Ucore Rare Metals (OTCQX:UURAF) recently announced that the U.S. Geological Survey (USGS) is undergoing a study at its Bokan Project in order to better understand the geology of rare earth element deposits. The USGS will be mapping the mineralogy of Ucore's Dodson Ridge rare earth element deposit in order to understand the tectonics that led to the creation of this mineral deposit.
As I suggested in my June article on Ucore, and as CEO Jim McKenzie discusses in my interview with him published a couple weeks earlier, Ucore stands out among junior rare earth element mining companies in part because of the U. S. government's interest in the project. Rare earth elements, an in particular heavy rare earth elements such as dysprosium, terbium, europium, and yttrium all have critical applications in clean energy technologies and in the defense sector. Unfortunately an overwhelming majority of these metals are mined in China, which makes the U.S. and other Western countries vulnerable to a supply shock should the Chinese choose to restrict exports (and they have threatened to do so in the past).
This makes heavy rare earth deposits outside of China compelling investments, and the fact that Ucore has so much government involvement makes it stand out among its peers. We can see this from the relatively strong performance of Ucore shares, which are up 47% this year and seem to be making a strong, long term bottom. Meanwhile we are seeing weakness in the stock prices of companies that don't have this advantage such as Quest Rare Minerals (NYSEMKT:QRM), Rare Element Resources (NYSEMKT:REE), an Great Western Minerals (OTCQX:GWMGF). All of these stocks are at or near multi-year lows.
With this being the case however I should point out that the prices of rare earth elements have been declining as of late, and the economics of the Bokan Project aren't nearly as attractive as they were a few weeks ago when I discussed the project. Furthermore, Ucore's stock price has risen. Thus I would advise that investors wait for a better entry point. Again, the stock seems to be making a long term bottom, and there is substantial support in the $0.20 - $0.25/share range.
Disclosure: The author has no positions in any stocks mentioned, but may initiate a long position in UURAF over the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.
Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.