USGS report on rare earths (REE)

Read this USGS report.....

The Principal Rare Earth Elements Deposits of the U.S. - A Summary of Domestic Deposits and a Global Perspective 

The Principal Rare Earth Elements Deposits of the U.S. - A Summary of Domestic Deposits and a Global Perspective News release: "USGS: America Has Abundant Supply of Rare Earth Elements - America’s Rare Earth Elements Can Create U.S. Jobs, Expand Renewable Energy: "On the heels of a Wall Street Journal report outlining America’s dependence on China’s tightening rare earth element (REE) market, the USGS released a report revealing 13 million metric tons of REEs exist within known deposits in 14 U.S. states. While the largest deposits exist in California, Alaska and Wyoming, additional known REE deposits are found in Colorado, Florida, Georgia, Idaho, Illinois, Missouri, Nebraska, New Mexico, New York, North Carolina, and South Carolina."

....by clicking through to here. The link in the text next to the dot downloads the 5Mb PDF document.

Has Rare Metals Blog censored Mickey Fulp?

Yesterday in this post, we left the link to a great article written and published by Mickey Fulp over at Rare Metals Blog. However, this morning the post seems to have disappeared. Why that should be is currently unclear, but as the post did take a couple of REE companies to task and point out their weaknesses the suspicion here at IKN Nerve Centre is that it's been censored by the blog owners. 

We'll get news on that if we can, but in the meantime, here's the whole of the post as written by Fulp. Google cache rocks.

I read with interest the recent blog from respected engineers in rare earth element space, Jack Lifton and Gareth Hatch. These two men are experts and likely have forgotten more about the process metallurgy, separation, refining, sales, and marketing of this fascinating specialty metals group than I will ever know.

I can agree with many of the points that each makes in his analysis. I will not quibble with the idea that “small” is okay in REE space but will disagree with Jack that small is somehow better.
That said, as a field geologist by education and experience and an analyst and investor by profession, I think both gentlemen are missing key criteria for success by not carefully considering the share structure, people and projects of their top stocks before picking them as favorites. There is much more to the REE game than deposit size, metal distribution, process metallurgy and concentrate tonnages.
I would suggest that most readers of this are speculators in the junior resource sector attempting to learn about the best companies so they can invest and make money in the stock market. Thorough due diligence is always required to assess a company’s chances of success.
Let’s look briefly at some of the companies favored by Jack and/or Gareth:
I visited Ucore Rare Metals’ (UCU.V) Bokan Mountain project in mid-August along with fellow Rare Metal blog editors Jack Lifton and Tracy Weslosky.
The Dotson Ridge deposit is small with low TREO (total rare earth oxide) grade but heavily skewed toward the HREOs (heavy rare earth oxides). The individual mineralized zones are very narrow (generally less than a mineable width of 1.5 meters) and are discontinuous along strike. The deposit will require selective mining and/or physical or mechanical separation of pay zones from wall rock using very high cost mining methods.
The company apparently is reluctant to commence the next logical step: Permitting, test mining, and bulk sampling during the 2011 field season. I must conclude the sole corporate exit strategy is to sell the project but have doubts that any larger player in the REE sector is seriously interested at this juncture. With current knowledge, the Bokan Mountain project is not viable. I agree with Jack that it will require private or government subsidies if a significant deposit can be delineated and if it is ever mined.
As of June 30, Ucore Rare Metals had 105.4 million shares outstanding, 134.0 million shares fully diluted, 24.5 million warrants at an average price of 26 cents, market cap of about $65 million, and $4.4 million in cash and securities. The company must go to the market for financing later this year or in early 2011. Ucore Rare Metals’ share structure is highly diluted given the stage of its flagship project and the potential for a significant increase in its share price is therefore limited.
The second company Jack discussed is Great Western Minerals Group Ltd (GWG.V). Great Western is the only current North American junior with a partially integrated REE business via its Less Common Metals alloy facility in England and what appears to be an R&D lab in Michigan.
I do not think any of the company’s exploration projects currently are candidates for development and mining. Hoidas Lake is too small, low grade, remote, and infrastructure-challenged to be of interest to outside parties. Others are very early stage, remote and/or too low grade.
Steenkampskrall in South Africa is a small, narrow, high grade vein deposit that was mined from 1952-1963. If it eventually proves to be of sufficient size and grade, the mine likely will be operated at a loss to secure supply. Its high thorium content could be an environmental issue. GWG has signed an off-take agreement to purchase the REE mineral concentrates from owner Rare Earth Extraction Co. of South Africa and currently holds a 20% equity interest in that company.
GWG recently announced a $35,000,000 equity financing at 33 cents with a two year half warrant at 45 cents. With another 106 million shares out and 159 million fully diluted, I address the crux of my issues with Great Western Minerals Group: It has a severe case of “Aus disease”, i.e., an excessive number of shares outstanding. I first evaluated GWG at a Toronto show in October 2007 and it had too many shares for my liking at that time.
Post-financing I estimate the company soon will have about 350 million shares outstanding, 451 million fully diluted, a market cap of $125 million, and $38 million in working capital post-financing.
Compare GWG with the share structure of Quest Rare Minerals Ltd (QRM.V): After completion of its new bought deal financing, QRM will have about 53 million shares outstanding, 64 million fully diluted, a market cap of about $250 million, and about $55 million in the bank; or Rare Element Resources Ltd (RES.V; REE.AMEX) with 32 million out, 39 million fully diluted, a market cap of $270 million, and about $8 million in working capital.
I opine that Great Western Minerals Group has diluted beyond being a vehicle for speculative investment. A big share rollback (5 or 10:1?) appears inevitable for Great Western Minerals Group. Note I have never experienced a rollback that was beneficial to current shareholders.
I know some about Gareth’s suggestion, Alkane Resources Ltd (ALK.ASX). The Dubbo project may become a mineable deposit for zirconium and rare earth elements but development has been pending for two decades. As of June 30 Alkane had A$8.5 million in the bank and requires a large capital infusion to complete its goal of a definitive feasibility study, environmental assessment, and mine financing within one year. Capital expenditures to build the mine and processing complex are estimated by the company at A$150 million. The deposit has significant uranium content and that could be problematic since uranium production is prohibited in New South Wales. With ALK’s significant gold projects, Dubbo could be acquired by a specialty metals miner, Zr or REE consumer, or perhaps spun-out as a stand-alone entity.
Alkane is not a company that is likely to attract significant North American speculative interest due to the difficulty of trading Australian-listed stocks in this hemisphere. As per usual, it has a mild case of “Aus disease” with 249 million shares outstanding but with a healthy current market cap of about A$210 million.
I think most savvy North American investors will play on our own terra firma and leave this speculation for those that speak English with an oversized twang, drink beer from oil cans, and waltz with sheilas.
Gareth also mentions Stans Energy Corp (RUU.V). My problem with this company is reflected in its name: Stans’ flagship project is in a country that ends in “stan.”  It’s Kyrgyzstan, a country that had a violent coup, street riots, and ethnic fighting this spring and summer. I will steer clear of companies operating in any of the “stans” for obvious geopolitical reasons.  
The Luxemburg-based company, Frontier Rare Earths that Jack writes about is new with little public information available. It holds the Zandkopsdrift deposit in South Africa and recently applied for a Toronto Stock Exchange listing. I have not found sufficient information to comment.
In my opinion most of the companies discussed above have projects of merit in rare earth element space. That does not imply I will consider them for speculative investment using my key criteria for investing of Share Structure, People, and Projects and employing my Power of Two philosophy.
I will let you decide which are worthy of your speculation. As Otto sez: DYODD dudes and dudettes!
P.S. I own shares of Quest Rare Minerals and Rare Element Resources. Quest is a sponsor of my website.
Ciao for now, 
Mickey Fulp
MercenaryGeologist.com
Contact@MercenaryGeologistGold.com

IKN UPDATE: Confirmed, Rare Metals Blog has pulled the article. More on this later.

UPDATE 2: OH GOODY!! Your humble scribe has just been threatened with legal action by Rare Metals Blog! We'll have a full rundown of the fun and frolics going on behind the scene in a post tomorrow. Until then, when the appearance of our coffee-sipping soldier is a near-certainty. Might be able to get owly in there, too...

More practical REE advice from Fulp

So Mickey, what you got there? Praseodymium, promethium 

or just plain boring kryptonite?
c

Mickey Fulp's columns over at Rare Metal Blog are becoming must-reads on the sector. This week's is no exception and gives solid, practical advice on stockpicking for some of the companies in the universe of REE. Go read it youself by clicking this link. And yeah, DYODD dudettes and dudes.

UPDATE: If that link above doesn't work for you, please check this post.

Rare Earths must read

We like Mercenary Geologist Mickey Fulp and we really, really like the article he published over at Rare Metal Blog yesterday that ripped a new one for an outfit known as Australian American Mining (AIW.ax). Go follow that link yourself to find out why, but just as a general jist feeling thing, here's an extract:

"...Okay, well and good: Promotional but no big red flags for me except the hosts are complex pegmatites, which are usually small and seldom have the size and grade to make mineable ore bodies, especially in the southwestern United States.

"But then it goes to hell in a hand basket in a hurry:...."

Love it! Y'see, it's a bit like the Ottotrans™ posts we run at this humble corner of cyberspace...only much better. When a ranting fool such as your author rips into these thingsit's one thing, but when somebody like Fulp, a professional and highly experienced geologist, gets busy on these "marginal companies" (let's say) and the way they obfuscate, bewilder and represent themselves as HarderBetterStrongerFaster than they are...well, it's another level. Go Mickey!

So go read Fulp's words yourself by clicking this link. You'll learn stuff about REEs, you'll learn about News Release red flags and you'll learn that there are people such as Mickey Fulp out there in the wild world of the interbwebnetpipes trying their best  to protect you from scamsters. DYODD.

Fulp on BNN does Rare Metals (and moves markets)

Here's the chart of Tasman Metals (TSM.v). Check out 11:50am, the time Mickey Fulp picked TSM out as his favourite play of all the REE sector right now on his 5 minute segment on BNN today:

See the whole interview as recorded on BNN right here. where Fulp talks about TSM and other REE plays. Disclosure: no position in TSM or in any of the companies.

Fulp to do REEs on BNN

Thanks to kind reader 'JC' for this headsup. Tomorrow morning (Thursday) Mercenary Geologist Mickey Fulp is on BNN, doing the talkinghead bit and talking Rare Earths (REE). Here's 'JC's mail:

Otto

This is Thurs. lineup on BNN.

11:30 AM – Commodities
MAG's Moly/Gold Discovery: Dan MacInnes, president and CEO, MAG Silver
How to play Rare Earths: Mickey Fulp, author, the Mercenary Geologist.com

Regards

So check it out, folks.

Rare Earths and the US Department of Defense

Thanks to one of IKN's most special readers (thanks dude, you know who you are) check out the link here to the April 14th 2010 report by US Department of Defense and its call on the need to secure Rare Earth Metals supplies. The 38 page document is necessary reading for anyone interested in the sector, but FWIW here are the six summary points as per the DoD:

SUMMARY

Objective 1: Current and Projected Availability
• While rare earth ore deposits are geographically diverse, current capabilities to process rare earth metals into finished materials are limited mostly to Chinese sources.

• The United States previously performed all stages of the rare earth material supply chain, but now most rare earth materials processing is performed in China, giving it a dominant position that could affect worldwide supply and prices.

• Based on industry estimates, rebuilding a U.S. rare earth supply chain may take up to 15 years and is dependent on several factors, including securing capital investments in processing infrastructure, developing new technologies, and acquiring patents, which are currently held by international companies.

Objective 2: Defense System Dependency
• DOD is in the early stages of assessing its dependency on rare earth materials and is planning to complete its study by the end of September 2010.

• Government and industry officials have identified a wide variety of defense systems and components that are dependent on rare earth materials for functionality and are provided by lower-tier subcontractors in the supply chain.

• Defense systems will likely continue to depend on rare earth materials, based on their life cycles and lack of effective substitutes.

• We found examples of components in defense systems that use Chinese sources for rare earth materials and are provided by lower tier subcontractors.

Objective 3: DOD Identified Risks and Actions Taken
• DOD has not yet identified national security risks or taken departmentwide action to address rare earth material dependency, but expects to consider these issues in its ongoing study expected to be completed by the end of September 2010.

• Some DOD components, other federal agencies, and companies are taking initial steps to limit their reliance on rare earth materials or expand the existing supplier base.

Or in other words, China has the USA's ass in a sling for the next 15 years minimum. Enjoy the rest of the report, dudettes and dudes.

Quest (QUC.v): Cash In on Rare Earths!

Let's say straight and up front that I don't blame this Peter guy and the other insiders at Quest Uranium (QUC.v) for selling a few shares inside these last few days. After a run-up like this.....

....and after holding what must have been a dire amount of boring, cheap shares for gawdknows how long, if fate smiles upon Strange Lake rare earths asset and plops a big win in your lap it's fair game to take a slice and buy your loved ones something nice.

But with a last name like "Cashin" and selling right at the top of the run (and just before a $7m placement is announced) it's impossible to resist! Cashing in? Bwahahahahaah!! Here's the juice:

Quest Uranium Corporation (QUC)						As of October 11th, 2009
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Oct 10/09	Sep 30/09	Cashin, Peter John	Direct Ownership	Common Shares	10 - Disposition in the public market	-15,000	$3.500
Oct 06/09	Oct 05/09	Watson, Mackenzie Iles	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$3.660
Oct 06/09	Sep 29/09	Watson, Mackenzie Iles	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$3.250
Oct 06/09	Oct 01/09	Kay, Ronald	Direct Ownership	Common Shares	10 - Disposition in the public market	-100	$3.930
Oct 06/09	Oct 01/09	Kay, Ronald	Direct Ownership	Common Shares	10 - Disposition in the public market	-9,900	$3.920
Oct 06/09	Sep 30/09	Kay, Ronald	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$3.580
Sep 25/09	Sep 18/09	Watson, Mackenzie Iles	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$2.800
Sep 25/09	Sep 16/09	Watson, Mackenzie Iles	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$2.600
Sep 24/09	Sep 16/09	Kay, Ronald	Direct Ownership	Common Shares	10 - Disposition in the public market	-3,000	$2.610
Sep 24/09	Sep 16/09	Kay, Ronald	Direct Ownership	Common Shares	10 - Disposition in the public market	-16,900	$2.600

Rare Earth Elements

Mickey Fulp ran a very interesting radio report this morning on rare earth elements (REE) and you can hear what he had to say by clicking right here.

Thoroughly recommended.

Dear Jim. Thank you. Love Don

Not really LatAm, but a good lesson in why self-fulfilling prophecies are not and never will be my bag. When the famed Jim Dines pumped the hell out of rare earths to his mega-subs list a couple of weeks ago, the self-fulfilling prophet did this to the company share price of one of his picks, Avalon Rare Metals (AVL.to):

Management were quick to recognize the good fortune that had plopped into their lap in this PR dated May 27th that said amongst othe things;

"....management believes that this unexpected increase in trading volumes is related to the recent publication of some independent commentary on the rare earths business."

But those inside the company also know a gift horse when they see it. Here we see a nice bit of optioneering by Donald Bubar, President of AVL.to, who exercised his 69c papers to make room for another batch and has already dumped 25k of those recently exercised 100,000 options onto a willing and liquid market (and what's the betting is about to dump the other 75,000?).....all thanks to a newsletter writer and his flock.

Avalon Rare Metals Inc. (AVL)						As of June 12th, 2009
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Jun 12/09	Jun 03/09	Bubar, Donald Stephen	Direct Ownership	Common Shares	10 - Disposition in the public market	-2,000	$1.690
Jun 12/09	Jun 03/09	Bubar, Donald Stephen	Direct Ownership	Common Shares	10 - Disposition in the public market	-3,000	$1.600
Jun 12/09	Jun 03/09	Bubar, Donald Stephen	Direct Ownership	Common Shares	10 - Disposition in the public market	-9,600	$1.580
Jun 12/09	Jun 02/09	Bubar, Donald Stephen	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,400	$1.700
Jun 12/09	Jun 02/09	Bubar, Donald Stephen	Direct Ownership	Common Shares	51 - Exercise of options	100,000	$0.690
Jun 12/09	Jun 02/09	Bubar, Donald Stephen	Direct Ownership	Options	50 - Grant of options	100,000	$1.41