay. The property covers large unexplored magnetic targets near the basal contact of the Duluth Complex.

Mkango Resources renewed its exploration license for its flagship Songwe Hill rare earth project in Malawi for an additional two years.

The Phalombe licence has been renewed for a further two years, effective January 20, 2013, and grants the company exclusive rights to carry on prospecting operations for all 17 rare earth elements — such as yttrium, strontium and niobium — as well as a number of other elements, including iron ore, manganese, gold and silver, according to a company press release.

The company’s main priority with respect to the Songwe Hill project is completion of scoping metallurgical test work and further mineralogical studies, both of which are partially funded by external research programs in South Africa and the United Kingdom.

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VANCOUVER, BRITISH COLUMBIA - Jan.17,2013 - CAVAN VENTURES INC. ("Cavan" or the "Company") announces today it has received significant rare earth element (REE) assays from its 2012 prospecting program at its 100% owned Pythonga Property, located approximately 15 kilometers west of the town of Maniwaki, Quebec. The property consists of 110 map staked claims covering an area of approximately 6,523 hectares. The claims are divided in three blocks: the East Block (35 claims), the Central Block (71 claims) and the SW block (4 claims).

The prospecting program was executed by the team of Magnor Exploration Inc. under the supervision of Dr. Christian Derosier, P.Geo, Cavan's Consulting Geologist and Qualified Person for the Pythonga Lake Rare Earth Element project. The program consisted of prospecting along recently-built timber roads, channel sampling, limited line cutting, limited radiometric survey and delimiting the future stripping areas. All this work has been conducted within the East Block boundaries.

A total of 42 channel samples were taken and assayed by ALS Minerals lab in North Vancouver, B.C. The method of analysis recommended by the exploration team and the laboratory for rare earth and trace elements uses the lithium metaborate/tetraborate fusion followed by Inductively Coupled Plasma (ICP) for the major oxides and by Inductively Coupled Plasma Mass Spectrometry (ICP-MS) for a series of 38 elements which include the REE's.

Most samples which returned appreciable REE values (higher than 0.20% TREE) were obtained from pink to red coarse-grained pegmatite that returned more than 400 counts per second (cps) with the radiometric field instrument. These samples were selected close to already known mineralization, or on their on strike extensions.

Sample P268092 was collected at a new location. This new discovery gave 390.1 ppm U, 1149 ppm Th and 13600 cps with the instrument. The "Frog" occurrence is in mafic gneiss mixed with some pegmatite dikes. The outcrop is 1-2m wide and was followed over 25m in length. This occurrence is open in both directions.

This new discovery as well as the new channel sampling increase the economic potential of the Pythonga REE project and justify a more aggressive exploration program which will be started as soon as the snow cover clears.

Mr. Peter P. Swistak, President of Cavan Ventures states, "The Pythonga REE project continues to reveal a real potential for economic rare earth mineralization. We are preparing a focused exploration campaign which will begin with geophysical surveys, a trenching and stripping phase, followed by a diamond drilling program."

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 A team led by Ames Laboratory in the US is to undertake research into solutions to the shortage of materials that are essential in the manufacturing of renewable energy equipment.

The US Department of Energy has awarded the lab awarded a five-year, $120 million grant to establish an ‘energy innovation hub’ research centre in Iowa.

The centre will be named the Critical Materials Institute and will explore how the country’s clean energy industry can overcome the shortage of materials such as rare earth metals, which are used in solar panels and wind turbines.

David Danielson, Assistant Secretary for Energy Efficiency and Renewable said: “Rare earth metals and other critical materials are essential to manufacturing wind turbines, electric vehicles, advanced batteries and a host of other products that are essential to America’s energy and national security.

“The Critical Materials Institute will bring together the best and brightest research minds from universities, national laboratories and the private sector to find innovative technology solutions that will help us avoid a supply shortage that would threaten our clean energy industry as well as our security interests.”

In 2011, a DOE critical materials strategy reported that supply challenges for five rare earth metals – dysprosium, terbium, europium, neodymium and yttrium – may affect clean energy technology deployment in the coming years.

The centre will focus on developing technologies capable of making the best use of what materials are available and that eliminate the need for scarce materials altogether.

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Jamaica could become a major player in the rare-earth market, which is currently dominated by China.

According to Jamaica's minister of Science, Technology, Energy and Mining, Philip Paulwell, a recent survey carried out by Japanese researchers has found high concentrations of rare-earth elements in bauxite residue. Mind you, the Japanese should be pretty good at finding stuff in the dirt, since Japan doesn't really have any noteworthy natural resources.

In a report to Jamaica's Parliament, Paulwell pointed out that the researchers believe Jamaica's rare-earth elements could be efficiently extracted, indicating that commercial production could be possible. The discovery could potentially turn Jamaica's economy around.

"The government of Jamaica perceives the extraction of the rare-earth elements that are present in Jamaica to be an exciting new opportunity to earn much needed foreign exchange and create jobs," Paulwell told lawmakers.

AP reports that Nippon Light Metal, the company behind the survey, has already agreed to invest $3 million in buildings and equipment for the pilot project.

Rare-earth elements produced during the pilot project will be jointly owned by Jamaica and the company, while negotiations on full scale commercialisation are expected at a later date.

China currently dominates the rare-earth market and it has a virtual monopoly on supplying rare-earth elements to manufacturers. In recent years China scaled back exports, causing alarm among foreign companies and governments. In response, the US, EU and Japan filed formal complaints about China's decision to curtail exports of rare-earth minerals.

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The prime minister of Greenland says he will not favour the EU over China or other investors when granting access to highly prized rare earth minerals.

Kuupik Kleist said it would not be fair "to protect others' interests more than protecting, for instance, China's".

Greenland, a vast autonomous Danish territory, is not in the EU, even though Denmark is.

Jamaica may be able to benefit from newly found deposits of rare-earth elements that are key ingredients for smartphones, computers and numerous other high-tech goods, the Caribbean island's top mining official said Tuesday.

Science, Technology, Energy & Mining Minister Philip Paulwell said Japanese researchers believe they have found "high concentrations of rare-earth elements" in the country's red mud, or bauxite residue.

China is now the world's main supplier of rare-earth elements, which are minerals that play a critical role in making products from basic communication devices to high-tech military weaponry. Worried by that dominance, manufacturers around the globe have been spurring searches for other sources that could be profitably mined.

In a statement to Jamaica's Parliament, Paulwell said researchers from Japan's Nippon Light Metal Co. Ltd. believe rare-earth elements can be efficiently extracted in Jamaica, where a once-flourishing bauxite industry has fallen on hard times.

Paulwell touted the discovery as a potentially significant boon for the Caribbean island's chronically sputtering economy.

"We are at the starting line of an opportunity that has the potential to redefine Jamaica's economic prospects in a positive way," he told lawmakers. "... The government of Jamaica perceives the extraction of the rare-earth elements that are present in Jamaica to be an exciting new opportunity to earn much needed foreign exchange and create jobs."

A pilot program will establish the scope of any potential commercial project on Jamaica, which is about the size of the U.S. state of Connecticut. The environmental and planning agency has already authorized the pilot program but other government agencies still need to examine it.

Nippon Light Metal has agreed to invest $3 million in buildings and equipment for the pilot project while also being responsible for operating costs. Any rare-earth elements produced during this phase will be jointly owned by Jamaica and the Japanese company. Negotiations for commercialization are expected to occur at a later date.

China has built a virtual monopoly on supplying rare-earth elements to the world's manufacturers, thanks to cheap labor and low environmental standards. It alarmed companies around the world in recent years by reducing exports and at the same time building up its own industries, saying the curbing of rare earth exports was needed for environmental protection.

Last year, the World Trade Organization created a panel to evaluate China's rare earth exports after the U.S., the European Union and Japan complained about the curtailment of Chinese sales of rare earth minerals.

Rare earths aren't scarce, but few places exist with enough concentrations to mine profitably, and they are difficult to isolate in a purified form and require advanced technology to extract.

Jamaica had previously tried to get rare earth minerals from the country's red mud around bauxite mining grounds, but Paulwell said it faced major challenges in attempting to extract minerals from the bauxite tailings.

Last January, Nippon Light Metal approached Jamaica saying it had the capacity to extract rare-earth elements and wanted to evaluate the local red mud. Since then, it has done chemical research and successfully extracted some rare-earth elements, Paulwell said.

Representatives of the company could not immediately be reached for comment.

If the pilot project is a success, Nippon Light Metal hopes to extract 1,500 metric tons of rare-earth oxides annually, Paulwell said.

"It is clear that this resource presents an opportunity Jamaica must pursue, and which must be managed in such a way that Jamaica and Jamaicans benefit significantly," he said.

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KUALA LUMPUR -- Malaysia's nuclear power plans will be delayed by the pall over the industry from Japan's atomic disaster, along with domestic anger at a controversial rare earths plant, an official said Tuesday.

The government had said in December 2010 that it planned to build two nuclear power plants to meet rising energy demand, one by 2021 and the second a year later.

But Mohamad ZamZam Jaafar, chief executive of Malaysia Nuclear Power Corp., said a feasibility study for the construction of the plants had been pushed back by six months.

“Our plan is delayed slightly,” he said, adding the study might not be ready until late 2014, while construction of the first plant “may be later than 2021.”

ZamZam spoke at the Nuclear Power Asia conference in the capital Kuala Lumpur, where industry figures and atomic experts have gathered to discuss the future of nuclear energy in the region.

ZamZam said the delays were due in part to the nuclear power industry's lingering public relations woes in the wake of the 2011 Japan disaster, in which a huge earthquake triggered a tsunami that knocked out a nuclear plant.

The meltdowns at Fukushima released large amounts of radiation and laid bare to the world the risks of nuclear power.

“Fukushima happened soon after we were set up. That put a damper on what we are trying to do,” he told conference attendees.

He said the feasibility study was being delayed in part because authorities were unable to visit proposed sites, fearing it would spark protests.

ZamZam also cited the rare earths processing plant built on Malaysia's east coast by Australian miner Lynas Corp., which has galvanized a nascent green movement in the Southeast Asian country.

Opponents of the plant, which began operating in recent weeks, had sought to block its opening, fearing it would lead to contamination by nuclear waste created during processing.

Lynas insists the plant is safe.

Malaysia has significant reserves of oil and gas but has mooted the nuclear plan amid fears that its fossil fuels will one day run out.

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African Consolidated Resources on tuesday announced that the Zambian authorities have confirmed the validity of the Nkombwa large scale prospecting licence number.

The licence is held by the company’s subsidiary, Fisherman Mining, and it encompasses the Nkombwa Hills rare earth project. It has effectively been approved as the sole existing exploration licence over the area which is recognised by and authorised by the Zambian ministry of mines.

The Nkombwa project is being advanced via a venture with Galileo Resources, which has also now confirmed that it has finalised its legal due-diligence.

Galileo is financing African Consolidated's farm-in partner, which is committed to spending US$1.35mln on defining an indicated rare earth resource estimate.

"We are delighted with this news from the Ministry in Zambia which removes any uncertainty as to the validity of our Nkombwa licence,” said chairman Roy Tucker.

“With Galileo's formal confirmation that it has finalised its legal due diligence on the Nkombwa Hills Rare Earth Project, we are now well placed to advance this valuable asset up the development curve.

“Underpinning this, Galileo has reiterated its commitment to developing the project, which has to date reported enriched outcrop samples of up to 23.6% total REE [rare earth elements] oxide over a strike length of at least 350 metres, stating that it intends to advance the project to resource definition stage in as short timeframe as practicable."

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The markets have been abuzz with rumors that Molycorp’s recent fall below its net asset value is turning the high-potential firm into a prime takeover target.

Earlier this year, the company, which boasts the largest rare earth element (REE) deposit in the western world, increased its proven and probable reserves of rare earth minerals at its Mountain Pass, California facility by 36 percent. The updated estimate expands Molycorp’s reserves to 18.4 million short tons of rare earth ore. An independent verification estimates that the proven and probable component of Mountain Pass’ ore body contains approximately 1.3 million metric tons of contained rare earth oxide equivalent.

However, the company had its fair share of trouble in 2012, including slumping prices, exorbitant costs at its flagship mine and a regulatory probe; it also recorded its lowest ever share price. Those factors ensured that Molycorp’s investors experienced a torrid time in the markets, with circumstances eventually snowballing to the point that the company’s CEO, Mark Smith, resigned in what the board of directors described as “a natural inflection point” as the firm transitions its focus from development to ongoing operations.

Even after rebounding from a record low in November, Molycorp shares are still trading at a 19-percent discount to their book value, according to data compiled by Bloomberg. With the company currently trading well off its one-year high of $35.79 per share, many are of the impression that its currently depressed valuation could jumpstart interest from potential takeover candidates.

Potential candidates

While Molycorp has so far declined to comment on whether there is any truth to the rumors, most investors will be looking to historical market sentiment for guidance.

The company’s current valuation could very well result in manufacturers, such as Nissan putting in a bid, according to a Bloomberg article that cites information from Byron Capital Markets. On a different note, Robert W. Baird & Company’s recent analysis outlines that after expanding its refining and processing operations with the purchase of Neo Material Technologies, Molycorp may even appeal to private-equity firms.

A Roland Berger Strategy Consultants rare earth study, published last year, also supports the idea that a manufacturer may put in a bid. It notes that more and more manufacturing companies are implementing a wider range of measures to counteract volatile REE prices. It adds that while some manufacturers are seeking alternatives, others are going directly to the source; in fact, half of all enterprises surveyed have already set up task forces dedicated to designing strategies aimed at securing supplies of raw materials. This mindset gained even more credibility when Toyotsu Rare Earth Canada, a subsidiary of Toyota Tsusho moved closer to securing its own REE supply by paying Matamec Explorations for an interest in the company’s Kipawa deposit.

Any manufacturer involved in a takeover of this scale would ensure its own REE supply for the foreseeable future and in doing so would give itself a massive boost in relation to its competitors.

However, while a guaranteed supply of raw materials is appealing, another mining company might be better positioned to take over the project.

Luisa Moreno, an analyst at Euro Pacific Capital, told Bloomberg that Molibdenos y Metales, Molycorp’s largest shareholder, and also the world’s largest molybdenum processor, could seek to increase its holding.

However, Michael Gambardella, an analyst at JPMorgan Chase & Company who is also quoted in the Bloomberg article, argues that potential acquirers within the space might hold off because Molycorp’s new plant is employing a refining technique that differs from that of most other mining companies.

One step forward, two steps back

While the company has come up against a number of issues, Molycorp is twice as sophisticated as it was two years ago, when its share price was six times the level it is today.

The company provides a unique buying opportunity in that its shares are currently trading at 0.77 times their actual book value, while one of its largest competitors, Lynas Corporation — which has been involved in a long and drawn out regulatory battle — is trading at a price-book multiple of about 2.1 times.

Despite these factors, the company’s near-term future was once again brought into question last week when its shares plummeted on the back of confirmation that its 2013 revenue will come in lower than previously expected. That’s the result of a drop in selling prices and a delay in achieving full production at its California processing plant.

In a press release, Molycorp noted that all key production components of its new manufacturing complex at the Mountain Pass mine are operational and that the facility has begun ramping up to its full-scale “Phase 1” run rate. However, concerns mounted when it added it will not proceed with the next planned phase of development until it sees an improvement in rare earth demand and prices, in addition to easier access to capital.

As much risk as opportunity

In a market rife with rumors, there will never be a shortage of both bears and bulls, but investors will do well to realize that Molycorp is far from the finished product. It is still developing its mine, has not proven capable of producing heavy rare earths and is still experimenting with a new processing technology. In other words, the stock presents as much risk as it does opportunity.

At the same time, if prices are to rebound, the company remains uniquely poised to ride a wave of opportunity. The fact remains that this project boasts astounding potential, and while investors focused on the short term may be against Molycorp’s decision to hold back on its second phase of development, its willingness to hold out for a more attractive market environment is a plus for long-term investors.

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