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Jack Lifton

 
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  • Update: Great Western Minerals' Loss Widens On Rising Expenses [View article]
    How are you calculating your market cap figure? SA shows it as under USD19 million.
    LCM as a stand alone venture might be a ble to grow enough to survive, but with the Albatross of the current GWMG management I doubt it.
    Nov 21, 2014. 09:04 AM | 1 Like Like |Link to Comment
  • The Resources Segment Is Killing Molycorp [View article]
    Thank you. I really had blocked out that MCP is a NYSE listed company.
    Nov 20, 2014. 11:56 AM | Likes Like |Link to Comment
  • The Resources Segment Is Killing Molycorp [View article]
    Ausheds,

    I noted this aspect of the powder market in Ningbo last March when many presenters held themselves out as powder makers in direct competition with Magnequench. I even reported it on InvestorIntel, but it didn't seem to have any traction.

    Can someone tell me when MCP will be delisted on the AMEX? It has been below $4 for just over 6 months without a single day in that period being above $4.

    Just wondering.
    Nov 19, 2014. 11:14 AM | Likes Like |Link to Comment
  • Molycorp: Will Q3 Results Trigger S&P Upgrade? [View article]
    There's a rumor today that one of the well-known Canadian rare earth juniors is exiting the rare earth sector and will develop other technology metal deposits. This is more likely to have caused the after hours decline than the ongoing and routine and boring dismal Molycorp news.
    Nov 5, 2014. 05:43 PM | Likes Like |Link to Comment
  • John Kaiser's Tips For Escaping The Resource Sector Swamp Alive [View article]
    John,

    Some thoughts:

    You are right about HREs. The Chinese are or believe they are in danger of exhausting their domestic supplies of HREs, which are critical for maximizing the efficiency of consumer as well as military electronics. As China shifts from an export led to a domestic consumption led economy it is increasingly important to its central planners to conserve a resource such as HREs, which, as of now, ONLY China has bothered to produce at all.

    It may in fact be critical for the industrialized world that HREs be produced outside of China for two reasons: 1. A best case scenario where China continues to export HRE enabled consumer electronics will mean that China has access to sufficient HREs so that it can satisfy its domestic needs and also have, or have access to, a surplus for export, or 2. China decides to conserve HREs and its export of HREs ceases, so that the non Chinese world has to produce its own HREs if it wishes to produce rare earth enabled devices, . Neither scenario seems possible without new non Chinese production of HREs.

    I'm betting on the lowest CAPEX, HRE producing, projects in North America to be developed in the near term. These would be Rare Element Resources, Ucore Rare Metals, and Texas Rare Earth Resources. In Australia I agree with you that Northern Minerals looks very good although its CAPEX is higher than the rest. In Africa I think the best choice is Namibia. Tasman Metals in Europe (Sweden) is another choice, because without its production of HREs the EU as a high tech manufacturing center becomes totally dependent on the good will of China. With Tasman's deposit as an anchor Europe would have a totally integrated domestic rare earth magnet and phosphor industry

    The next problem will be refining capacity. Without it any HREs produced outside of China would need to use only Solvay's LaRochelle, France, solvent extraction facility, but it has only a limited capacity.

    I think we will see new HRE focused toll refineries both in North America and in Europe before 2020, and they will be fed by one, several, or all of the above deposits. There is also a distinct probability that some of the North American deposits will be vertically integrated with newly developed accelerated solvent extraction technologies or other technologies newly applied to the separation of the rare earths.

    We have been living in a world of increasing metal mining driven by Chinese demand. Chinese demand will not simply evaporate, but it has been reduced.

    It is time we enumerated critical resource "deposits," which are not the same as deposits of critical resources. Critical resource deposits are those the development of which are necessary for the world's economy to grow and to be maintained.

    It is also time that the pricing of critical materials becomes transparent.

    I think you are one of the most astute of the resource analysts today, and I pay close attention to your work.

    Jack Lifton
    Oct 15, 2014. 10:35 PM | 3 Likes Like |Link to Comment
  • Book Review: Critical Metals Handbook Edited By Gus Gunn [View article]
    Ben,

    This is a good review, because it zeros in on what this book is not. It is not a guide for investors. The review is well written.

    I do take exception to the denigration of generalists as when this reviewer says:

    "On the plus side, you have an expert writing on the subject and not some generalist dabbling into way too many categories"

    Specialists tend to be myopic. They very often miss the synergies of, for example, the adaptability for a wide variety of separations of a refining process, such as the separation of the rare earths, or of uranium and vanadium, or zirconium and hafnium, or cobalt and nickel by solvent extraction. I have been in many conversations in the last decade with solvent extraction process engineers who are mystified by the fact that so many rare earth juniors were not only unaware of the process but thought it arcane.

    I find that generalists (such as myself) tend to examine the trees holistically as the components of the forest rather than the other way around as this reviewer might be suggesting.
    Academics, such as the authors of the sections of this book, are almost always specialists or even when not are frequently beholden to governmental grants and industrial special interests.

    Critical materials can only be defined in a specified frame of reference of time and space. This definition must include both a political and a moral space. Many "critical " materials are, in fact, strategic for lifestyle enhancement and not necessary for health, safety, or welfare.

    Investors need to be aware of 'fashions" in critical materials' studies.

    I will have much more to say about this in the coming months on the web sites of Investor Intel and of Technology Metals Research. I think investors can learn much more from general discussions of the concept of critical materials than from "expert" analyses of subjectively chosen materials.

    Jack Lifton
    Sep 27, 2014. 12:06 PM | 1 Like Like |Link to Comment
  • Forbes Thinks Molycorp Is Oversold, Here Is Why They're Wrong [View article]
    Polecat0,

    If a Chinese "geopolitical event" occurred then the market would lose not only 95% of the world's light rare earth production but also 80% of its DEMAND.

    After that it would take years for significant downstream capacity in high purity separation (not currently offered by MCP, California), metal and alloy making, and magnet making to replace the Chinese production. I suspect that in the case of a Chinese "event" the world rare earth industry would melt down and the wreckage would wash away MCP>
    Sep 11, 2014. 09:35 AM | 4 Likes Like |Link to Comment
  • Rare Earth Prices Hitting Bottom: Molycorp On The Road To Being Cash Flow Positive [View article]
    Can any of you imagine how long it could take to bring Chinese mining environmental issues under control? Do any of you understand that the purpose of the governmental moves to regulate Chinese rare earth mining and refining is to minimize pollution, maximize efficiency, ensure the continuation of the downstream value adding rare earth enabled components manufacturing industry IN CHINA, and maximize tax collections! In the short term as the vast imbalances in the Chinese rare earths industry among which are vast overcapacity and huge above ground inventories of the least valuable rare earths are eliminated and worked through how, pray tell, will this LONG term program help a Molycorp running through other people's money very rapidly?
    Sep 10, 2014. 09:17 AM | Likes Like |Link to Comment
  • Uncertainty Still Surrounds Molycorp [View article]
    I note my colleague's, Dr Gareth Hatch's, optimism above, and I want to state my pessimism and some of my reasons for it clearly:

    The author of this article says that:

    "Bloomberg, citing Kevin Starke, an analyst at CRT Capital Group Inc., reported that if Mountain Pass mining facility becomes fully operational then Molycorp's severe cash crunch problem will be solved."

    But if Molycorp becomes "fully operational" then it will only be "profitable" if it can go beyond break-even by SELLING most of its Mountain Pass production in direct competition with Chinese pricing. If Molycorp achieves its target costs then this could happen for its neodymium and praseodymium production, but I doubt very much if it will ever achieve competitive costing on cerium or lanthanum, both of which are today in surplus and therefore sell for very low prices with an ominous inventory overhang looming in China. Molycorp's best bet would be to try to convert 100% of its Nd/Pr into magnets or magnet alloys outside of China, but I note that these products would only sell outside of China if they were cheaper than their Chinese competition and just as good as Japanese magnets.

    It is the same for Lynas with the addition of the fact that 5% of its production consists of an SEG/HREE concentrate that can add significant profit to its bottom line.

    I honestly believe that the best solution for both companies would be to add to their business models toll chemical processing to remove Ce and La from consigned concentrates followed by toll refining to produce didymium and/or Nd and Pr products for the magnet and alloy industries.

    In any case this is the last hurrah for Molycorp. It will not be able to borrow again, so this latest plan has to work. I don't know what the status of Lynas is in this regard, but it cannot be too different.

    All of the strategies to raise money by these two companies must be viewed in the harsh light of the global demand for ALL of their products now and in the near future. Unless both companies can be profitable by 2016 there will be no future for either of them.
    Aug 29, 2014. 11:10 AM | 2 Likes Like |Link to Comment
  • Molycorp: Conversation With Kamakura - What Did Bondholders Tell Us Prior To Q2 Earnings? [View article]
    Shock,

    Your detailed analysis of the financial operations of Molycorp and the responses of the more thoughtful of the commentators leads me to ask a question: What happened to Neo Materials?

    Prior to its "takeover" by Molycorp it, Neo. was the most profitable and well run rare earths based company outside of China (NOTE that I am not saying that there were better run Chinese companies, because we have no way of knowing that since the murky, at best, balance sheets of the Chinese companies were not comparable to those of western entities in the same or similar businesses). As recently as 2011 I asked Neo's then CEO, Mr Karyannoupoulos, why he didn't vertically integrate by buying or taking control of a mine or mining project(s). His answer was the same one he gave me in 2007 when I first had asked him that same question: "Why would I want to get into such a volatile business. Let others take the risks of raw material pricing." I am paraphrasing a bit, but, in essence this is what I recall from my conversations with him.

    I can understand why NEO allowed itself to be acquired by MOlycorp; it was a fabulously overpriced deal for Neo's shareholders, and I can understand why, after looking at Molycorp from the inside, Mr Karyannoupoulos, took or was given control by the board. But I cannot understand why the former Neo management has not moved to unwind the original acquisition and reverse it. I think that the best hope for Molycorp is that the mining and light rare earth separation facilities in the USA and Estonia become a stand-alone profit center of a new Neo. I think I understand how and even why the small investors might feel betrayed by such a move, but Neo was, and perhaps, stiil is, a state-of-the-art operation in separation, metal making, and magnet manufacturing. The global rare earth industry can get along with less or even no more production from Mountain Pass, but the loss of Neo's skills and products would be a severe set-back for the global supply chain.

    Perhaps it is time to bite the bullet on the mining operation.
    Aug 26, 2014. 11:25 AM | Likes Like |Link to Comment
  • Update: Great Western Minerals Reports Strong Q2 Earnings [View article]
    Since when does LCM, or Great Western, make rare earth permanent magnets? The relevant output of LCM is the neodymium-iron-boron ALLOY, and the samarium-cobalt ALLOY used to make rare earth permanent magnets by those with the skills, technology, and in many cases, licenses from Hitachi to do so.
    LCM with an output of less than 300 tons of magnet alloy per year is so far a VERY SMALL player in a market that produces 75,000 to 80,000 tons per year of this type of rare earth permanent magnet. Japan's Santoku, for example, has TWENTY TIMES the revenue of LCM, and it is profitable.
    If LCM is to be self-sufficient based on SKK production then its production of alloy from domestic resources will be approximately 3 1/3 times the tonnage of neodymium produced at SKK. If it can be profitable at this level then it should go forward. I am not including samarium-cobalt in this caluclation, but if SKK produces samarium and cobalt can be bought at market price then LCM could also be competitive in that market using in-house (NYSEARCA:SKK) feed stock.
    The best business model for GWMG would be to partner with both a separation provider and with other juniors outside of China with significant dysprosium, neodymium, and samarium. In the event that one of these juniors creates an in-house separation facility then it would be the ideal partner for GWMG. Such a partnership would then be very enticing for a magnet maker as a further "partner." Thus a vertically integrated, though transnational, but non-Chinese rare earth permanent magnet group could be created.
    Aug 17, 2014. 12:10 PM | 1 Like Like |Link to Comment
  • Molycorp - Everything Is Moving In The Right Direction For Long Investors [View article]
    Where is everyone getting MCP's "production costs?" And where does the $12/kg for cerium come from???

    The last time I priced cerium in China it was 3 Euros/kg, which is at best $4/kg. If you add an export tax of 50% (it is today 25%, I believe) you get a Chinese export price of $6/kg. Thus the Chinese SELLING PRICE delivered outside of China is LESS THAN MOLYCORP's PROJECTED TARGET COST!!!

    China's cerium demand is 80% of the world's total. I heard the General manager of Baotou say last summer in Ganzhou that he is producing a surplus of 30,000 tons a year of cerium!

    I think that Molycorp as currently structured can only be successful in this cerium/lanthanum price and supply environment if it shuts down the mine, the Silimae operation, and Boulder Wind, and proceeds with the revenues from the operations of the old Neo Materials.
    Aug 15, 2014. 09:29 PM | Likes Like |Link to Comment
  • Molycorp - Everything Is Moving In The Right Direction For Long Investors [View article]
    I came across this comment today from a rare earth markets analyst in Hong Kong replying to a post of his on the Investor Intel web site:

    Hongpo on August 15, 2014 at 1:01 PM said:
    Thank you Andrew

    "The surplus of La & Ce are mainly caused by the serious imbalance of China’s rare earth consumption structure and the rampant illegal rare earth production.
    For example,in China’s 2014 rare earth annual quota of 105,000 tons,lanthanum and cerium account for approximately 70.57%,
    Praseodymium neodymium oxide account for approximately 20.08%.( China increased its light rare earth production quota in order to meet the rapid growing demand for neodymium and praseodymium in the application of rare earth magnets sector,
    In fact,according to people familiar with the situation, the la & ce inventory of the Inner Mongolia Baotou Steel Rare-Earth Group has exceeded 150,000 tons by far."

    - See more at: http://bit.ly/1oBEaRZ

    Note that if this is correct then the "real" current price of both Ce and La in China is zero or less. This would explain why both are being sold internally today for $/kg; that could be the cost of carrying the inventory.

    So if in fact MCP can get its COGS to $6-7/kg this, it would seem, will be the figure to be charged against the production tonnage as a loss.

    Of course. if MCP's operations outside of China cannot get Chinese raw materials then transferring some of this material to them will cut the overall losses, but if Chinese material is available at a lower price outside of China then it might be considered malfeasance to buy at a higher price.

    I do not understand how it is that the Neo management could not know about the Chinese oversupply of Ce and La. Perhaps it isn't true. I hope that Molycorp will make a statement about the comment by Hongpo.
    Aug 15, 2014. 05:44 PM | 2 Likes Like |Link to Comment
  • Molycorp: Worst Fears Materializing As China Plans Challenge To Expiry Of Neo Patents [View article]
    SE,

    1. Hitachi's patent is a "process patent" for a technology of manufacturing neodymium-iron-boron powder from which NdFeB magnets are made by bonding with organic resins (magnequench) and sintering (90% of the NdFeB). The patent is and was an absurd grant in any country, since it patented an obvious process used during the manufacturing of the ALLOY powder. There is no way it could have been renewed by the US Patent Court (for example).
    As I mentioned before when I was in Ningbo, China, this last March, I found that many Chinese producers were already offering ALLOY powder against Neo, and that Neo had begun dropping its prices LAST YEAR in anticipation of the strong increase in competition!
    Bonded rare earth permanent magnets are made from purified neodymium powder; THIS IS NOT WHAT MOLYCORP PRODUCES IN CALIFORNIA. Sintered REPMs are made very often from neodymium/praseodymium natural mixes (THE "DIDYMIUM" of the TRADE). Neo China most likely does not use Mountain Pass produced didymium oxide to manufacture FURTHER PROCESSED neodymium for conversion into NdFEB alloy powder, because China makes it almost impossible to import light rare earths (But see a recent article by HongPo on http://bit.ly/1lVQOoG).

    2. Lynas is leaner and more smartly run than Molycorp, but it still faces a grim future. Lynas though seems to have broader support in Australia than Molycorp now has in the USA.

    Jack
    Jul 30, 2014. 07:23 AM | 3 Likes Like |Link to Comment
  • What Now For Molycorp? [View article]
    Sheer hype. Molycorp's mantra is in fact that it's ore contains very little thorium!
    Jul 27, 2014. 01:52 PM | 1 Like Like |Link to Comment
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