What is Hot
In every cycle, people jump on the bandwagon. Whatever is hot, becomes the darling of the day. In the last few years, it has been rare earth metals. Light rare earth and heavy rare earth metals, and any other deposit that may contain these metals, which in most cases is uranium. What set off this bandwagon was China's rapid expansion and then their restriction on exports of these rare earths because of their own needs. Now periodically, China makes an announcement of what quantity they will permit of any particular rare earth to be exported.
Until recently, mining operations around the world that were mining rare earths gradually ceased operations because of the unlimited supply being provided by China. Labour costs in China were so much cheaper than labour costs in the Western economies, that the cost of buying supply of these rare earths kept falling and no one outside of China could stay in business at those prices.
When China gained economic power, and then started increasing its military strength, people started to notice. Then the rapid development of smart phones, ipads, smart tv's and computers led to ever increasing demand for these rare earths. As supply diminished, and demand rose, the obvious happened. Prices spiked. All of a sudden, dozens of junior companies worldwide jumped on the bandwagon searching for rare earths, and projects were proposed everywhere. In every boom, as time passes, most projects fall to the laws of supply and demand, and quality prevails in due course with the best surviving, and the rest falling by the wayside.
A Metal Essential to America
As an understanding arose through both private research and government understanding, it became apparent that certain rare earth metals were becoming more and more essential for modern weaponry, and the supply of these metals was being reduced or was dependent on China. It was inevitable that for US strategic interests, a major domestic source had to be found. Enter Ucore. Ucore is located in US territory, is a major deposit, and contains the rare earths projected to be in shortest supply. Ucore's deposit includes the critical elements Dysprosium, Terbium and Yttrium. Approximately 40% (by weight) of the rare earth elements contained on the Dotson Ridge property are heavy rare earths elements.
Ucore Rare Metals Inc
One of our favorite stocks for quite a while now is Ucore Rare Metals Inc. is a well-funded development-phase mining company focused on establishing rare metal resources with near term production potential. We have been buying this stock for a while now, and looked at the recent downturn as a buying opportunity.
Recently there was a blog written about this company, from which we extracted the following excerpts. They mirror our thoughts. For the entire article, click on the link.
The mixed action in the rare earth sector may be highlighting one company which has been outperforming and making significant progress. Suffice it to say that we hope to publish this update on the rare earths that will suggest to our subscribers the positive direction in which the sector is heading, especially as we witness the U.S. Department of Defense take a step in reestablishing American rare earth independence.
This thesis did not take into consideration the distinction between heavy and light rare earths in coming to their conclusion. Technically the charts of one of our favorite heavy rare earth selection Ucore is outperforming the giants, demonstrating excellent relative strength compared to the more advanced light rare earth companies (Molycorp), whose claim to the heavies remains to be substantiated. The next move is up to Molycorp to inform the investorate as to the nature and source of this purported new motherlode. Subscribers are aware that we have been presenting Ucore (UURAF or UCU.V) as one of our choice selections. The current breaking news vis a vis the U.S. Department of Defense (NYSEARCA:DOD) vindicates our faith in the Ucore story.
In August of 2011, your editor decided to see for himself Ucore's Bokan Mountain property. We liked what we saw technically and fundamentally. Subsequently we visited Hazen Labs in Denver, Colorado, which confirmed our analysis that something was brewing. All that was needed to put the puzzle together was U.S. Government participation. We got it the other day. Streaming over the wires was "U.S. Department of Defense Contracts with Ucore". This decision by the U.S. Government to support Ucore's development may have been solidified by the recent news that was published that Ucore has separated dysprosium at the lab scale. Dysprosium is crucial to the military. This is a major advancement in Western rare earth technology to be able to isolate dysprosium from ore. The Department of Defense will be working with Ucore to take this to a pilot plant stage. Some of the recent metallurgical announcements using Solid Phase Extraction or Polymer Nanotechnology will be incorporated into Ucore's upcoming Preliminary Economic Assessment which should be published shortly.
In all of my years I can't recall a governmental agency especially one as large as the U.S. Department of Defense come right out and adopt a mountain.
We republish this article without deleting the references to other companies, on which we offer no commentary. We only comment on Ucore, which is a favorite and which we continue to buy at these levels.
Disclosure: I am long OTCQX:UURAF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds.