The REE Basket Price Deception and the Clarity of OPEX
Stephan Bogner | Mar 11, 2015 05:31AM ET
Today, mining analyst Stephan Bogner published a new research report on the Rare Element Resources Ltd. (AMEX:''REE'') market, in which he not only covers his top-pick, Commerce Resources Corp. (TO:CCE), but also most of the well-known and advanced REE projects globally. One crucial criteria for success (i.e. development to a mine) is the projected OPEX. In the end, all that counts are the operating expenditures respectively production costs. One of the many charts shows this vividly:
- Ashram: Commerce Resources Corp.
- Steenkampskraal: Great Western Minerals Group Ltd. (TO:GWG).
- Ngualla: Peak Resources Ltd (ASX:PEK).
- Zandkopsdrift: Frontier Communications Corporation (NASDAQ:FTR).
- Nolans Bore: Arafura Resources Ltd (ASX:ARU).
- Bear Lodge: Rare Element Resources Ltd. (AMEX:REE).
- Kipawa: Matamec Explorations Inc. (TO:MAT).
- Songewe Hill: Mkango Resources Ltd.
- B Zone: Quest Rare Minerals Ltd. (AMEX:QRM).
- Nechalacho: Avalon Rare Metals Inc (AMEX:AVL).
- Browns Range: Northern Minerals (ASX:NTU).
- Bokan Mountain: Ucore Rare Metals Inc (TO:UCU).
- Round Top: Texas Rare Earth Rcs (OTC:TRER).
- Norra Kärr: Tasman Metals Ltd (AMEX:TAS).
- Lofdal: Namibia Rare Earths Inc. (TO:NRE).
With $6.25/kg REO produced, the Ashram REE Deposit from Commerce Resources has the lowest OPEX of the peer group. Even the low REE market prices would allow Commerce to produce profitably.
With $15.54/kg REO produced, Commerce’s operating margin is ranking #1, being 34% more than the 2nd ranking deposit (Steemkampskraal from Great Western Minerals) and being almost twice as much as Ucore’s Bokan Mountain Deposit.
Analyst Bogner comes to the following conclusion in his 14 page study:
“There are some quality REE assets in the world under development; however, I feel the cream of the crop is the Ashram Deposit, with known mineralogy, standard low-cost and proven processing routes, favourable jurisdiction, robust preliminary economics using practical pricing assumptions, along with a seasoned and learned management team that understands the space. The Ashram Deposit can produce what the market needs at some of the lowest costs projected, if not the lowest in the space. This is market flexibility and versatility to its core, and is what any project in any space strives for. Perhaps a detailed breakdown of my top pick should be the focus of my next article on the space?”
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Disclaimer: The author, Stephan Bogner, owns shares Commerce Resources Corp. and thus would profit from a share price appreciation, whereas the author may sell those any time without notice. Neither Rockstone Research Ltd. nor the author was remunerated by Commerce Resources Corp. to produce or publish this content. Please read the full disclaimer within the full research report and/or on www.rockstone-research.com as a conflict of interest exists with Zimtu Capital Corp. and none of this content is to be construed as a "financial analysis" or "investment advice."
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