The GuruFocus 52-week low screener reveals that the rare earth and metals company Molycorp Inc. is at a 52-week low of $5.30 (high was $35.79). According to the GuruFocus Value Screen for 52-week lows, Molycorp is 85.2% off its high. But top investor Gurus, John Griffin and Steven Cohen appear to be holding on, and Molycorp's insider traders were busy in February.

Guru John Griffin is the largest Guru Molycorp stakeholder, with 2,864,700 shares as of the fourth quarter, when he made the new buy. With Griffin's trading history, his MCP shows an average share price of $9.58, and a 47% loss. GuruFocus research shows that Molycorp is down 85% over 12 months, off 49% since January. With a market cap of $1 billion, and a P/B ratio of 0.5, the company reported consolidated net revenues of $528.9 million during 2012, a 33% increase over the full year 2011. The company generated a gross profit of $17.3 million in 2012, as compared to $218.9 million during the prior year. According to the company, gross profit decreased as a result of significantly lower pricing and increased production costs, offset in part by increased volumes and the acquisition of Molycorp Canada in June 2012. The company also acquired a leading rare earth processor, Neo Material Technologies, for $1.3 billion (Canadian) in 2012.

Commenting on Molycorp's 2012 performance, President and CEO Constantine Karayannopoulos said, "The economics of our model of vertical integration on a global basis remain strong... Our fundamental strategy going forward is to return confidence to rare earth customers through supply security and price visibility."

Owner of the largest U.S. deposit of rare earth, Molycorp Inc. mines and processes rare industrial metals and minerals needed in a wide spectrum of manufacturing applications. The open-pit Molycorp mine in Mountain Pass, Calif., was once the world's largest producer of rare earth elements ( REE ). The mine was closed due to numerous leaks of radioactive wastewater as well as competition from China, the world's giant REE producer. The global company, headquartered in Colorado, re-opened the new and improved Mountain Pass mine in 2012, calling it "Project Phoenix."

Molycorp products and materials are critical to the manufacturing of electric vehicles, smartphones, solar power systems, advanced water treatment systems and a great deal more. The defense and aerospace industries use Molycorp materials in satellites, guidance and control systems, and global positioning systems.

Guru John Griffin is the largest Guru stakeholder, with 2,864,700 Molycorp shares as of the quarter ended Dec. 31, 2012, when he made the new buy. With Griffin's trading history, his Molycorp holdings show an average share price of $9.58, and a 47% loss.


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Greenland Minerals and Energy, a junior company focused on delivering a production center for specialty metals, including rare earth elements (REEs), at its Ilimaussaq complex in South Greenland, has decreased the estimated capital cost for its Kvanefjeld project from $1.53 billion to $810 million as it considers a staged development option.

Kvanefjeld, situated within the Ilimaussaq complex, was one of the company’s first large-scale deposits to be delineated, and is recognized as one of the world’s largest resources of REEs. It is estimated to contain a favorable mix of REEs, including yttrium.

Greenland Minerals and Energy is now focusing on a staged development strategy for the project, with initial mine throughput set at 3 million metric tons (MT) per annum, eventually expanding to 6 million MT per annum. The project development will consist of two stages, namely a concentrator stage and a refining stage. The concentrator stage will cost an estimated $450 million while the refinery stage will cost a further $360 million.

Greenland Minerals and Energy also confirmed that with the mine and concentrator study component of the feasibility study now completed, it will be able to finalize environmental and social impact assessment studies and apply to the Greenland government for an exploitation license. Construction is set to begin in 2015, with first production scheduled for 2017.
 

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Tantalus Rare Earths has revealed a new resource estimate for the total rare earth project in Madagascar which has confirmed its massive scale.

The review, carried out by consultant SRK, has defined a 435mln tonne resource at 0.08% total rare earth oxides (TREO), which equates to 348,000 tonnes of contained TREO.

This triples the size of the resource, which was last assessed in 2011.

“Our optimistic view of the value of the Tantalus project continues to be supported by the results of the exploration programme,” said chief executive Jurgen Schillinger.

“The issue of this updated JORC compliant inferred mineral resource represents a further milestone for the total rare earth project.

“It confirms the massive scale and grade of the project. It justifies proceeding with the proposed technical evaluation and preparation of a preliminary economic assessment.”

Tantalus rare earths also confirmed that analysed material shows that 19% of the REOs are in the ‘heavy’ category – across the industry these ‘heavy’ rare earths are typically considered to be premium products.

And Tantalus rare earths says that once cerium is excluded in production the heavy rare earth ratio will increase to about 31%.

It was also highlighted in that the research being conducted by the University of Toronto has confirmed that the  project’s rare earth material can be processed using very basic and environmentally friendly leaching method, which will separate a rare earth concentrate from ionic clays.

This material, according to Asian Metal, which is conducting separate research, is similar to the ion absorption clays found in China, which yield production costs averaging just US$3 to US$4 per tonne.

Tantalus rare earths said that the REO basket price for the material is estimated, by Asian Metal, at US$71.26 per kilogram.

Meanwhile, after applying a 35% discount to that basket price, Tantalus rare earths says the in-the-ground rare earth resource (excluding cerium, which cannot be processed simply) would be worth an estimated US$9.9bn.

“The suggested presence of a relatively large ion adsorption type clay deposit at the total rare earth concession renders it of particular importance to global efforts towards the expansion of HREO supply.

“The ion adsorption clay deposits of Southern China are currently the primary source for the vast majority of global heavy rare earth production, and have endowed China with a distinct economic advantage, as they are generally comparatively simpler and less expensive to exploit than their bedrock counterparts.

“Assuming additional studies reinforce test work indicating the presence of ion adsorption type clays, the development of the total rare earth Project will constitute an important step towards the establishment of an ex-China HREO supply chain that is directly comparable, and potentially competitive on a price basis, with that of China.”

The new resource estimate is based on a large amount of data taken from 289 drill holes, 968 pits and more than 20,000 samples.

Last week, Tantalus rare earths received regulatory approval for a share issue to raise up to €10.5mln.


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Washington right now is supposed to be all about slashing budgets and tightening belts — but the Department of Defense has recently asked Congress for over a billion dollars. To buy rocks.

Specifically, to buy rare earths and other minerals that are crucial to the U.S. defense industry, and whose supply is currently at the mercy of China and its opaque political system. Japan, for example, was starved of rare earth elements during a maritime dispute with China in 2010. The United States wants to hedge that risk, given the damaging consequences an abrupt clampdown could entail.

The DoD has in previous years noted China’s near-monopoly on global rare earth metal production, but the present report, delivered to the House Armed Services Committee in late March, describes the risks in stark terms, and sketches out a range of scenarios.
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One scenario has China embargoing exports of some key rare earth elements, and notes that currently the U.S. would be hamstrung.

Stockpiling some of the crucial elements is one of the proposed remedies for China’s control. It’s an idea that has hardly been heard since the later years of the Cold War, given the growth of globalized and largely unfettered trade that has characterized the last several decades.

Daniel McGroarty, principal of American Resources, a policy group, and president of U.S. Rare Earths, a mining company, referred to a reflection made by Adam Smith, the ideological father of free markets, over two hundred years ago: that when it comes to strategic items like sailcloth and gunpowder, “it might not always be prudent to depend upon our neighbors for the supply.”

Rare earth metals are to the the modern world what gunpowder and sailcloth were to 18th century Britain, McGroarty says, which explains the DoD’s concern.

                  

“I think we lost sight of the geopolitical or strategic element that might cause countries to intervene in industry for reasons of advantage that are not just economic,” McGroarty said in a telephone interview. “I think we just didn’t see that. And now when we do see it, the situation has changed drastically.”

Two decades ago, McGroarty said, the rare earth market was split between the United States and China. “Now it’s become extraordinarily lopsided,” with China producing over 90 percent of supplies of rare earths.

The Department presents its report on Strategic and Critical Materials Report on Stockpile Requirements every other year. In the past it has noted China’s predominance in the rare earth metal space, but had not previously evinced the concerns seen now.

In a strategic risk assessment given in Appendix 12, the possibility of China cutting off rare earth exports was assigned a mean probability of only 4 percent, though with dire consequences. “Gross domestic product losses would be high, and the consequences would extend over a significant timeframe,” the report said.

It continued: “Economic consequences of war with China are high based on the mutual dependence between the two countries. Militarily the conflict would be violent, but quick; and we would get the better of it, at least in the next ten years. Politically, there would be some loss of credibility on both sides, due to the failure to prevent the war. Trade disruptions would also have major Chinese domestic political consequences.”

A scenario where China cuts off exports of some key minerals for a year “in an effort to coerce or punish the United states… as well as to drive up commodity prices,” was also considered. There would be a $1.2 billion shortfall for the 72 minerals considered.

Complicating the assessment is the sometimes haphazard and fragmented nature of how rare earths are obtained from China: in the south of the country, tens of thousands of metric tonnes of rare earths are thought to be wrung from the ground, and refined and exported, by a chaotic chain of fly-by-night mining operators — none of those figures go into the official books. Estimates for that illicit activity range from 10,000 to 40,000 metric tonnes per year.

At the height of its production, Molycorp, a U.S.-based miner of rare earth elements that was hit hard by China’s rock-bottom prices, says it planned to produce 20,000 metric tonnes of product in 2012. This means the underground Chinese supply component could be as much as double the entire U.S. supply, which goes some way to illustrating the opaque and potentially volatile nature of Chinese supply.

“Think about how nervous that would make a Pentagon planner,” McGroarty says.
 

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