Lynas Corp has no doubt been one of the headline leaders in February. After a protracted legal ordeal to confront environmental activists, at the end of February, Lynas started producing rare earth products at its LAMP processing plant in Malaysia. Lynas is expected to ramp up production by the second quarter of 2013 at a rate of 11,000 tons per year. The start of production and the preparations for the first official shipment have shifted have officially shifted Lynas’ mode from development to production. This shift is reflected in CEO Nick Curtis’ decision to step down from his chief executive role to remain as Chairman. He will be replaced by Eric Noyrez at the end of March and whereas the news may appear as a bombshell, the change at the executive floor reflects a planned transition and Lynas’ official switch from development to production. Indeed, Mr. Curtis, who will remain at Lynas as non-executive Chairman and who has led the company through a particularly challenging period, will leave on a high note in the wake of the start of production announcement. Eric Noyrez, , has extensive experience in chemical processing companies having held executive positions at Rhodia Group and Shell. Many will recall that Rhodia owns a rare earth processing facility in La Rochelle, France.

Lynas completed its initial commercial product samples, en route to nominal Phase 1 capacity (which is expected before Q3 2013).  Lynas also announced that it would receive an AUD$15.2 million rebate payment from the Australian Taxation Office (for R&D expenditures generated in 2012) in March. Nevertheless, rare earths prices continued to suffer in February, reflecting the trend from January. Nevertheless, the scenario is more complex.  Lower prices were seen in praseodymium oxide, yttrium, neodymium oxide, terbium oxide, rare earth carbonate, dysprosium oxide and europium oxide.  The remaining metals in the index actually managed to post gains for the month with neodymium, lanthanum oxide, and praseodymium neodymium leading the list of gainers.

                 

A combination of new supply and weaker domestic demand out of China is being viewed as the reason for the falling Rare Earths prices but it is important to look at individual examples in the metals index because these negative moves are not seen in all areas.  Export numbers for Chinese rare earth products have been the subject of debate (as different sources have reported different figures and Hong Po’s recent articles have highlighted some recent numbers), but all of the available data suggests that increased on-stream supply continues.

Chinese producer Rare Earths Global (LSE:REG) released a statement saying it is unlikely 2012 profit forecasts will be met, and that “normalized” losses will be seen on broader downside price changes in the rare earths market.  The company cited rapid industry changes and governmental uncertainties (the election of a new Chinese leadership body, changing statements from the Ministry of Commerce, and a recent white paper on rare earths).  Rare Earths Global said the added uncertainty is creating major delays for the reception of its production quota (an export quota was not received in 2012).

These factors are seen inhibiting operations in the company’s trading divisions and separation plant.  Rare Earths Global explained it is open to the possibility of joint ventures and believes demand for rare earths oxides will rise along with increased regulation and control of production. Meanwhile, Great Western Minerals (TSXV: GWG | OTCQX: GWMGF) entered its commercial production phase at its Less Common Metals subsidiary, with confirmation that specialty alloys have been sold to three existing clients.  The program is set to ramp up production with its second strip casting furnace before the end of the current quarter.   Tasman Metals (TSXV:TSM | NYSE MKT: TAS) released information relating to its Olserum heavy rare earth project in Sweden, saying the resource comes in at 4.5 million tonnes grading 0.6% TREO, with an inferred resource of 3.3 million tonnes grading 0.63% TREO (both with a 0.4% TREO cut-off).


Rare Earth Manufacturer & Supplier: Chinatungsten Online - http://www.chinatungsten.com
Tel.: 86 592 5129696; Fax: 86 592 5129797
Email: sales@chinatungsten.com
Tungsten News & Tungsten Prices, 3G Version: http://3g.chinatungsten.com
Tungsten News & Tungsten Prices, WML Version: http://m.chinatungsten.com

There is a growing realisation within the rare-earths extraction sector that those development projects that do not have well understood geologies would find it increasingly difficult to attract financing, which may result in those projects falling by the wayside in the medium-term.

The chairperson of South Africa-focused project developer Frontier Rare Earths, which is developing its flagship Zandkopsdrift project in the Northern Cape, Phillip Kenny, told Mining Weekly Online during the Prospectors and Developers Association of Canada’s recent show, which 30 147 investors, analysts, mining executives, geologists and government officials attended, that if a prospective rare earths company had not already identified one of the three well understood rare-earths ores, chances were slim to attract capital.

Kenny explained rare earths are most economically extracted with proven processes from the minerals bastnaesite, monazite and xenotime. Any other of the more than 200 minerals known to contain essential or significant rare earth elements (REE) would require extensive research and development to find an economically sensible process with which to extract REEs, which would take a lot of time and cost excessive amounts of money.

Financiers were increasingly asking for process flow sheets before they would consider borrowing developers a dime.

“The race is on to become the next rare-earths producer, and we are ahead, owing to being the only rare-earths junior which already has a significant strategic off-take partner. We are also well funded and the Zandkopsdrift project’s mainly monazite resource would enable us to produce rare earths at very economical cost,” Kenny aid.

         

Finance in place

He was referring to a deal closed in December with Korean Government-owned mining and natural resource investment company Korea Resources Corporation (Kores), which had acquired a 10% interest in Frontier's Zandkopsdrift rare-earths project, along with an offtake right and obligation for 10% of the production.

The company said it believed the C$23.8-million deal made it the only junior company in the rare-earths sector to have signed and completed a definitive agreement with a significant strategic partner.

Under the terms of the agreement, Kores has the option to increase its participation in Zandkopsdrift up to 50%, together with an offtake right and obligation for up to half of the production from the project.

Further, Kores had agreed to arrange project finance to develop the entire project on the best-available market terms and to provide pro rata funding for the portion of Zandkopsdrift development costs not covered by the project finance, while it would also be responsible for providing technical and operating experience for the design, construction and operation of the Zandkopsdrift facilities.

Frontier added that it was willing to cooperate with Kores with regard to downstream opportunities in the area of rare-earth metals, alloys and magnets.

Frontier said its cash balance was boosted by the transaction to C$52-million and was expected to be sufficient to fund the completion of a preliminary feasibility study (PFS) and a definitive feasibility study at Zandkopsdrift, work on the company's other proposed exploration and development programs and corporate overheads.

Kores was also required to pay Frontier 10% of all operating costs and expenses related to Zandkopsdrift from July onwards, amounting to about C$400 000 as at the end November.

Potent resource

In April 2012 Frontier started work on a Canadian National Instrument 43-101-compliant PFS on Zandkopsdrift. Kenny said most of the requisite ancillary studies were now either completed or were at an advanced stage.

“The group of REE-development companies have indeed already become smaller, as pressure on rare-earths prices have made many projects uneconomical,” he said.

However, he believed prices have bottomed out and with growing demand from producers of smartphons, electric vehicles and magnets, REE prices were expected to climb.

Kenny pointed out the Zandkopsdrift project would be an integrated operation, meaning it would export the separated REEs to Korea.

The highest-value heavy rare-earth oxides, namely europium, terbium and dysprosium, are contained at elevated levels at Zandkopsdrift, compared with several other deposits being evaluated in Australia and North America.

The levels of thorium – 178 parts per million (ppm) – and uranium (47 ppm) in the Zandkopsdrift deposit are low, and compare favourably with many of the more advanced rare earths projects worldwide. This also reduces the potential environmental implications that may arise, should mine development be undertaken at Zandkopsdrift.

There are about 22.92-million tons containing 532 000 t of total rare-earth oxide (TREO) at an average grade of 2.32% at Zandkopsdrift in the indicated resource category, with an additional 20.81-million tons containing 415 000 t of TREO in the inferred resource category, with a 1% TREO cutoff grade.

It is also important to note that there are a series of higher-grade zones within the overall resource estimate at Zandkopsdrift, which are considered to be sufficient in size for exploitation as discrete units within the deposit.

The 2.5% cutoff zone is a discrete area referred to as the Zandkopsdrift B zone, which contains about 450 000 t of rare-earth oxide and is expected to be the initial focus of the company’s activities.

Rival company Great Western Minerals Group is developing the Steenkampskraal REE project, also located within the Northern Cape province.


Rare Earth Manufacturer & Supplier: Chinatungsten Online - http://www.chinatungsten.com
Tel.: 86 592 5129696; Fax: 86 592 5129797
Email: sales@chinatungsten.com
Tungsten News & Tungsten Prices, 3G Version: http://3g.chinatungsten.com
Tungsten News & Tungsten Prices, WML Version: http://m.chinatungsten.com

After falling 22.8 percent, lanthanum oxide was the biggest mover in this week. Cerium oxide weakened by 17.0 percent. Rare earth carbonate finished the week after falling 15.4 percent.

Neodymium oxide dropped 8 percent over the past week. Europium oxide prices fell $30 per kilogram, down from a week ago. Europium oxide saw a 3.4 percent drop-off this week. The past week saw praseodymium neodymium oxide close after a 3.2 percent decline.

Praseodymium oxide fell 0.7 percent over the past week.

Neodymium prices held steady from the previous week. The week also finished with no movement for samarium oxide, terbium metal, terbium oxide, yttria and yttrium.

          


Rare Earth Manufacturer & Supplier: Chinatungsten Online - http://www.chinatungsten.com
Tel.: 86 592 5129696; Fax: 86 592 5129797
Email: sales@chinatungsten.com
Tungsten News & Tungsten Prices, 3G Version: http://3g.chinatungsten.com
Tungsten News & Tungsten Prices, WML Version: http://m.chinatungsten.com

Despite precipitous falls in several constituent price points – lanthanum oxide, cerium oxide and neodymium among them – the monthly Rare Earths MMI® held steady over the past month for a March reading of 43, on par with February’s value.

This comes after two straight months of declines for the index, and it, along with our Renewables MMI®, shares the dubious distinction of spending its entire existence under the Jan. 2012 baseline of 100. The majority of the price points in the complex held steady over the past month. But nothing has really changed to skew our existing long-term outlook for this minor metals market.

As we reported on last month’s rare earths index, the trouble for downstream demand of rare earth metals, minerals and oxides is far from over. Industry sources report that China demand for rare earths for the balance of 2013 is likely to remain sluggish, mainly because downstream end-use sectors are not holding up their end, according to metal-pages.com.

Certainly not helping the demand situation is more supply coming on stream. Lynas Corp. reported in a Feb. 27 company statement that the company has finally produced rare earths for customers, including a handy dandy flowchart of its process. Of course, it’ll take a bit to scale this operation, but the fundamental reality of future supply increases portend a depressed rare earths market as far as prices may be concerned over the next few years.

“We are watching the rare earth metal price index very closely because we believe a price floor has finally formed,” said Lisa Reisman, managing editor of MetalMiner. “Now whether that means prices will begin ticking up remains to be seen, but we have struggled to see a floor.”

Primary Price Drivers of Rare Earths Index

After remaining essentially unchanged the previous month, the price of lanthanum oxide fell 22.8 percent. The price of cerium oxide dropped 17 percent. Rare earth carbonate prices dropped by 15.4 percent this month.

The price of neodymium fell 6.6 percent. The price of dysprosium oxide fell 2.4 percent over the past month, the second straight month of declines.The prices of yttrium, terbium oxide, yttria, terbium metal and praseodymium neodymium oxide, among others, kept steady over February 2013.


Rare Earth Manufacturer & Supplier: Chinatungsten Online - http://www.chinatungsten.com
Tel.: 86 592 5129696; Fax: 86 592 5129797
Email: sales@chinatungsten.com
Tungsten News & Tungsten Prices, 3G Version: http://3g.chinatungsten.com
Tungsten News & Tungsten Prices, WML Version: http://m.chinatungsten.com