What Does The Rare Earths Market Urgently Need?
Stephan Bogner | Aug 27, 2014 04:02AM ET
Today, Rockstone Research published a research update on the rare earth elements (REE) market highlighting Commerce Resources Corp. as its top pick in the REE space. Numerous other REE stocks are analyzed as well, whereas mining analyst Stephan Bogner comes to the conclusion that Commerce is leading the pack and that all other peers are lagging behind in terms of metallurgy, which is the crucial criteria of success.
Those REE deposits in development that have the greatest chances of success (i.e. being developed into a mine, and thus, offering the highest share price appreciation potential no matter if REE prices remain low) are those that host a REE mineralization out of which a >30% TREO mineral concentrate can be produced with an industry standard process that makes economic sense.
Unfortunately for REE investors, today there exist not many undeveloped REE deposits hosting a mineralization out of which a high enough grade mineral concentrate can be produced, and easily processed, which would be saleable to global REE processors (also known as separation or refining facilities), and from which the numerous REE end-products, which are saleable to the industry, could be produced.
Thus, those few REE development companies capable of producing a >30% TREO mineral concentrate should (and will) be the focus of REE investors, if not already. According to our research only 3 active development companies have attained this base requirement:
The following REE stocks are analyzed in the report:
1. Molycorp Inc (NYSE:MCP) ($450 million market cap)
2. Lynas Corporation Ltd (ASX:LYC). ($350 million)
3. Greenland Minerals (OTC:GDLNF) ($85 million)
4. Tasman Metals Ltd (AMEX:TAS) ($70 million)
5. Commerce Resources Corp. (TO:CCE) ($40 million)
6. Arafura Resources Ltd (ASX:ARU) ($35 million)
7. Great Western Minerals Group Ltd. (TO:GWG) ($33 million)
8. Frontier Rare Earths Limited (TO:FRO) ($30 million)
9. Peak Resources Ltd (ASX:PEK) ($28 million)
10. Quest Rare Minerals Ltd. (TO:QRM) ($20 million)
11. Texas Rare Earth Rcs (OTC:TRER) ($15 million)
12. Geomega Resources Inc (TO:GMA) ($13 million)
13. Namibia Rare Earths Inc. (TO:NRE) ($11 million)
14. Matamec Explorations Inc. (TO:MAT) ($10 million)
Commerce’s share price at the TSX.V has been outperforming the HUI mining index by around 200% since late 2013. Since our initial coverage, the stock appreciated by 283% – thanks to the metallurgical breakthrough announced in December 2013. So far, 2 distinct consolidation phases occured during the new upward-trend, whereas the second one appears to have ended a few days ago as the price started to increase back into the (green) channel, thus generating a buy-signal. We anticipate another strong decoupling phase from the HUI as soon as the (red) resistance is broken.
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Disclaimer: The author holds 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 any of the companies mentioned herein to produce or publish this content. Please read the full disclaimer within the full research report and at www.rockstone-research.com as a conflict of interest exists and none of this content is to be construed as an "investment advice."
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