Let's see, Veteran (Vietnam era), Commercial Artist, picture framer, industrial engineer & corporate executive (once upon a time), small business owner and operator, Ayn Rand fan, Libertarian (and no, its not a synonym for "Republican" or "Conservative"), and history... More
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Only your band of brothers should be trusted with your six. Politician’s are devoid of trust since they are professional liars. The seals disobeyed orders to stand down because they answer to a higher code of conduct - honor. A code of conduct that politicians are incapable of comprehending.
Same ole Lynas bleed. Might have to just ignore it till the 19th. The holidays sure are a welcomed distraction. Happy holidays to everyone! I'm enjoying the thing I missed most from my California childhood- See's Candies. Glad they put a full store in my local San Antonio mall. Peace!
Chihawk, find it on the net. Recently sent Peruvian food to my sons girlfriend from Peru from a site called Amigofoods.com. Not many Peruvian food stores in Japan. Bet see's candies has a whole store on the net.
Merry Christmas and Happy New Year and happy 14th Mayan Baktun also.
They do have online but the stores are a carefully duplicated theme they preserve and thus remind me of my childhood. The online is good. Used it for years. The candy is good. But the store is an experience with a savings, a reminder of the season, and (most important with chocolate) immediate gratification. :-)
I believe social media generally distorts more than it says. It is little more than the next extension of laziness in journalism in a century long continuum. Journalists once researched and reported with content. Then they decided to ignore research and report ideological dribble instead. Now ten guys on personal pages that talk more about "needing sleep" and "going to toilet" suddenly speak on a group page for large communities where opinions go unreported.
I doubt the opposition was ever significant. The only substantive thing they ever did was tying themselves to the national opposition party. But like all environmentalist groups they know facts don't matter. Almost all environmental court action these days is based on frivolous court delay over science. The courts, globally, fail to apply a standard of reasonableness to these claims and politically there is plenty of funding for every irrational enviro-jackass out there. The result is a litigious waste that will eventually undermine important environmental issues. Those issues will be victimized by the selfish irrational few that monopolize our courts of today. I urge all judges to recognize the importance of summary judgment. Just MO.
Lynas Corporation (ASX: LYC, OTC: LYSDY) has received a positive response from existing shareholders for the share purchase plan announced last month, and will allocate applicants in full which will raise A$25 million.
The amount raised could have been higher, with Lynas previously announcing that the maximum to be raised under the plan was A$50 million.
The funds from the plan, along with a much larger component raised in a fully underwritten institutional placement will be used for working capital and general corporate purposes during commissioning and ramp-up at the Lynas Advanced Materials Plant in Malaysia.
Full text of the announcement. Dec 14th we will learn what the SPP was priced... I'm guessing NOT the A$.75 the institutions paid, assuming that held up.
I consider it dilutive, but once the share price dove below $A$.75, it was unlikely that they could sell the entire A$50mm planned.
There is now an odd new item floating around...
Street Insider: "...Shares of rare earth miner Molycorp (NYSE: http://bit.ly/nxK0vk) flew higher on Monday on reports that Lynas Corp, a major competitor with operations in Australia and Malaysia, could lose its license. Lynas Corp. received notice from Malaysia's minister of trade that it must remove all its waste from the country or risk losing its operating license.
"Should Lynas fail to comply with this condition, the Atomic Energy Licensing Board is empowered to suspend or revoke the license, and order Lynas to immediately cease operation," said a government statement. ...
As a result, Molycorp could soon find itself in the enviable position as the only reliable source of rare earth minerals outside China..."
MCP is trading up about 20% right now.
This looks like another re-hash of old news, but some headlines just work. MSM power to move markets appears intact, despite a rich history of being wrong.
Presumably to straighten out a misunderstanding about whether or not the LAMP residue would be removed from Malaysia. Lynas had agreed to do it and someone, the opposition, misrepresented the situation to stir up things.
Mark Smith out as CEO of MCP. Constantine Karayannopoulos is interim president.
MCP Molycorp appoints Vice Chairman Constantine Karayannopoulos Interim President and CEO; Mark A. Smith has left the company (11.33 +0.63) Co announced that its Board of Directors has appointed Constantine Karayannopoulos as Interim President and Chief Executive Officer and is immediately undertaking a search for a permanent President and Chief Executive Officer. He succeeds Mark A. Smith, who has left the Company. Constantine Karayannopoulos will assume all management responsibilities for Molycorp and its subsidiaries, effective immediately, and will continue to serve as a Director and the Vice Chairman of Molycorp's Board of Directors. A professional engineer, Karayannopoulos previously served as President and Chief Executive Officer of Neo Material Technologies, a position he held from 2005 until this year.
Perhaps this is the real reason the stock price has shot up, instead of the bogus Lynas articles...
However, I would also expect that we will soon learn that the promises (made by prior management, of course) of Phoenix completion this month will not meet the schedule.
2013 will be when we discover the answer to the question: Who meets the ex-China world's light REE demand?
I agree. That is a big upgrade. Karayannopoulos may "kitchen sink" some of the Moly claims we have heard for two years. And CEO's leaving while the SEC is looking at your company is not the best combination. But going forward I like the change in direction. The critique has to be that it was long overdue. But to be fair, it almost always is overdue in these situations.
FPA, the stock did fall today but I'm not sure it was because of Smith leaving. I said on the QC and clearly implied in my article today about MCP that the company is better off without him. The next few weeks will tell whether that view is correct or not!
I agree with your assessment that the company is better off him gone. But if I was a stockholder, I would be concerned as to why he was fired in close temporal proximity to an SEC investigation. I like the idea of owing the MPC notes. But I would like to see the payoff of stock ownership compared with the payoff of the notes ownership. Risk appears to be less with the notes, but are the profit opportunities the same? I suspect the stock is a potentially more profitable play but more risky... Is that correct? If that is correct, when do you think the SEC will get around to making its case. They seem to move very slowly and in the mean time I would think their on-going investigation will gut the stock.
I believe the risk to the common is <considerably!> greater. With conversion parity at 12, the reward is close to the same.
I won't waste your time here since you probably read the article as to my reasons for saying the above. I always try to balance risk and reward in our favor. I view the notes as an income item which I believe will pay off at par (with some reasonable risk to that hypothesis!) and effectively a "call option" on the common at 12 for the next 4.5 years.
Seems like there is some confusion going on with regard to Lynas residues. Seems the MPs are demanding the residues be removed from Malaysia, while NC says that's not the case.
Yeah, if the "residue" from extracting the REEs from the ore can be turned into a safe, useful product, does it have to be removed from Malaysia? Maybe the "residue" is what's remaining after the leftover has been turned into a safe, useful product. Confusing!
Probably just noise and can't be burnishing Malaysia's image as progressive country. Former leader, Mahathir, who spearheaded Malaysia's move toward modernity, has come out on the Lynas side of things. http://bit.ly/UG6H3S
In US bux, Lynas closed in Oz at $0.617 as we slept.
There are 2 types of waste produced, one of which is not considered radioactive/dangerous (even by Malay standards) which represents the bulk of the waste (this would NOT be the type of waste covered under the requirements in the regulations).
There is then a second type of waste which IS covered by Malay standards as potentially dangerous (though in most countries it might not) in its undiluted form.
Lynas plans to produce commercial byproducts to be sold with this waste, including the #2 type, which with just mild dilution is rendered "safe" even by Malay standards.
This was all covered many months ago, when this topic came up during the various bureaucratic reviews (and re-reviews, and re-re-reviews), not to mention before the courts, etc, ad nauseum. This is the same old chestnut reissued (apparently as the basis of the "new" court action, just as it was with the other court actions) once again.
The accusations have not changed, the science has not changed, the regulations have not changed, the corporate plans have not changed, the politics have not changed and we have good reason to hope that the end result will not change.
What, unfortunately, is also likely to happen is another delay (which to be honest would ALSO be something which has not changed in dealing with the Malays).
My first questions would by why did this come up now? Why did they suddenly say the license could be taken away? Finally who decides if the waste was not removed. Malay courts, politicians, govt bureaucrat? Who pulls the license? Who can be bought?
That might shine a light on something moving about in the dark recesses with the encouragement of who ever benefits from the shut down. Hmmmmmm
CNBC and Fox business even came out and said that Lynas might lose its license when they talked about the moly pop in stock price. I would not brush off this threat so quickly.
It would also be one hell of a way to crush the stock price of lynas and buy a lot of thier stock at some point cheap, cheap, cheap. China was told they can not buy Aussy rare earth companies earlier so maybe this is part of the "end run".
Do not have any ideas or answers about this just noticed my copper colander seems to be glowing a little while thinking about this.
I have been a reader of the REE Concentrator for some time, but have not commented until now. I have found the opinions and insight expressed here valuable.
In my opinion this is nothing more than political theater for the Malaysian masses, it really has nothing to do with Lynas directly.
Remember, there’s an election coming up and the MPs want to look tough and take away any political advantage from the opposition party. The opposition has used Lynas to try to gain a political advantage. The MPs are trying to neutralize the opposition by taking a hardline on Lynas now with the election looming so close.
Lynas has said that they will deal with all the residue—they have even taken extra steps to deal with it beyond what's really required of them, so it’s really not the issue driving this story—it’s all about the election.
I’m hoping that the election will be called right after the New Year. There’s no advantage for the current ruling party to letting it drag on too long. The we can get this nonsense behind us once and for all.
Welcome motionstream. Elections, yes they do play havoc as we are all to well aware. Your insight makes good sense as to why now. Very good sense actually.
Thanks for providing some more input to the mystery theater.
Again welcome and thanks for the comment. You should contribute more.
Maybe investors are hedging their bets on the Lynas situation by buying more of Alkane? For some reason Alkane's stock has suddenly rebounded from two- year lows. http://seekingalpha.co...
Lynas is back in court tomorrow (12-18) for SMSL to once again (is anyone keeping score?) ask for permission to ask for ANOTHER stay vs the TOL...
Depending on where you look, SMSL also thinks they have an appointment before the courts for 12-19.
Could be anticlimactic (I hope) if the courts toss them out again.
Meanwhile, some odd things drifting out of GWMland...
It would appear that perhaps a shadowy new entity (linked to ex-GWM board members?) may be considering a plan to buy the North American claims (Hoida Lake, etc) presumably based upon a price pulled from the PEA plus the outlays to date by GWM (something over $20million). It is also apparent that claims that the new processing plants in SA would be completed early 2013 are slipping, and now it might be late 2013 or even 2014 before they come on line.
Existing financing requires a minimal amount of processing occur else bad things start to happen, which leads one to question what GWM plans to do?
My first thought is that they may be able to dodge that bullet by shipping some ore (assuming they can get the front end of their Chrloride line running at Steen) to a Chinese processor (perhaps their jv partner at the Ktown processing plant?) to provide the processing for a toll charge?
Meanwhile, MCP continues to bubble in the SEC pot, which process could go on for some time...
Lifton says MCP has troubles at the mine, too, without even mentioning the SEC. I wonder from reading this if the new management might be considering selling the mine or creating a separate corporation for operating the mine. Closing the mine sounds extreme. http://bit.ly/RBfM3x
that rumour has been put out by wwater who has been wrong on many a big occassion. Maybe there is something to it or not but I would take that with a large grain of salt for now.
Closing the mine would be very unlikely. Troubles getting Phoenix up and running would be anticlimactic to me (I have disbelieved their timetable from day 1). The recent announcement that they are suing one of their contractors would make the idea that they are having troubles finishing pretty unsurprising.
With about 90% of the investment already made to build Phoenix and restart the entire new operation, it strikes me as difficult to believe that MCP would abandon the project at this late date. Statements from the various fan-groups involving much rumourmungering has been constant for the past 2 years, and whereas I do listen to wwwater when he speaks about GWM, I lend far less credence to the sniping at competing REE companies like Lynas or MCP.
GWMGF just appointed an interesting new Board member:
"SASKATOON, Dec. 18, 2012 /PRNewswire/ - Great Western Minerals Group Ltd. ("GWMG" or the "Company"), (TSXV: GWG) today announced it has appointed Marc Le Vier to GWMG's Board of Directors. The appointment is effective immediately.
Mr. Le Vier has been President and Chief Executive Officer as well as a Director of Texas Rare Earth Resources Corp. where he oversaw the completion of a Preliminary Economic Assessment and established the strategic direction and vision for that company. Prior to that, he spent over twenty years with Newmont Mining Corporation in senior metallurgical and management positions including General Manager of the Zarafshan/Newmont joint venture and Senior Director, Metallurgical Research and Development.
Mr. Le Vier holds a Bachelor of Science in Metallurgical Engineering as well as a Master of Science degree in Metallurgical Engineering, both from Michigan Technological University in Houghton, Michigan.
His professional affiliations and certifications include membership in the Society of Mining, Metallurgy and Exploration as well as the Mining and Metallurgical Society of America."
I've always thought that it was healthy for the engineers to join the boards of directors if they can articulate to the rest of the board members which specific project developments are realistically feasible and which are not.
I think the blog needs to give more attention to Ucore these days. This is a true junior start-up. But they are outperforming the sector by a lot lately. They have had some nice scientific achievements and updates this year. And it appears their HREE content is appealing to some. I have largely ignored them due to their low ore grade. That was probably a mistake on my part as a mining focused investor. It led me to feel they are a pipe dream living off government subsidy dreams. I think that conclusion is wrong now.
I'm not fully ready to shower them with praise as I see a long path to production. But I would be interested in comments. I think the market is telling us Ucore belongs with the "Big 3". It has dramatically outperformed all 3 on share price direction (note it's share price almost matches Lynas and passed GWG long ago with far less shares) it has progressed, albeit at earlier stages, throughout 2012 much better than the others; and it's basket, capital structure, and margins are holding up better than other REE junior start ups as well. So what are the thoughts here mates?
I have had a smallish position in UURAF for a long while, trading in and out over time (my average share price is about zero). The recent mild bounce in Uranium has something to do with their fortunes, in an indirect fashion (anyone curious should look into the fact that the recent elections in Japan saw the sitting Democrats who had promised to close down Japan's nuclear industry lose big to the LDP).
I have always seen UURAF as one of the limited number of U/REE plays in the sector, along with GDLNF and perhaps ALKEF.
I agree with chihawk, their recent news has been very good and there is a strategic dimension which goes beyond direct government subsidies (still likely, of course). The DOD has been counting on MCP's Phoenix for the 7000 metric tonnes of rare earths they need every year (and much of that are the less usual critical and heavy rare earths). With MCP's floundering and their entirely predicatable missing of their recently reiterated construction/production goals, speculation waxes as to whose projects in North America will step up to the plate.
I also agree as to their overall low grade of ore in terms of REE content - but the odds that strategic considerations will outweigh production efficiency given the sector chaos have definitely improved.
I do recall John Kaiser putting a solid sell on Ucore awhile back. Can't recall the reasons why.
Do you guys have an opinion on Northern Minerals just released JORC mine estimate? "The company (ASX:NTU) delivered its maiden JORC reserve of 1.44 million tonnes at 0.73% total rare earth oxides (TREO) at its Browns Range project which is close to the Northern Territory-Western Australia border. That is a contained resource of (roughly) 10,000 tonnes of REE, with 89% of that comprising the heavies. The quantity of dysprosium would allow economic production of that element as a stand-alone proposition. In 2013 the plan is to increase the TREO resource to a contained 30,000 tonnes based on targets at which there have already been drill intersections reported. NTU is still pinning hopes of a 2015 start-up."
Strategic considerations were emphasized at a recent minerals summit in Alaska between public and private participants. Ucore was one of the participants at the summit. It seems to me that they have a winning strategy given some time, effort and financing. http://1.usa.gov/UXcVxK
Here's an interesting story about South Korea's interest in Frontier Rare Earths, which is developing a mine in western South Africa. http://seekingalpha.co... The South Koreans are buying rare earths where they can be obtained, including North Korea, apparently. http://bit.ly/Uef62i
India is setting up its monazite processing plant to possibly start operating this month. http://bit.ly/UpnixL Maybe the Indians will find it easier to import rare earth minerals from East Africa and Australia for the next several years rather than Afghanistan because of the war going on there.
Good luck! The Chinese aren't finding things too friendly in Afghanistan. From the WSJ article entitled "Delays at Chinese-Run Afghan Mines Raise Security Fears: "
"The Taliban say they oppose the Chinese investment because the concession was awarded by a government they consider illegitimate. "We are against any foreign company extracting the mineral [wealth] of Afghanistan as long as Afghanistan is under occupation," Taliban spokesman Zabihullah Mujahid said."
Lynas, MCP and others get mentioned in today's FT. Interestingly, you can read the whole article on CNN International's website. The title of the FT version points out that the article is about the heavies. Lynas doesn't get credit for its HREEs.
Two excerpts: "Molycorp and Lynas look set to satisfy demand for light elements, with room for a third operator, such as Canada's Iamgold."
"But analysts point to Quest's Strange Lake project in Quebec, as well as projects run by Tasman Metals in Sweden, Matamec Explorations and Avalon Rare Metals in Canada and Alkane Resources in Australia, as those nearest to going in to production of heavy rare earths."
I agree with the general sentiment, HTL, my notes:
GWM added the new director to bring someone on board who knows enough about the PEA's objectives to pull it together. This explains his presence - the decision to look again at the resource report - his 400k options at $.22 - and of course the delay in issuing the PEA.
The delaying tactic with GQD also provides strategic cover for the delays in starting up that construction. The chloride plant construction is simply delayed, though they mention a new plan now in the hands of their contractor.
One way to look at the GWM mess is to imagine what their situation would be IF Lynas had not fallen into the Malaysian black hole - or if MCP had been managed competently. Only due to their primary competition's failures does GWM appear to have a workable plan.
FYI: There would appear to be a very slow process of short covering in Lynas over the past 4-5 weeks, since I started watching it again. The data I get is a week old but each week it shows a reduction of about a percent and then during the week it oscillates in that range. For most the fall it was right around the 10.5% area or around 190M -200M shares short. It has now come down to 117M. I noticed about four or five weeks ago it fell into the 9's, the following week it was in the 8%'s, then 7%, then 6% and now today it shows 5.99%. They seem to be able to be taking their time right now with the fiasco in the markets but I am with TB and suspect the next major volume spike would likely be the result of a larger move out of short positions pushing the price higher. Just an FYI and it will be a learning experience for me.
Edit: here is a link to the data I have available.
Thanks TB! Let 2013 be a turning point for this sector!! It's humbling that the markets were up across the board for 2012, but not for this sector and my portfolio ;( Thanks for all the great discussions.
Adding my thanks to Trip for the REE/Strategic Minerals Concentrator... And to all the good people for their contributions as well. Happy New Year to all.
TB and gang, I mostly lurk here, but would like to thank you all for helping my education. TB, thanks for all the work to keep this blog going. Happy New Year All.
Here are some very recent quotes by Wong Tack that may indicate a shift of focus from Lynas, to the government as a whole. While it does not look like he has 180ed his position, it would appear that he may be recognizing the truth and is looking for an easier street to hawk his wares...
“After this, Lynas will not be our focus anymore. But to destroy the threat, we must look hard to prevent further corruption and abuse of power,” Himpunan Hijau chairman Wong Tack told The Malaysian Insider yesterday.
“We will work hard to bring down the regime ... We will bring down the government,” Wong declared.
He admitted that it would be impossible for the group to dismantle the Lynas Advanced Materials Plant (LAMP) which had been given the green light to operate after a temporary operating licence (TOL) was granted.
“We were never against Lynas coming, we were never against rare earth, we just don’t want them to go through a short cut,” Wong asserted.
“When they are 100 per cent ready, 100 per cent safe, and comply with the regulations 100 per cent, they can go on. Why does Malaysia have to take all the risk?”
Despite shifting its focus on other environmental threats in Malaysia, Wong stressed that Himpunan Hijau will not be sitting idly with regards to Lynas.
Toly, very typical self promoting politician slinging mud at the competition and trying to gain name recognition in the process as a champion for the people. Same story every where we look now. I can only assume his last comments about the 100 percent was to cover his tail if he is successful in his campaign and realizes he needs the LAMP jobs......they will be found to be 100 percent in compliance.
TB thanks for keeping this blog going, I love your insight and contrarian thought process which has helped keep me out of some bad choices. Thank you and I really mean it when I say I appreciate everything you do here.
OK, perhaps the theory is working, although the fiscal (so-called, I believe its misspelled and should read "fecal") cliff news is all the rage...
Anyway:
NATUF up 18.52% UAMY up 17.05% GDLNF up 13.9% MHREF up 10.91% QRM up 10.48% MCP up 10.06% GWMGF up 9.89% HUDRF up 8.65% AVL up 8.09% LYSCF up 7.57% GOLDF up 5.45% SAND up 4.83% ARAFF up 4.71% URRE up 4.06% TAS up 2.54% EMMCF dead in the water at $.03 TIE down .06% QREDF down 3.53% IAALD down 7.01%
Good news for GDLNF. It looks like they might get the official acceptance for digging their rare earths mixed in with Southern Greenland's uranium at Kvanefjeld. http://bit.ly/VEeEbK
Molycorp (MCP) +7.3% premarket, as the company’s low valuation and the chance to lock in rare-earth resources could make it a potential takeover target.
This author suggests a positive outlook for MCP, too. http://seekingalpha.co... If the company can communicate they have a workable corporate structure after all with access to the more critical heavy rare earths for processing, then I'll concur with the outlook. If this other author is right about them, then I would think that their existing vertical integration won't work well, possibly meaning that the mine needs to be a standalone operation separate from the global operations. http://seekingalpha.co... We'll see one way or another this year.
Very fair comment VB. And this vertical integration question seems destine to remain an issue going forward for some time. All of the companies seem to desire vertical integration at some level. Moly and GW want something fairly complete. Lynas has JV plans in this direction. There is a debate about tolling in the future which would take things in a less vertical direction versus the chorus that says concentrate is not and will not be marketable in the future.
The manufacturing view point seems passionate about vertical integration. They are aided by some companies seeking government assistance. It seems reasonable to believe an integrated company is in a better position to receive government help. And since China is the main producer now in a very state structured way some feel a similar structured model is needed to fill all of the voids in the current Western production model. Simply put, creating one company (and possibly subsidizing them) looks easier to do for the certainty of supply than hoping the full mining and manufacturing model will return to the west with multiple start-ups.
By contrast, some favor horizontal integration. Most mining diversifies into a multiple suite of mining products favoring economy of scale due to the large capital investment costs rather than increasing margins through more sophisticated operations.
But whether the start up hopes to use tolling for processing and seeks to purely mine; hopes to end at processing with supply contracts; hopes to JV with manufactures; or hopes to do it all in one company, the issue will remain central to the sector going forward.
My own view is that horizontal integration is favored if a real price for REE's can be established. If China and smuggling control the prices too much then a vertical and subsidized model seems best prepared for the reliability of supply. If reliable supply creates new demand and a viable and complete Western market, the miners and tollers have a good case IMO.
Currently, I favor Lynas' JV efforts. Admittedly, I like the capitalist side to this approach. Lynas and Siemens get to do the parts they do best in a private JV. This rewards Lynas for being early Western supply and avoids a start-up needing to be strong in multiple businesses before making money. Time will tell which method is best. But history offers few examples of fully integrated mining to final product models.
The increased margins have always been there and many have tried to create such a company. I see few compelling reasons why the allure of the paperwork and pencil pushers will translate to rare earths where others failed before.
About ninety percent of all acquisitions eventually are considered unsuccessful. There are many practical reasons for this (corporate culture, complexities, logistics, communication, ect.). We can debate that number and the definition of failure, but as investors these reasons should be considered when evaluating any acquisition or integration. My own view is acquisition is it works best when two successful companies combine and even there challenges remain.
The Australian is reporting that Lynas expects to increase production to "full capacity" over the next 3 months. Sorry, no link, its a subscription I don't own, so this is second hand...
Hot Copper is reporting NC out doing interviews...
If they manage to sell the by-products with long term contracts like the rare earths, this would be a lift to the stock which may have been missed by some critics.
Update: LYC now trading at A$.68. With this sort of momentum and the prospect of a large, crowded short squeeze, this puts the recent institutional offering price of A$.75 in reach. I have been viewing this natural support price as resistance, so it will be interesting to see what effect it has over the next few days.
I think Lynas is starting to put the politics further behind it and is making real progress. In March of last year we were told of the steps in the update today. http://bit.ly/VvAzCB (Slide 20) Obviously, the TOL politics changed the timeline. But now there appears measurable progress toward production. I think Lynas continues to de-risk. I am not adding leverage but I do think the share price is way behind the current progress of the company story. The rise today is good and makes sense to me. Compared to the Moly rise on the "everybody wants to takeover a loser" news and the GW "Still uncertain" update that jumped that stock and I would say Lynas has widened it's lead over the others while allowing a better entry point. If Lynas keeps this near term timeline a close eye should be kept on the REE prices IMO.
They fell $25mm short when the SPP raised $25mm instead of the $50mm planned - due to the soft share price, imo. This should not be a short-medium term factor, but does shorten their operating flexibility until they can create sufficient cash flow.
This morning trading starts with A$.715 close on the ASX, up 14.4%. I would expect the American markets to match this ($.73-.75).
TB handled the Where but I'd say the "why?" is also a very good question. And I have no answer. Curtis is a banker and has usually keeps more cash than most. That's smart but in no way explains $208 Mil and trying to raise $50 mil near the 52 week low. Curtis also believes "The dark is light enough" when it comes to disclosure. I think much of that is the sum set aside is being used for Phase 2 building that is currently on going. But the recent announcement still says nothing about why they need all of this cash for a completed Mt. Weld and LAMP? Is it for Duncan? If so, why not get cash flow and issue after the share price rises off the accomplishment? Makes little sense to me.
I believe the money was raised to pay for ongoing operations plus the $50million the AELB requires be set aside in trust (as ore is imported in sufficient quantities). The A$183mm is sufficient for the burn rate through the first half 2013. Actually becoming cash flow positive (which NC has indicated will occur early in Q2) should take the pressure off the operating costs.
But does that make sense? It's like these are construction rates of burn on a finished plant? I know they kept the employees (about 300 I think). But $183 mil in six months? Are these employees all Vince Youngs and Mike Tysons?
Starting up a large industrial process, including much international transoceanic shipping, is not cheap. Labor (particularly at Australian mining rates, which are sky high, its not just Malaysian labor involved) is a big expense, but cranking up a major chemical plant is big money. I have always given them the benefit of the doubt about the Phase 2 money matching up well with the Phase 2 restricted funds on hand, so I don't see the recent funding going to that...
I had hoped they would shoot for more like $150mm, and that the $200mm+ goal displayed something of a lack of confidence. Its necessary to keep the timing in mind, I suppose. The Malaysians were creating delays again in the courts, and it was uncertain just when Lynas could operate again. The $200mm struck me as designed to compensate for something of a worst case scenario, ie, that the LAMP would be held up until the Malay elections.
TB, Are you sure you don't want to start writing the Lynas press releases? :-)
Maybe I have been a Lynas mushroom and dined on Lynas humus, fish fertilizer and Ratatouille for too long. But even with your good explanation, I do smell some fish. Hope it's just old scars and nothing more. I'm happy with the move and I'm still holding more than ever. But today seems like the first time in a while where I can ask the question and I hope the company will address the issue in a new press release soon. Just imagine if they don't need the money and do a buy back after cash flow at $1.50 AUD.
Sorry I haven't been around much lately, TB and all. Family medical issues plus some difficulties getting my SA articles published as timely as they are on other sites. But I thank you, TB, for this forum, and all who contribute. I know there's one or two here anyway who subscribe to Investors Edge, so they know I've been expecting China shenanigans and took a big gulp and bought more LYSDY in December and loaded up on the MCP 6s-2017 for all the reasons I wrote in the most recent SA article back in early December. We normally hew to a pretty conservative path but every now and then a macro event is just so compelling we're willing to give it time. And with these 2, time and time and time and time!
Just checked over at Sydney, and LYC topped out at A$.74 earlier, but appears to have bounced off of resistance there (as expected). I would anticipate that it might close tonight's session somewhere close to par with where it closed yesterday, say flat on the day.
another BOD appt at Great Western: January 8, 2013 - Saskatoon, Canada: Great Western Minerals Group Ltd. ("GWMG" or the "Company", TSX:V – GWG) today announced it has appointed Ron Hochstein to GWMG's Board of Directors. The appointment is effective immediately.
Mr. Hochstein is currently President, Chief Executive Officer and a Director of Denison Mines Corp. ("Denison"), positions he has held since 2009. For three years prior he had been Denison's President and Chief Operating Officer. Within his CEO role, Mr. Hochstein successfully negotiated a $100 Million financing and restructured Denison following the sale of its U.S. assets. Previously, his senior management positions were with International Uranium Corporation, H.A. Simons Ltd. Mining Group, Noranda Inc. and North Canadian Oils Ltd. His responsibilities included project development, exploration activities, public company reporting, regulatory negotiations and mine operations management. In addition to his current duties with Denison, Mr. Hochstein is President of Uranium Participation Corporation, an investment holding company which invests substantially all of its assets in uranium.
What I heard was that Gorski and part of the board (which had just forced him out of management in a narrow victory for a majority vote) managed to gain back the lost vote, get a majority, and push out their 4 enemies on the board (plus new hire LeVier, of course).
This sort of thing happens, particularly in small companies with high pressures in the board room (just look at the similar story playing out in GWM recently).
Note that the new board members at TRER are dominated by Gorski plus a couple of academics (probably intended to compensate for the loss of the departing LeVier's strong metallurgical credentials).
My view is that TRER's loss is GWM's clear gain.
LeVier on the GWM board signaled a potential sale to me...
LeVier as CEO sends a very different signal. I now anticipate them going forward with their plans in South Afrika.
I have not seen an extension that short before and believe that is why they have done it. Perhaps I'm wrong but I can't think of any other reason to have done a one month extension of the warrants. Assuming this is why they also think it will stay above that level at least for a bit. Why use a warrant if the stock is or soon will be cheaper? I've never seen a similar situation so if anybody wants to educate me on why I might be wrong feel free.
While troubles with the processing may send the stock down. I'm thinking they expect, if all goes well, GMWGF will not be this low again.
The warrants work right now. The warrant was a share and a half for forty-five cents, and today GWM .V closed at .32 CAN, for 3 cents profit per warrant.
thanks TB. I was never on board with the sale idea. I don't think they have any inte,ntions of selling anything but the other properties in NA. You don't keep ordering ovens for LCM so you can sell them. It looks like the PEA should be shortly then there will be real info to chew on. It should be interesting to see where he takes the company...
OG, I think it already has, just before they dumped Smith.
The warning that revenues would only be around $1billion in 2013 seems very anticlimactic to me. JPM's downgrade is belated and (as always) probably self-serving.
The Voldemort administration just launched a new "Manhatten Project" looking at what to do about critical raw material shortages in strategic materials, with an initial $120mm of the taxpayer's money to throw at such things as modeling nuclear power scenarios and what to do about the rare earth situation...
China just smiled, cut their export quotas another 27% from last year, and told them "...not our problem".
I bailed on MCP common when it was $13, since I thought $10 was more like a real value at the time (of course, Smith was still CEO back then and issuing unbelievable promises). I am still long a very few MCP+A shares.
I do not own a pole long enough to touch the preferred, MCP-A. The notes sound viable. JLS you share thoughtful positions! I am behind on my reading and well-wishing:
OG, I agree and appreciate your frank position on Moly and their preferred. Moly is shelving Phase 2 because of weak market AND a poor financing environment. Moly was long ago suppose to be fully financed through Phase 2. From my research on those comments I think they are more than a little short of Phase 2 financing. This means they are burning far more in some or several areas of the business than we realize. I think this was a good "kitchen sink" disclosure by the new CEO.
But now the nest is opening up IMO. -Week demand (that Xsorbix does little or nothing to solve). -Financing needed for phase two that is not there and would need a better environment to make happen. -A cloudy business model that is using up more funds than expected. -An SEC investigation after one CEO departs and now a kitchen sink disclosure. Could be more to come. I do not think the stock or the preferred are safe in Moly.
Shelving Phase 2 Phoenix is a self-supporting decision when it comes to supply and demand for light rare earths...
Much of the projected over-supply was expected to come from a 40+kmt capacity Phoenix. Cut that in half, and at least 20kmt per year leaves the market place, and that will support prices. This makes the MCP numbers look better, and they can always take up Phase 2 at a future time when the business case supports it (presumably the world economy WILL recover and resume growing at some future date).
Lynas is close to finishing its own Phase 2 buildout, of course, but perhaps they, too, will elect to conserve operating resources and slow down that doubling of their production as well. NC's recent prediction of "full capacity" production within less than 3 months seems much more likely if that does NOT include a fully completed and operating Phase 2... But we will see how that turns out.
Should MCP stick with a 20kmt business plan, while Lynas hits something between 10 and 20kmt, the supply and demand swings back into something resembling short-medium term balance.
Without the anticipated drain from operating losses at an over-built Mountain Pass, MCP (particularly their Neo operation) becomes potentially profitable again. Cutting their production goals by 50% brings MCP back to a point where virtually all of its products are contracted already (something which was never true before, even with the dodge of allocating over 28% of their production to Xsorbix sales which probably would never have been real).
TB, I don't see it this way. Revenue projects were for phase 2 production. So even though the La and Ce were not contracted they were in the revenue and margins.
Shelving Phase 2 should effect your entire company analysis or you are not really doing one. Const. mentioned they had the equipment but that is a small part of the cost here. It would take Moly a long time to start up phase 2. So what we have is a Company at Phase 1 (that will not be up to speed till mid-2013 now). This is a sizable construction/ start-up delay for phase 1 at this last stage. Note also, the new technology being applied to Phase1. A delay like this raises serious questions about those technologies and the commissioning process in my opinion. And Const. talking about bottleneck concerns is responsible talk, but should be viewed with caution by investors.
Moly now competes with a producing Lynas. This will make Moly off take contracts much harder. We cannot know the current state of Moly contracts. To simply assume all prior contracts hold when production is cut in half is strange to me. Volume pricing, production costs, reliability of supply, amount of supply, quality of supply, timing and even ratios with new technology should be questioned in my opinion. Const. did the right thing by coming clean and kitchen sinking this. But this is a much blacker box with much greater risk than before. And with the debt this company already has I cannot appreciate the risk here.
But the problem is even more severe if we look at the Mountain Pass ore. These guys are very light. The CREE prices they need are on half the product (hopefully). And that small some can easily be eaten up by a single contract. Cutting production in half does not solve the LREE oversupply. The ratios remain the same (hopefully). The only difference is a supplier needing CREE's can only get a small sum from Moly. Lynas gets much more per tonne; has it ready now; and has the potential of Duncan in the future.
The Ce and La may even be a wash at current production costs. It seems obvious those cost estimates are going up since they are admitting (by omission) that they have been using some Phase 2 money to run things already. If the new technology works well then the CREE's could save them. But nothing in the rear view mirror offers assurance with Moly and the technology is delayed and unproven. And if I did not have confidence in Const., I'd say his bottleneck comments hint at engineering concerns as well.
Bottom line: Anytime a miner says they will cut the plan in half and delay six months on the eve of when they are suppose to reach their full run rate, a major reassessment is needed in my opinion. I don't know what happens here, but if this were coal or timber I'd say they go to zero. Being REE's I don't know. Good luck to all but I would use the weekend on this thing.
I have to side with Chi on MCP. It was a nice trade when it hit all-time lows mainly because it had used debt financing which limited the amount of outstanding shares so the float got churned quickly - good for trading volatility (which Smith used to his advantage), bad for long-term business developments. Also, with recent rather neg. developments as well as Lynas being first to feed I would be very hesitant try to play another bounce trade right now in MCP.
Lynas doing the majority of their financing with equity has created a ton of outstanding shares. Everybody hates it because it takes a while to rotate through, so they can stay along the bottom longer than investors/traders like but it was definitely the better long-term business decision.
Just my opinion. I don't own either one right now, wish I had enough powder to own some LYSDY though.
Read my post carefully, Chi. I never said that I was doing an MCP selling job, so pointing out that I was not doing so is belaboring the obvious. I was looking at how the dramatic change in plans impacts the sector as a whole, and it does. I am not presenting a case for MCP as a "buy", I am but pointing out anvil obvious truths about the world market for light rare earths. Delete 20kmt per year, and the prices improve vs adding them to the heap. Much of the hit on MCP and Lynas by their critics on brand Y and elsewhere has been that their production was going to create surplus light REE supply and drive prices down, at precisely the time when they both will need good prices to make profits. Better prices will make a smaller Phoenix less a money loser (not to be confused with a profit center), and will help Lynas with the gap between whenever it gets the LAMP cash flowing and when they can bring Duncan's critical REEs to market. Its a sound business decision which will be a positive for both companies (and the smaller fry in the ex-China sector as well).
"Shelving Phase 2 should effect your entire company analysis or you are not really doing one."
Correct. I was not doing one. Really. But you seem intent on one, so let's wade through. I believe we are in agreement on many points anyway:
"Const. mentioned they had the equipment but that is a small part of the cost here. It would take Moly a long time to start up phase 2."
In my opinion MCP should put a hold on Phase 2 until they have contracts in hand (real vs Xsorbix hopium). They appear to have about 20kmt/year in contracts, which means that they might be able to meet those levels with Phase 1 Phoenix later this year, though I would agree that they will be limping along at something between 5kmt and 10kmt between now and then (and this could be a kind estimate).
It has been a long time since we have seen a good update from either Lynas or MCP about their contracts, many of which may include performance clauses which have lapsed due to all the delays. This is news to watch for.
"So what we have is a Company at Phase 1 (that will not be up to speed till mid-2013 now). This is a sizable construction/ start-up delay for phase 1 at this last stage."
Obviously, as you and I have both predicted would probably occur. Mid-2013 is realistic, if not even a little kind. The results of their ongoing lawsuit against their contractor may reveal some details as time goes on.
"Note also, the new technology being applied to Phase1. A delay like this raises serious questions about those technologies and the commissioning process in my opinion. And Const. talking about bottleneck concerns is responsible talk, but should be viewed with caution by investors."
The word from MCP is still a lot of vague reports without details. MCP's metallurgical goals were, indeed, ambitious, and I suspect some of the delays could represent problems with new proccesses. Presumably the construction problems, delays and cost overruns are involved as well, but we have only a very vague announcement to go by. If there were no bottlenecks Smith would still be running the show and Phoenix would be in production at 20kmt levels now, with short term prospects for 40kmt.
Lynas' technological goals have been much more modest, focusing on just 2 discrete rare earth products plus didymium. I still hope that this will mean that they will have limited problems meeting customer requirrements, but again prudence would require accepting the likelihood that they, too, may experience teething issues with a new plant.
"Moly now competes with a producing Lynas. This will make Moly off take contracts much harder. We cannot know the current state of Moly contracts. To simply assume all prior contracts hold when production is cut in half is strange to me."
As I indicated above, a review of both company's existing contracts is necessary. Perhaps they will both issue an update soon. MCP was claiming a high percentage of nameplate under contract, but they cheated (as I indicated earlier) by including their own Xsorbix division as taking over a quarter of the whole. Dropping the estimate to just half what was claimed seems reasonable, but yes, it would be great to hear details from them.
As for a "producing LAMP", this remains to be seen, and at what levels, but I too am hopeful.
When looking at the likely impact of delays and failure to deliver upon sales contracts, it would be logical to look at the dates involved for both companies in the comparison. Lynas is now running about 17 months behind schedule, whereas MCP is now looking to run about 8-12 months behind schedule. Not knowing the details of any of these contracts, this is all just speculation, but if any company has already run into contract deadline difficulties it would seem more likely to be Lynas, although of course their current likelihood to start delivering new product undeniably looks much better than MCP's.
"Volume pricing, production costs, reliability of supply, amount of supply, quality of supply, timing and even ratios with new technology should be questioned in my opinion. Const. did the right thing by coming clean and kitchen sinking this. But this is a much blacker box with much greater risk than before. And with the debt this company already has I cannot appreciate the risk here.
But the problem is even more severe if we look at the Mountain Pass ore. These guys are very light. The CREE prices they need are on half the product (hopefully). And that small some can easily be eaten up by a single contract. Cutting production in half does not solve the LREE oversupply."
Adding 60+KMT to the world markets every year was a larger problem than adding 40kmt is what I said. No one indicated that cutting back Phoenix production was a "solution". It brings the plans at Mountain Pass from the absurd into something like reality, and puts a tourniquet on MCP's bleeding. Now Lynas and MCP numbers are at least roughly comparable to a reasonable level of future demand ex-China.
"The ratios remain the same (hopefully). The only difference is a supplier needing CREE's can only get a small sum from Moly. Lynas gets much more per tonne; has it ready now; and has the potential of Duncan in the future. "
Actually, the only way any customer gets CREEs from Lynas later this year will be from some form of tolling agreement through a third party (this has been speculated upon here and elsewhere, but if there is a solid plan in place, I have not seen the announcement from Lynas). MCP claims to have that technology, but its questionable, as we discussed earlier, since they have not revealed either the details of the metallurgy or the source for the ore. Lynas will be seeking that capability when it develops Duncan, agreed, but for now that lies somewhere years downstream. Lynas will be stockpiling the byproducts containing the CREEs, it seems, but its real early to check that box on the reliability survey.
MCP has never revealed details of its precise plans in those areas, Chi, and there are many who have questioned those points, including both of us here on this blog in the past. We still don't know, hence the rampant speculation.
"The Ce and La may even be a wash at current production costs."
I would like to see an update from both MCP and Lynas as to their real production costs once they get up and running. NC has gradually increased his rough estimates, true, but even so it would be good to have real world numbers (which we might not see until next year, really). This is one reason why I mentioned that some critics might have missed the added sales generated by the synthetic gypsum and other byproducts mentioned recently by Lynas. Time will tell, though.
"It seems obvious those cost estimates are going up since they are admitting (by omission) that they have been using some Phase 2 money to run things already."
As I recall, MCP's cost estimates (which I rained all over at the time as unrealistic) were very low, a fraction of those from Lynas. At this time I would consider both numbers to be interesting fiction until we know a lot more and the companies actually operate their new plants long enough to generate legible numbers.
"If the new technology works well then the CREE's could save them. But nothing in the rear view mirror offers assurance with Moly and the technology is delayed and unproven. And if I did not have confidence in Const., I'd say his bottleneck comments hint at engineering concerns as well."
I believe its possible to assume problems in all the various areas we've mentioned, but quantifying them and laying them out in some sort of useable timetable is far beyond the information available to us. This was one reason I couched my earlier comments with limited conclusions directed more toward how this might impact the entire sector rather than as a due diligence effort focused solely upon MCP.
"Lynas doing the majority of their financing with equity has created a ton of outstanding shares. Everybody hates it because it takes a while to rotate through, so they can stay along the bottom longer than investors/traders like but it was definitely the better long-term business decision."
Lynas has $212mm long term debt, wheras MCP has $193mm. Equity-based funding of various kinds have been used by both companies, though so far Lynas has not done things like notes convertible into common stock.
"Just my opinion. I don't own either one right now, wish I had enough powder to own some LYSDY though".
Chi, I didn't know that you exited Lynas completely. I hope you didn't take too bad a beating.
TB, your writing is an invaluable education, between you and Springer I am going to owe you guys fees soon. I meant I share Chi's bearishness on MCP at this time for the reasons i laid out, but your factual analysis on MCP and the ree sector is second to none, and it is a pleasure reading input from everyone who participates here.
P.s. you mixed up mine and chi's post a bit. He never stated he is out of LYSDY, that was me, and the only reason was to take my very short term profits over to axpw, I wish I had more cash to spread around b/c I would still own LYSDY.
No worries TB. I think the readers get the feel for the opinions and information on all sides. I really see it as a good conversation.
As for Lynas and me... I'm fully in and of course I have taken a beating. Anyone in rare earths over the last year and half probably has taken a beating. There will be some that associate that with credibility on blogs. I don't. I find many that gloat are neither honest nor content based in posts. I hope we are all judged on content mostly. And everyone has my sympathy if they lost in REE stocks in recent months or years. Even in the stocks I don't like I feel the same. To paraphrase: Love the playa, not the stock.
Anyhow, on content I consider the above a good read on all sides.
A Great Western note regarding the Moly mess. Great Western is a very different company than Moly. But since Moly began expanding their vertical reach they have been less profitable, less transparent, and near as I can say they are less successful. This could turn around, but so far they have combined Silmet, NEO, and Mountain Pass into a less successful single company. There are a lot of reasons for that and many do not apply to GW. But the functioning parts of these companies should be paying off for Moly more than we see. And it is very reasonable to think much of the prior Phase 2 funding is being eaten up by that integration. GW is it's own platypus but this neighbor deserves a look for the caution it offers IMO.
It could be too as TB rightly points out that MCP is attempting to right the ship get their costs and finances in order, and the first step to that was Smith leaving.
I agree with that. Both that the ship needs righting and that they are trying. I just don't know the size of the problem well enough to invest in it. None of TB's facts are wrong. I just see the view as overconfident relative to the current uncertainty and lack of disclosure.
Another interesting article this morning on REEs in The Diplomat, a current-affairs magazine for the Asia Pacific region. Not a lot new information here for those of us that follow the space closely. What is notable is the article's conclusion regarding India. There are also some amusing comments from the misinformed.
And it's ruining my ability to buy more of the cv notes! The dealers know people are emotional about MCP -- the bid/ask spread is $830 by $1002. Their presumption being that we are all idiots and will take whatever they offer when we sell and rush like lemmings every time there is quasi-good news. (Quasi-good being the best we long-term REE buyers can hope for these days!)
Caveat emptor -- if you want to buy place limit day orders. I have begun buying between 890 and 912, and not in the size I'd like...
Molycorp is one of the sponsors the government's new Critical Materials Hub, a joint public private effort focusing on research and development influencing future usage of rare earths. I have to wonder how this will effect Molycorp's bottom line since the other consideration being critical is its less than stellar corporate situation. http://1.usa.gov/10wUzeV http://preview.tinyurl...
The BBC just had a report about the REEs the Japanese found at the bottom of the ocean -- old news. They highlighted the importance of the dysprosium (Mt. Weld has 0.124%) in the deposit because of the current friction between China and Japan.
Also tonight, this Nick Curtis interview has lit up the Hot Copper bulletin board. Hasn't lit up the LYC price in Oz, though. "Lynas looks to lock in cash flow FY14" http://bit.ly/Xuqbd8
Expected to some degree, but correct me if I am wrong..... Moly was supposedly fully funded through Phase two with considerable cash to spare as late as the start of Q4 of 2012 right?
So now they say they will shelve half of the production (Phase 2) AND raise $300 million? I realize there is a CEO change and an SEC investigation so we knew we didn't have the full story before. But we are looking at a $180 million shortfall that may be widening due to the outlook warning today. The stock is cheap, but not without reason. Honestly, this is way too grim for me. I don't know anything more than the next guy, but I see the stock going to zero. The bleed is too large for me. Just MO.
The assumptions were obviously vapor back 3-6 months ago. When the promise to build an order book of 75% of nameplate production was announced as "accomplished" with over 1/3 of the total contracts being Xsorbix, it was apparent that their projections were not trustworthy.
The recent announcements ex-Smith pointed toward this development.
Most of the cost of Phase 2's buildout has already been paid, but they have wisely determined that they had no market for the extra 22kmt per year (never did, barring huge orders for Xsorbix, which would be surprising), and have lowered their sights by that amount.
What we have yet to hear are any details on the remaining contracts. Given the ex-China Neo capacity which will presumably be added to the roughly 16-17kmt (ignoring Xsorbix), it seems likely they have sufficient customers to take what they can make with Phase 1 alone.
I view this new round of funding as prudent. There is little doubt that it would have been much better had prior management been competent and avoided overextending themselves building too much capacity at Mount Weld. The company's shares are pricing below book... But it is yet a VERY risky investment, particularly non-dividend paying common stock.
I read that MCP will still be $250M short AFTER raising $300M. The real number is (at the very least) $550 Mil. Given their tendency to understate or delay admitting financial issues while overstating forward looking statements... Oy.
motion, I agree with your points. But I have to say with revenues in doubt and the pace of the bleed I do not see any Moly stock as safe. I know several here have the preferred. It does pay a great dividend. But it trades like it is not safe. And I can't see the research to suggest it is safe. And the bleed can kill the dividend and a restructure could wipe out the preferred as well. OG, put the numbers in very plain English. They tell a clear story in my opinion.
The offering also seems doubtful to me too. They may get a Lynas in December type result. That was bad, but this would be far worse. They need every bit of what they are asking. This can severely depress the stock. And the preferred will be hit as well. It is a mandatory conversion so I expect them to continue to trade in a similar direction.
Sorry to see Molycorp struggle like this. I have to think that this puts Lynas even more in the limelight. Hasn't seemed to budge Lynas yet, however - finished half a cent up in Oz last night. US$0.684 to us.
ung, Lynas can't really move much right now I think. They simply mismanaged the Malaysian politics. By failing to control the dialogue they left investors with the impression that the ruling party could lose and that the opposition party would do SMSL's bidding. I disagree with both of those concerns but investor fear controls. That fear is also heightened by the Malaysian legislature and courts apparently "moving the goal posts" throughout their year and a half of indecision and delay.
I think the dumbest comments I read these days come from the common Stockhouse view that GWG has somehow already managed their political situation in South Africa by complying with mandatory BEE requirements. My honest view is South Africa is a mess and politics is one of several reasons why the Chinese are doing nothing for Steen.
I'm done with political correctness on blogs. I don't want anyone to lose money. But I never trusted Moly or GWG. I do think Moly's stock goes to zero and GWG has no future either. It's not about blog socializing, it's research. Lynas looks like the only real company in the space. That does make them a good long term investment in my opinion. But this is going to take some time to move up significantly the way I see it.
As usual Chihawk you fail to understand the underlying value of GWMG. That is the final product which Less Common Metals (LCM) will be selling to the ROW which are the metal REE and other alloys at a high margin. Less Common Metals Ltd. is a world leader in the manufacture and supply of rare earth based alloys and high purity metals. With considerable experience in the production of materials to tight compositional tolerances and controlled microstructures, LCM in coordination with GWTI, (Great Western Technologies Inc) both offer an innovative and highly flexible approach to a wide range of material requirements.
Main products include:
Neodymium iron boron and samarium cobalt alloys for the permanent magnet industry Other rare earth alloys, including magneto-optic and magnetostrictive materials, hydrogen storage systems and master alloys High purity rare earth metals Sputtering targets Ultra high purity indium Our extensive technical expertise and competitive philosophy make LCM the ideal supplier for a vast range of complex alloys and other specialised metal products.
The Steens site is only for supplying LCM with inhouse feedstock for their processing requirements
GWMG is not just a miner and processor for producing LREE oxides as Lynas is going to be selling at very low margins, they are going to be lucky to make a profit or break even.
OK Nova, I accept the difference of opinion. I am well aware of all of the facts you mention AND how long GWG has been producing these products and pursuing their vertical integration. I also see they have failed to have a profitable year in the last thirty-four years. Engdahl was also honest that the profitable year will not come until Steen is providing feedstock. Their progress is minimal in 2012 and 2011 in my opinion. I suppose we can debate some of this but clearly the goals of most of their presentations during that time remain unfulfilled.
We also have considerable speculation to suggest they will need more capital. They already have a large share count when measured against tangible book (especially if the mining assets are properly valued); they have a large compensation package for shares in the fifty cent area and they have $80 million in convertibles at 8% already.
So this is a company that has had many ideas over the years; currently appears in transition and under funded; and talks a lot and executes as much or less than several similar REE stocks. That seems like fair analysis in view of their recent history and balance sheet. Might the Chinese come through for them and they make money soon? Maybe. Honestly, I think they fail, but I don't own them. Good luck to them either way.
"They already have a large share count when measured against tangible book " Lynas- 1.7 bil shares GWG- 418mil shares
GWG also has approx 50mil on hand with a high grade deposit that so far has atleast a 14year mine life with the latest NI. They also do not need to depend on spot prices as it will feed LCM (which is expanding)
Chihawk is a well documented GWG basher that just can't let it go.. tunnel vision you might say.
Thanks Mike, I freely admit I do doubt GWG. I think they have "mined the street" for decades and I think they eventually go to zero in a restructuring. Right or wrong, I think some of our differing view comes from my prior experience as an investor in miners. When I look at the status of the two companies and the distance from free cash flow and the financing terms I see the same numbers as you and reach the opposite conclusion. Lynas has too many shares but I think they make it and will be able to address the problem with near term profitability.
Time will tell as always, but this is investing. My view is Lynas is surviving in a field with a future and with big long term advantages over other non-Chinese competitors (cash flow, deposit, first mover, ect.). GWG appears to have financing issues and a clock ticking. Will LCM save them? Maybe. But, I do not think they are moving fast enough and I think the story is very hyped for something with no near term profitability scenario and little built at Steen to support it.
I think the Chinese are baulking because they realize the cost or the thorium at Steen is an issue in processing in South Africa that they have never really had to address previously in China. That is just my honest opinion.
I respect that the SH gang disagrees, but this is not a popularity contest. I read the blog but have not seen sufficient content to change my mind. I think this can be a respectful debate if it remains focused on content. I see no reason to give an insincere view to comfort emotions. That just does not serve readers IMO.
Well said, Chi. You and I disagree on Moly, but we seem to have the confidence in our -- differing -- analysis to be respectful and to hope to learn from each other's comments. Tunnel vision is as dangerous in investing as in any other of life's endeavors...
I very much agree Joe. All of these companies are trying to get going. It is widely accepted that some will succeed and others will fail. That is the nature of this investing. I think our debates have always been healthy and content based. I also think most readers care very little about the conclusions we draw. They want the information. This forum does a good job of focusing on that side of things and I consider you among the best contributors especially on that point. I welcome "SH crossovers" like everyone else and hope they will follow your great example.
Even if this man is a member of a green think-tank in Germany and paid by SMSL, this could... again... hurt a little bit the share price on monday and maybe it's a bad news just before the judicial review on 01/29
There is no "if", the article indicates that this is, indeed, a hireling of SMSL talking, and referencing no new facts nor providing any new insight into, well, anything.
There is a loud worldwide minority which has a kneejerk reaction to the word "radioactive". Next week they will find one of these that hails from the UK, the US, or perhaps claims kinship with ancient aliens.
There is a reason why the LAMP (unlike, say, the Steenkampskraal operation of GWM) does not require a high level of nuclear permitting allowing them to process and store truly radioactive materials. The ore is simply not very rich in radioactive elements.
Looking at GWM, GDLNF, or UURAF, for instance, one finds that the primary ore is high in radioactive values and requires much more attention to the processing of the byproducts and waste.
Even so, it is necessary to parse the Lynas topic carefully, which has been done here multiple times in the past.
As for still another Malaysian court review, these have become quite pro-forma. The preponderance of the official and regulatory data favors the continued operating of the LAMP, and so does even the keystone kop activities of the Malay bureaucrats and courts.
Of course, none of us knows what the Malay system will do from day to day, but the best guess would be that this will be another non-event and more likely to support the share price slightly.
Another cycle of delays while the courts polish their political image would probably be the safest bet.
TB, I have been thinking about the Malaysian Court system, as to whether there's a legal remedy for Lynas to prevent SMSL from bringing more actions against them. It seems to me that there ought to be some level of relief available to Lynas to stop these continued actions by SMSL. Do you have any insight here?
Lynas has brought suit (successfuly) on this matter recently. I believe their case against SMSL is already made on this point, based upon similar action.
Lamentably, SMSL lacks the resources to compensate Lynas for damages even should Lynas win a large suit.
Thanks TB! It would be nice to see this nonsense go away. One might assume that the "temporary" nature of the (TOL) license would be enough to keep all parties in check. A little trust would be nice to see by both sides.
Thanks TB for the precisions. I thought waste management was the only point on which Lynas was not completely clear and safe from having to support more delay. I'm also quite happy to see that (as you said) court review and decision is quite "pro-forma"
Good news is of course that the expanded Resource estimate was done in January.
Disappointing news is that the promise that the PEA would be completed in January has slipped to "later in Q1". I find this to be unsurprising, given the recent additions to the board and the new CEO, all of whom have a lot of expertise in these evaluations. There are several new brooms in the Board Room, and this Update and the delayed PEA will be their introduction to the investors.
My take on the Update in more detail, quotes from the update in parentheses:
"The Company now estimates that the PEA will be completed and the results released prior to the end of the 1st Quarter of 2013, as GWMG's new Chief Executive Officer and his senior management team are gathering additional metallurgical testing and capital expenditure data in order to properly evaluate the options available in the context of the expanded Resource Estimate."
I expect a more complete, professional, and detailed presentation than we have seen in the past from GWM management. The delay is a minor point and predictable, but only if, indeed, we start seeing an upgrade to their results going forward.
"Less Common Metals ("LCM"): The relocation of U.K.-based LCM from its Valley Road location in Birkenhead to its new facility at Hooton Park in Ellesmere Port is now virtually complete. The new facility houses LCM's first strip casting furnace with provision for substantial expansion. All equipment that had been in operation at the Valley Road site, including the analytical laboratory, has been relocated to Hooton Park and is now fully operational."
Big news, and particularly when one remembers that GWM is a processor first of all that also owns some claims and a mine, rather than just a miner. These improvements at LCM have been very extensive, long running, and expensive. While most of the news and analysis focuses on Steenkampskraal, it is my belief that the heart of the company lies with their position at the end of the cycle rather than the beginning. Make or break will come at LCM in the end.
"LCM continues its evaluations of the new strip cast furnace capabilities with its customer base. Sampling has been undertaken for all key customers and LCM is progressing into advanced stages of commercial supply contract / technical approval stages."
This is not dissimilar to what all new processors go through, as their very choosy customers review samples and the company strives to meet quality standards. LCM is being held to exquisitely high standards by very demanding customers.
"GWMG Presentations and Marketing: GWMG management will be representing the Company in the following venues in early 2013:
â– February 1, 2, 3: GMP Securities Mining Jamboree in Hermanus, South Africa - presentation to attendees and investor meetings."
Interesting, and something we have not been seeing done by GWM management. I think this could also be a marketing effort for more than just the company's stock, but getting the word out (such as to certain titanium producers in South Afrika with interesting waste byproducts containing critical rare earths) about GWM's capabilities.
"â– February 5, 6, 7: African Mining Indaba in Cape Town, South Africa - corporate booth, investor meetings and investor/analyst tour of the Steenkampskraal mine site."
Same comment as above, though I believe this will feature a dog and pony presentation for analysts and major investors.
"â– March 3: Pro-Active Power Breakfast at PDAC in Toronto - presentation and investor meetings.â– CEO Marc LeVier's interview and presentation at the Power Breakfast will be posted to the GWMG website and to Pro-Active's Stocktube.com site following the event."
"â– April 21, 22: Pro-Edge Wire Technology Metals Summit 2013 in Toronto - presentation and investor meetings."
Canadian dog and pony show for the homefolks in Canada.
Good report TB. I'm surprised by the sell off today. I mean if you believe in these guys after all that has happened... why sell today?
My reaction to the report is like my attitude toward Malaysian politics..... It is Groundhog day. Always the same disappointments and false optimism and a new delay. GWG updates are like "Peace in the Middle East" headlines.
The GWG faithful make plenty out of LCM IMO. The real problem here is they claim it is so world class, so advanced, so critical, so key to the story... but it has never made the company a profitable year? REE prices go to the moon and back and LCM still does not make GWG profitable at any margins. I know the explanation is the drilling. But seriously, the real spending on Steen has not started. Look at the mine site pictures. This will be a smaller mine I know. But that place looks like my back yard on a Saturday after a trip to Home Depot. As my accountant wife says "Got the receipt?".
No surprise there is no "cash on hand" update. This burn should be watched very closely at this stage. I'm curious to see what all of the board shuffeling has done to that subject. I also think the generous option grant at progressively lower strikes deserves a mention: "The Company announces that it has granted to newly appointed Company director, Ron Hochstein, 400,000 options to acquire common shares of the Company. The options are exercisable into common shares of Great Western Minerals Group Ltd. at a price of $0.25 per share for a period of five years from the date of grant, January 7, 2013, and will vest in accordance with the Company's stock option plan. The Company also announces that it has granted to newly appointed Company director, Lenard Boggio, 400,000 options to acquire common shares of the Company. The options are exercisable into common shares of Great Western Minerals Group Ltd. at a price of $0.315 per share for a period of five years from the date of grant, January 14, 2013, and will vest in accordance with the Company's stock option plan"
Bottom line: Same ole GWG. More company compensation. More delays. And the same hope over and over.
I hope it is all based on the expanded promise of more production. But my concern is if we look back at last year's spend; and we agree that it currently looks like little more than my kids' swing set; then we can't feel good about the company GWG has been. Of course the next question is will the resource size increase result in the promise of increased production or will it be just another increased GWG promise? Either way the 30 year GWG ritual of asking for more capex while printing shares and options for management remains at the same steady pace. The faces change but GWG management always feels the shareholder's pain, but the option grants clearly show they never really share that pain.
Also the resource increase is based on a 1% cut-off. That is OK but with such a high Thorium count at Steen is the resource portion at lower grades worth mining? And will LCM and the customers for the feedstock buy up the increased production? Some of this is good "problems" to have if GWG gets there, but I hope the PEA will tell us more on the topics.
Molycorp has announced that it will release financial results for the fourth quarter and full year ended December 31, 2012, after the market closes on Thursday, February 28, 2013. Release of Molycorp's financial results will be followed by an investor conference call at 4:30 p.m. Eastern. Constantine Karayannopoulos, President and Chief Executive Officer, and Michael Doolan, Executive Vice President and Chief Financial Officer, will host the call.
Investors and news media representatives interested in participating in the live call from the U.S. should dial +1 (866) 831-6162 and reference passcode number 64941332. Those calling from outside the U.S. should dial +1 (617) 213-8852 and reference the same passcode as above.
"At the current market cap investors are paying for the build cost of the plants at Mt Weld and Kuantan and almost getting for free one of the world’s largest and richest rare earth deposits. Not to mention that there is little value being factored for the future earnings that are imminent. LYC is trading at less than 5x and 2x PE on FY14 and FY15. It is trading at less than 1x EV/EBITDA on FY15. Accordingly, we retain a Buy recommendation with a price target or $2.33/share."
Do you guys agree with this assessment? Thanks for the feedback.
Lynas is also sitting on the world's second largest/richest niobium deposit, plus very rich titanium/tantalum deposits (Crown Deposit).
I would expect them to start planning to exploit these metals after Duncan is built out.
I agree with the assessment, overall, though I would certainly like to know more about the sales contracts which were written about 1.5 - 2 years back. They are getting long in the tooth without fulfillment.
I suspect the recent round of institutional funding at A$.75 indicates a lot of speculation along those same lines, ung.
The current liberal government running Australia enjoys the most narrow of majorities... Should they lose control (which appears likely) in the future, the timing for a surge of M&A in Australia's resource sector could trigger...
Another factor would be early indications of a resurgence in rare earth prices, particularly the critical group present in Duncan. Should Lynas overcome the A$.75 resistance, that could be a signal.
The Chinese were sent packing when they came looking for rare earths. One would "assume" possibly foolishly, that would remain the case for anyone looking for the rare earths.
An article in The Economist on a new cheaper way to refine metals. Neodymium is included in the article, but tantalum and titanium are the most prominently mentioned in "A tantalising prospect."
The link is http://econ.st/YtgbTJ but you may have to google the above title to read.
Many, including Lynas and Great Western, that have significant investements in the separation and refinement process, might be adversely affected if this hits large commercial capability too quickly and starts gets getting licensed for others to use the process.
There is still a lot of "we hopes" in the article, and as we saw with the note that the process was originally published in 1997, its not really very new. And my bs detectors start to beep when the author talks about "industrial scale" simultaneously with a metallurgical smelting operation contained within a small house.
The article is also none-too tightly wrapped. Talking about replacing steel with titanium is pretty lame, other than the sorts of things already made from titanium. For one thing our technological culture uses approximately 10,000 times the tonnage every year of steel vs titanium. The materials which go into steel are extremely common commodities, whereas the occurance of commerically exploitable titanium is very rare.
As I recall the largest expense to produce aluminum, for instance, is electricity. Only by co-locating the smelters near extremely cheap sources like large hydroelectic dams located in remote regions can they shave their costs.
This reminds me of the quite old (but still fascinating, of course) stories of utilizing electrolysis to seperate dozens of valuable metals and minerals from sea water, with byproducts like perfectly pure fresh water and oxygen. All that was required was enough electricity to halt the moon in its orbit, and a few minor things like room temperature superconductors and cold fusion...
These sorts of topics were wild fun at the science fictions conventions of the 70's, back when we were still sending missions to the Moon and science was cool. I really miss those days.
I was just going to post the same story, jimp. It breaks no new ground, of course, but it shows where the media is looking, and that is STILL at the Malay luddites.
We are approaching the time originally projected post-first feed when we might expect news that they have produced samples to present to the waiting customers...
As for the Malay elections...
If I were not invested in Lynas, I might almost wish that the Malaysian flat-earthers and Chinese agents would win...
As it is, ANY company investing heavily in Malaysia's future must be viewed as a doubtful investment. This includes Lynas, of course, as poster child.
TB, it seems to parallel our keystone pipeline fiasco. Maybe the malays are just catching up to our wacko greenies and silly politicians here in the good ole USA. Sad thoughts indeed. Sorry all.
Yes. When XOM sold off their entire retail infrastructure in the United States, I was discussing the development with some investors. Many looked at it as "unpatriotic". I told them that, as an investor, I viewed them as being somewhat MORE likely to be a good investment after the sale...
Of course, then I ruined their whole day when I mentioned that Exxon-Mobil were idiots to keep their headquarters in the US...
About the same time Halliburton bolted for Abu Dhabi, I believe.
I think an interesting filter could be constructed just from picking resource companies (miners, oil companies, etc.) that are positioned to produce in countries which are NOT major Western nations suffering from "Kyoto disease", and who avoid the worst risks in the third world as well. This would probably exclude about 80% of the potential investments, and picking the best of the remaining crop could be an interesting exercise...
Picking bests I would first look to Canada, of course everything can change overnight but they can sell to USA, China, or Japan and do very well. As a resource country, they get it.
I would pick them over Australia, for now. Australia has a very bad case of "warmitis", and should they re-elect their current government, the capntax will wreck them.
Canada flirted with a similar route, hugely increased resource taxes, and when they eliminated the canroy's, it was looking pretty scary. I think they have been letting Australia and Europe lead (ie, test the economic mine fields the old fashioned way, by walking straight ahead with their eyes wide-shut). This was wise.
Australia has no NAFTA with their major customer (China).
Rumor has it that JPM is shorting denialium, GS is selling CDO's on AIG's non-allocated denialium, and the 'Nank has a plan to buy it all up when the excrement impacts the impeller.
SMaturin: Don't forget the re-hypothecation of the CDO's. The notional exposure of those illustrious institutions could be thousnads of times larger than it appears.
Heck, there's some evidence that even the excrement is re-hypothecated and the "prop wash" when it hits the impeller will be larger than the 'Nank expected.
Being painted into a corner of his own devising, he'll be awash in the stuff since he can't escape ... easily, and would likely attempt to escape too late, just like almost all the Fed chiefs that preceded him.
The gap between LYSCF and LYSDY was particularly large and strong at the close today. I believe this could be pointing toward short covering in Sydney over the next few days...
We are due an update from Lynas about their first run at the LAMP.
"SASKATOON, Feb. 21, 2013 /PRNewswire/ - Great Western Minerals Group Ltd. ("GWMG" or the "Company"), (TSXV: GWG) today announced that as a result of an internal investigation into the activities of Vincent Mora, who had previously provided services to the Company as Project Director and was terminated for cause, suspicions were raised about invoicing, purchasing and contracting activities. Because irregularities were found during the Company's review, GWMG filed a complaint and cooperated with the South African police to investigate the possibility of criminal activity. As a result of this investigation, police have arrested Vincent Mora on suspicion of fraud and money laundering.
GWMG, through its South African legal counsel, has been actively engaged in assisting the South African police with the criminal proceedings and is completing the Company's full assessment of the nature of the activity that took place. The Company is also conducting a review of compliance with its internal controls.
Investigation into the activities of East Rand Engineering Services ("ERES"), the contractor that was awarded the earthworks and mine refurbishment contract, led GWMG to terminate its contract with that company (see GWMG news release November 26, 2012). The Company has paid ERES approximately C$10.62 million to date out of an invoiced amount totaling approximately C$13.32 million (exclusive of VAT). The Company's quantity surveyors and engineers are assessing the completed and partially completed works and GWMG is pursuing all available options, including the commencement of civil claims, to recover any damages which may have occurred.
GWMG President and Chief Executive Officer Marc LeVier said, "GWMG will pursue every legal avenue available to recoup any losses that may have arisen through this situation. We will continue to assist the police in their investigation of the criminal acts that have violated the trust of the Company."
Mr. LeVier went on to say, "Steenkampskraal remains a great project with one of the few real opportunities to be a leader in the rare earth sector. Our plans to become a vertically integrated mine-to-market company, with unique market access, continue to guide our efforts. We have great employees, with high levels of integrity and values, with whom we will continue to build a team of excellence and the actions of a few persons should not reflect upon the rest of our team. GWMG has the ability to deliver the Steenkampskraal project and we will do so as we build a relationship of trust with our investors."
Because this matter involves an ongoing criminal investigation and civil matter, the Company and its spokespersons will not be able to provide additional information at this time."
This explains a lot. The termination of the engineering company in November - and the subsequent withholding of over $2million they had invoiced GWM - the puzzling sloth of construction - is now explained. This may also reflect upon the reasons for the shakeup in GWM's management and Board.
I expect that GWM will be seeking compensation from Mr. Mora and ERES.
What we don't know, of course, is the quality of work performed by ERES, and how this might affect the timeline and finances going forward.
I like the sunlight which is now present upon this months-long mystery, however, and this should provide a clean slate for the company to build from.
For those who have been waiting for an entry point for GWM, this could provide it.
I guess that is one view TB. As an attorney dealing with the Texas prison system, I must respectfully disagree with some of this. This announcement is suggesting a multi-million dollar fraud on the heals of a major Board change. When a fraud is on this scale it is very unlikely it is only one person. Also, the project was nearly paid out on the invoices without much performance. That does not suggest these guys were quick to see the trouble. I would have liked to hear a comment on insurance or an expectation of full recovery as well. Honestly, money is tight and timelines are important as well. This looks bad to me.
I have been very harsh on GWG for a long time. I have even said I am not comfortable trusting them. Maybe it's all the contractor, but if the old board ends up involved I will not be surprised. All the same, GWG never acts trustworthy IMO. And saying "The money is gone; we are working with the police; and we might sue" is not enough light on the subject to impress me.
Yes, it would be good to know if Mora or ERES were bonded, for instance. My experience as a project manager for large construction projects was that all contractors had to be bonded and insured.
GWM is not large enough to self-insure for this sort of loss, so yes, it would seem that they SHOULD have had insurance. Kicking those reponsible for NOT having insurance off the Board or out of Management would seem a speculative but possible motive for the major changes to Management and the Board...
It seems like a challenge for reimbursement from Mora and ERES in South Africa and noting has even been filed yet. I agree they should be bonded. And the insurance comment makes sense. But even in a best case, it will take a long time to resolve an issue of this size. I mean these guys paid out $10 million to ERES and borrowed $80 million at 8% in May. This is not a big company. If you strip out the goodwill and land claims on GWG, the $10 million is a significant percent of GWG's tangible assets. And it is a big amount of their operating capital. Also a fraud like this makes it harder to raise capital or to get the Chinese going on their part.
TB, People will read what they want to or see for themselves. I think your thoughts are clear. I get accused of giving investment advice all of the time and I think I never do it. I respect the information and opinion.
REE/Strategic Minerals Concentrator, Dec. 7,2012 378 comments
REE/Strategic Minerals for December 7, 2012...
Lynas has a new Announcement regarding the Malay court proceedings:
http://www.asx.com.au/asxpdf/20121207/pdf/42bswv9wkttdcr.pdf
So, Dec. 19 is the next hearing.
Shares were up A$.005 on the news last night downunder, so I still see support at current levels, if not a rebound.
2 weeks from now we might expect a mild boost back to $.70 or so if the courts can get their act together.
Disclosure: I am long MCP, LYSDY.PK, GWMGF.PK.
Additional disclosure: LYSDY, MCP, GWMGF, ARAFF, GDLNF and many other stocks in this sector.
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Merry Christmas and Happy New Year and happy 14th Mayan Baktun also.
http://bit.ly/VosP3P
http://bit.ly/TIongg
hearing? Thx
I doubt the opposition was ever significant. The only substantive thing they ever did was tying themselves to the national opposition party. But like all environmentalist groups they know facts don't matter. Almost all environmental court action these days is based on frivolous court delay over science. The courts, globally, fail to apply a standard of reasonableness to these claims and politically there is plenty of funding for every irrational enviro-jackass out there. The result is a litigious waste that will eventually undermine important environmental issues. Those issues will be victimized by the selfish irrational few that monopolize our courts of today. I urge all judges to recognize the importance of summary judgment. Just MO.
The amount raised could have been higher, with Lynas previously announcing that the maximum to be raised under the plan was A$50 million.
The funds from the plan, along with a much larger component raised in a fully underwritten institutional placement will be used for working capital and general corporate purposes during commissioning and ramp-up at the Lynas Advanced Materials Plant in Malaysia.
Full text of the announcement. Dec 14th we will learn what the SPP was priced... I'm guessing NOT the A$.75 the institutions paid, assuming that held up.
The SPP raised 50% of the original goal.
Is the SPP dilutive?
There is now an odd new item floating around...
Street Insider: "...Shares of rare earth miner Molycorp (NYSE: http://bit.ly/nxK0vk) flew higher on Monday on reports that Lynas Corp, a major competitor with operations in Australia and Malaysia, could lose its license. Lynas Corp. received notice from Malaysia's minister of trade that it must remove all its waste from the country or risk losing its operating license.
"Should Lynas fail to comply with this condition, the Atomic Energy Licensing Board is empowered to suspend or revoke the license, and order Lynas to immediately cease operation," said a government statement.
...
As a result, Molycorp could soon find itself in the enviable position as the only reliable source of rare earth minerals outside China..."
MCP is trading up about 20% right now.
This looks like another re-hash of old news, but some headlines just work. MSM power to move markets appears intact, despite a rich history of being wrong.
http://reut.rs/Ubil7V
http://bit.ly/Vw6OA1
http://bit.ly/T47RIO
Old news, new headlines.
MCP Molycorp appoints Vice Chairman Constantine Karayannopoulos Interim President and CEO; Mark A. Smith has left the company (11.33 +0.63) Co announced that its Board of Directors has appointed Constantine Karayannopoulos as Interim President and Chief Executive Officer and is immediately undertaking a search for a permanent President and Chief Executive Officer. He succeeds Mark A. Smith, who has left the Company. Constantine Karayannopoulos will assume all management responsibilities for Molycorp and its subsidiaries, effective immediately, and will continue to serve as a Director and the Vice Chairman of Molycorp's Board of Directors. A professional engineer, Karayannopoulos previously served as President and Chief Executive Officer of Neo Material Technologies, a position he held from 2005 until this year.
Perhaps this is the real reason the stock price has shot up, instead of the bogus Lynas articles...
However, I would also expect that we will soon learn that the promises (made by prior management, of course) of Phoenix completion this month will not meet the schedule.
2013 will be when we discover the answer to the question: Who meets the ex-China world's light REE demand?
I believe the risk to the common is <considerably!> greater. With conversion parity at 12, the reward is close to the same.
I won't waste your time here since you probably read the article as to my reasons for saying the above. I always try to balance risk and reward in our favor. I view the notes as an income item which I believe will pay off at par (with some reasonable risk to that hypothesis!) and effectively a "call option" on the common at 12 for the next 4.5 years.
I hope this isn't ramping into something serious.
http://bit.ly/ZhLiFO
Probably just noise and can't be burnishing Malaysia's image as progressive country. Former leader, Mahathir, who spearheaded Malaysia's move toward modernity, has come out on the Lynas side of things. http://bit.ly/UG6H3S
In US bux, Lynas closed in Oz at $0.617 as we slept.
There are 2 types of waste produced, one of which is not considered radioactive/dangerous (even by Malay standards) which represents the bulk of the waste (this would NOT be the type of waste covered under the requirements in the regulations).
There is then a second type of waste which IS covered by Malay standards as potentially dangerous (though in most countries it might not) in its undiluted form.
Lynas plans to produce commercial byproducts to be sold with this waste, including the #2 type, which with just mild dilution is rendered "safe" even by Malay standards.
This was all covered many months ago, when this topic came up during the various bureaucratic reviews (and re-reviews, and re-re-reviews), not to mention before the courts, etc, ad nauseum. This is the same old chestnut reissued (apparently as the basis of the "new" court action, just as it was with the other court actions) once again.
The accusations have not changed, the science has not changed, the regulations have not changed, the corporate plans have not changed, the politics have not changed and we have good reason to hope that the end result will not change.
What, unfortunately, is also likely to happen is another delay (which to be honest would ALSO be something which has not changed in dealing with the Malays).
That might shine a light on something moving about in the dark recesses with the encouragement of who ever benefits from the shut down. Hmmmmmm
CNBC and Fox business even came out and said that Lynas might lose its license when they talked about the moly pop in stock price. I would not brush off this threat so quickly.
It would also be one hell of a way to crush the stock price of lynas and buy a lot of thier stock at some point cheap, cheap, cheap. China was told they can not buy Aussy rare earth companies earlier so maybe this is part of the "end run".
Do not have any ideas or answers about this just noticed my copper colander seems to be glowing a little while thinking about this.
In my opinion this is nothing more than political theater for the Malaysian masses, it really has nothing to do with Lynas directly.
Remember, there’s an election coming up and the MPs want to look tough and take away any political advantage from the opposition party. The opposition has used Lynas to try to gain a political advantage. The MPs are trying to neutralize the opposition by taking a hardline on Lynas now with the election looming so close.
Lynas has said that they will deal with all the residue—they have even taken extra steps to deal with it beyond what's really required of them, so it’s really not the issue driving this story—it’s all about the election.
I’m hoping that the election will be called right after the New Year. There’s no advantage for the current ruling party to letting it drag on too long. The we can get this nonsense behind us once and for all.
Thanks for providing some more input to the mystery theater.
Again welcome and thanks for the comment. You should contribute more.
DG
http://seekingalpha.co...
Depending on where you look, SMSL also thinks they have an appointment before the courts for 12-19.
Could be anticlimactic (I hope) if the courts toss them out again.
Meanwhile, some odd things drifting out of GWMland...
It would appear that perhaps a shadowy new entity (linked to ex-GWM board members?) may be considering a plan to buy the North American claims (Hoida Lake, etc) presumably based upon a price pulled from the PEA plus the outlays to date by GWM (something over $20million). It is also apparent that claims that the new processing plants in SA would be completed early 2013 are slipping, and now it might be late 2013 or even 2014 before they come on line.
Existing financing requires a minimal amount of processing occur else bad things start to happen, which leads one to question what GWM plans to do?
My first thought is that they may be able to dodge that bullet by shipping some ore (assuming they can get the front end of their Chrloride line running at Steen) to a Chinese processor (perhaps their jv partner at the Ktown processing plant?) to provide the processing for a toll charge?
Meanwhile, MCP continues to bubble in the SEC pot, which process could go on for some time...
http://bit.ly/RBfM3x
With about 90% of the investment already made to build Phoenix and restart the entire new operation, it strikes me as difficult to believe that MCP would abandon the project at this late date. Statements from the various fan-groups involving much rumourmungering has been constant for the past 2 years, and whereas I do listen to wwwater when he speaks about GWM, I lend far less credence to the sniping at competing REE companies like Lynas or MCP.
"SASKATOON, Dec. 18, 2012 /PRNewswire/ - Great Western Minerals Group Ltd. ("GWMG" or the "Company"), (TSXV: GWG) today announced it has appointed Marc Le Vier to GWMG's Board of Directors. The appointment is effective immediately.
Mr. Le Vier has been President and Chief Executive Officer as well as a Director of Texas Rare Earth Resources Corp. where he oversaw the completion of a Preliminary Economic Assessment and established the strategic direction and vision for that company. Prior to that, he spent over twenty years with Newmont Mining Corporation in senior metallurgical and management positions including General Manager of the Zarafshan/Newmont joint venture and Senior Director, Metallurgical Research and Development.
Mr. Le Vier holds a Bachelor of Science in Metallurgical Engineering as well as a Master of Science degree in Metallurgical Engineering, both from Michigan Technological University in Houghton, Michigan.
His professional affiliations and certifications include membership in the Society of Mining, Metallurgy and Exploration as well as the Mining and Metallurgical Society of America."
http://bit.ly/T7wvK9
Slush with trillions of REE's
http://on.mktw.net/T8uFY1
I'm not fully ready to shower them with praise as I see a long path to production. But I would be interested in comments. I think the market is telling us Ucore belongs with the "Big 3". It has dramatically outperformed all 3 on share price direction (note it's share price almost matches Lynas and passed GWG long ago with far less shares) it has progressed, albeit at earlier stages, throughout 2012 much better than the others; and it's basket, capital structure, and margins are holding up better than other REE junior start ups as well. So what are the thoughts here mates?
I have always seen UURAF as one of the limited number of U/REE plays in the sector, along with GDLNF and perhaps ALKEF.
I agree with chihawk, their recent news has been very good and there is a strategic dimension which goes beyond direct government subsidies (still likely, of course). The DOD has been counting on MCP's Phoenix for the 7000 metric tonnes of rare earths they need every year (and much of that are the less usual critical and heavy rare earths). With MCP's floundering and their entirely predicatable missing of their recently reiterated construction/production goals, speculation waxes as to whose projects in North America will step up to the plate.
I also agree as to their overall low grade of ore in terms of REE content - but the odds that strategic considerations will outweigh production efficiency given the sector chaos have definitely improved.
Do you guys have an opinion on Northern Minerals just released JORC mine estimate?
"The company (ASX:NTU) delivered its maiden JORC reserve of 1.44 million tonnes at 0.73% total rare earth oxides (TREO) at its Browns Range project which is close to the Northern Territory-Western Australia border. That is a contained resource of (roughly) 10,000 tonnes of REE, with 89% of that comprising the heavies. The quantity of dysprosium would allow economic production of that element as a stand-alone proposition. In 2013 the plan is to increase the TREO resource to a contained 30,000 tonnes based on targets at which there have already been drill intersections reported. NTU is still pinning hopes of a 2015 start-up."
http://1.usa.gov/UXcVxK
http://seekingalpha.co...
The South Koreans are buying rare earths where they can be obtained, including North Korea, apparently.
http://bit.ly/Uef62i
http://bit.ly/UpnixL
Maybe the Indians will find it easier to import rare earth minerals from East Africa and Australia for the next several years rather than Afghanistan because of the war going on there.
"The Taliban say they oppose the Chinese investment because the concession was awarded by a government they consider illegitimate. "We are against any foreign company extracting the mineral [wealth] of Afghanistan as long as Afghanistan is under occupation," Taliban spokesman Zabihullah Mujahid said."
Only if they are in charge. They wouldn't like someone else's 10th century.
http://bit.ly/UxbnxV
http://bit.ly/VmjHxK
Two excerpts:
"Molycorp and Lynas look set to satisfy demand for light elements, with room for a third operator, such as Canada's Iamgold."
"But analysts point to Quest's Strange Lake project in Quebec, as well as projects run by Tasman Metals in Sweden, Matamec Explorations and Avalon Rare Metals in Canada and Alkane Resources in Australia, as those nearest to going in to production of heavy rare earths."
"Great Western Minerals Group corporate update"
http://prn.to/UE0Fpr
HardToLove
GWM added the new director to bring someone on board who knows enough about the PEA's objectives to pull it together. This explains his presence - the decision to look again at the resource report - his 400k options at $.22 - and of course the delay in issuing the PEA.
The delaying tactic with GQD also provides strategic cover for the delays in starting up that construction. The chloride plant construction is simply delayed, though they mention a new plan now in the hands of their contractor.
One way to look at the GWM mess is to imagine what their situation would be IF Lynas had not fallen into the Malaysian black hole - or if MCP had been managed competently. Only due to their primary competition's failures does GWM appear to have a workable plan.
I reiterate my view that GWM is seeking a buyer.
Still leaves it at depressed prices, of course...
Seems like a large reaction to small news, however. I would still call the stock a "Hold" until more is known.
Edit: here is a link to the data I have available.
http://bit.ly/TsLzSI
Let 2013 be a turning point for this sector!! It's humbling that the markets were up across the board for 2012, but not for this sector and my portfolio ;(
Thanks for all the great discussions.
I mostly lurk here, but would like to thank you all for helping my education. TB, thanks for all the work to keep this blog going.
Happy New Year All.
YTD performance.....
UURAF +39.27%
REE +4.62%
ALKEF -25.05%
AVL -42.85%
HREEF -43.32%
GWMGF -43.53%
LYSCF -45.18%
MCP -60.63%
“After this, Lynas will not be our focus anymore. But to destroy the threat, we must look hard to prevent further corruption and abuse of power,” Himpunan Hijau chairman Wong Tack told The Malaysian Insider yesterday.
“We will work hard to bring down the regime ... We will bring down the government,” Wong declared.
He admitted that it would be impossible for the group to dismantle the Lynas Advanced Materials Plant (LAMP) which had been given the green light to operate after a temporary operating licence (TOL) was granted.
“We were never against Lynas coming, we were never against rare earth, we just don’t want them to go through a short cut,” Wong asserted.
“When they are 100 per cent ready, 100 per cent safe, and comply with the regulations 100 per cent, they can go on. Why does Malaysia have to take all the risk?”
Despite shifting its focus on other environmental threats in Malaysia, Wong stressed that Himpunan Hijau will not be sitting idly with regards to Lynas.
http://bit.ly/YLeeS3
TB thanks for keeping this blog going, I love your insight and contrarian thought process which has helped keep me out of some bad choices. Thank you and I really mean it when I say I appreciate everything you do here.
OK, its 2013 so now we see whether the theory that much of the recent selloff was to capture tax losses for 2012 in a beaten-down sector...
We might see some gains tomorrow if that is true...
Anyway:
NATUF up 18.52%
UAMY up 17.05%
GDLNF up 13.9%
MHREF up 10.91%
QRM up 10.48%
MCP up 10.06%
GWMGF up 9.89%
HUDRF up 8.65%
AVL up 8.09%
LYSCF up 7.57%
GOLDF up 5.45%
SAND up 4.83%
ARAFF up 4.71%
URRE up 4.06%
TAS up 2.54%
EMMCF dead in the water at $.03
TIE down .06%
QREDF down 3.53%
IAALD down 7.01%
http://bit.ly/VEeEbK
To TB and all, I wish a healthy and wealthy 2013!
HardToLove
Thanks TB and to all contributors.
mj
http://seekingalpha.co...
If the company can communicate they have a workable corporate structure after all with access to the more critical heavy rare earths for processing, then I'll concur with the outlook.
If this other author is right about them, then I would think that their existing vertical integration won't work well, possibly meaning that the mine needs to be a standalone operation separate from the global operations.
http://seekingalpha.co...
We'll see one way or another this year.
And this vertical integration question seems destine to remain an issue going forward for some time. All of the companies seem to desire vertical integration at some level. Moly and GW want something fairly complete. Lynas has JV plans in this direction. There is a debate about tolling in the future which would take things in a less vertical direction versus the chorus that says concentrate is not and will not be marketable in the future.
The manufacturing view point seems passionate about vertical integration. They are aided by some companies seeking government assistance. It seems reasonable to believe an integrated company is in a better position to receive government help. And since China is the main producer now in a very state structured way some feel a similar structured model is needed to fill all of the voids in the current Western production model. Simply put, creating one company (and possibly subsidizing them) looks easier to do for the certainty of supply than hoping the full mining and manufacturing model will return to the west with multiple start-ups.
By contrast, some favor horizontal integration. Most mining diversifies into a multiple suite of mining products favoring economy of scale due to the large capital investment costs rather than increasing margins through more sophisticated operations.
But whether the start up hopes to use tolling for processing and seeks to purely mine; hopes to end at processing with supply contracts; hopes to JV with manufactures; or hopes to do it all in one company, the issue will remain central to the sector going forward.
My own view is that horizontal integration is favored if a real price for REE's can be established. If China and smuggling control the prices too much then a vertical and subsidized model seems best prepared for the reliability of supply. If reliable supply creates new demand and a viable and complete Western market, the miners and tollers have a good case IMO.
Currently, I favor Lynas' JV efforts. Admittedly, I like the capitalist side to this approach. Lynas and Siemens get to do the parts they do best in a private JV. This rewards Lynas for being early Western supply and avoids a start-up needing to be strong in multiple businesses before making money. Time will tell which method is best. But history offers few examples of fully integrated mining to final product models.
The increased margins have always been there and many have tried to create such a company. I see few compelling reasons why the allure of the paperwork and pencil pushers will translate to rare earths where others failed before.
About ninety percent of all acquisitions eventually are considered unsuccessful. There are many practical reasons for this (corporate culture, complexities, logistics, communication, ect.). We can debate that number and the definition of failure, but as investors these reasons should be considered when evaluating any acquisition or integration. My own view is acquisition is it works best when two successful companies combine and even there challenges remain.
http://bit.ly/XpoTGr
http://bit.ly/XcH3HD
These gains could accelerate if this triggers a short term short squeeze in Sydney.
Hot Copper is reporting NC out doing interviews...
If they manage to sell the by-products with long term contracts like the rare earths, this would be a lift to the stock which may have been missed by some critics.
(Slide 20)
Obviously, the TOL politics changed the timeline. But now there appears measurable progress toward production. I think Lynas continues to de-risk. I am not adding leverage but I do think the share price is way behind the current progress of the company story.
The rise today is good and makes sense to me. Compared to the Moly rise on the "everybody wants to takeover a loser" news and the GW "Still uncertain" update that jumped that stock and I would say Lynas has widened it's lead over the others while allowing a better entry point. If Lynas keeps this near term timeline a close eye should be kept on the REE prices IMO.
This morning trading starts with A$.715 close on the ASX, up 14.4%. I would expect the American markets to match this ($.73-.75).
I had hoped they would shoot for more like $150mm, and that the $200mm+ goal displayed something of a lack of confidence. Its necessary to keep the timing in mind, I suppose. The Malaysians were creating delays again in the courts, and it was uncertain just when Lynas could operate again. The $200mm struck me as designed to compensate for something of a worst case scenario, ie, that the LAMP would be held up until the Malay elections.
Are you sure you don't want to start writing the Lynas press releases? :-)
Maybe I have been a Lynas mushroom and dined on Lynas humus, fish fertilizer and Ratatouille for too long. But even with your good explanation, I do smell some fish. Hope it's just old scars and nothing more. I'm happy with the move and I'm still holding more than ever. But today seems like the first time in a while where I can ask the question and I hope the company will address the issue in a new press release soon. Just imagine if they don't need the money and do a buy back after cash flow at $1.50 AUD.
http://bloom.bg/UDqMek
We normally hew to a pretty conservative path but every now and then a macro event is just so compelling we're willing to give it time. And with these 2, time and time and time and time!
HardToLove
January 8, 2013 - Saskatoon, Canada: Great Western Minerals Group Ltd. ("GWMG" or the "Company", TSX:V – GWG) today announced it has appointed Ron Hochstein to GWMG's Board of Directors. The appointment is effective immediately.
Mr. Hochstein is currently President, Chief Executive Officer and a Director of Denison Mines Corp. ("Denison"), positions he has held since 2009. For three years prior he had been Denison's President and Chief Operating Officer. Within his CEO role, Mr. Hochstein successfully negotiated a $100 Million financing and restructured Denison following the sale of its U.S. assets. Previously, his senior management positions were with International Uranium Corporation, H.A. Simons Ltd. Mining Group, Noranda Inc. and North Canadian Oils Ltd. His responsibilities included project development, exploration activities, public company reporting, regulatory negotiations and mine operations management. In addition to his current duties with Denison, Mr. Hochstein is President of Uranium Participation Corporation, an investment holding company which invests substantially all of its assets in uranium.
http://bit.ly/VNPh7X
I would expect the PEA announcement to follow shortly...
This sort of thing happens, particularly in small companies with high pressures in the board room (just look at the similar story playing out in GWM recently).
Note that the new board members at TRER are dominated by Gorski plus a couple of academics (probably intended to compensate for the loss of the departing LeVier's strong metallurgical credentials).
My view is that TRER's loss is GWM's clear gain.
LeVier on the GWM board signaled a potential sale to me...
LeVier as CEO sends a very different signal. I now anticipate them going forward with their plans in South Afrika.
They did state they would not ask for another extension.
No guarantees tho.
Perhaps I'm wrong but I can't think of any other reason to have done a one month extension of the warrants.
Assuming this is why they also think it will stay above that level at least for a bit. Why use a warrant if the stock is or soon will be cheaper? I've never seen a similar situation so if anybody wants to educate me on why I might be wrong feel free.
While troubles with the processing may send the stock down. I'm thinking they expect, if all goes well, GMWGF will not be this low again.
Ah Thanks.
I don't believe there are any coincidences involved.
http://preview.tinyurl...
It looks like the PEA should be shortly then there will be real info to chew on.
It should be interesting to see where he takes the company...
New CEO Marc LeVier
Joined as a director in Dec. Worked on the PEA.
See the previous 10 or so posts for more info on him.
With all that debt coming due... where will it bottom?
The warning that revenues would only be around $1billion in 2013 seems very anticlimactic to me. JPM's downgrade is belated and (as always) probably self-serving.
The Voldemort administration just launched a new "Manhatten Project" looking at what to do about critical raw material shortages in strategic materials, with an initial $120mm of the taxpayer's money to throw at such things as modeling nuclear power scenarios and what to do about the rare earth situation...
China just smiled, cut their export quotas another 27% from last year, and told them "...not our problem".
I bailed on MCP common when it was $13, since I thought $10 was more like a real value at the time (of course, Smith was still CEO back then and issuing unbelievable promises). I am still long a very few MCP+A shares.
Yes, you are right, as the 11/16/12 MCP low was $5.75; a six month chart looks like a classic 1-2-3 bottom setting up.
The notes sound viable. JLS you share thoughtful positions!
I am behind on my reading and well-wishing:
Wishing everyone all good things in 2013.
I agree and appreciate your frank position on Moly and their preferred. Moly is shelving Phase 2 because of weak market AND a poor financing environment. Moly was long ago suppose to be fully financed through Phase 2. From my research on those comments I think they are more than a little short of Phase 2 financing. This means they are burning far more in some or several areas of the business than we realize. I think this was a good "kitchen sink" disclosure by the new CEO.
But now the nest is opening up IMO.
-Week demand (that Xsorbix does little or nothing to solve).
-Financing needed for phase two that is not there and would need a better environment to make happen.
-A cloudy business model that is using up more funds than expected.
-An SEC investigation after one CEO departs and now a kitchen sink disclosure.
Could be more to come. I do not think the stock or the preferred are safe in Moly.
Much of the projected over-supply was expected to come from a 40+kmt capacity Phoenix. Cut that in half, and at least 20kmt per year leaves the market place, and that will support prices. This makes the MCP numbers look better, and they can always take up Phase 2 at a future time when the business case supports it (presumably the world economy WILL recover and resume growing at some future date).
Lynas is close to finishing its own Phase 2 buildout, of course, but perhaps they, too, will elect to conserve operating resources and slow down that doubling of their production as well. NC's recent prediction of "full capacity" production within less than 3 months seems much more likely if that does NOT include a fully completed and operating Phase 2... But we will see how that turns out.
Should MCP stick with a 20kmt business plan, while Lynas hits something between 10 and 20kmt, the supply and demand swings back into something resembling short-medium term balance.
Without the anticipated drain from operating losses at an over-built Mountain Pass, MCP (particularly their Neo operation) becomes potentially profitable again. Cutting their production goals by 50% brings MCP back to a point where virtually all of its products are contracted already (something which was never true before, even with the dodge of allocating over 28% of their production to Xsorbix sales which probably would never have been real).
I don't see it this way. Revenue projects were for phase 2 production. So even though the La and Ce were not contracted they were in the revenue and margins.
Shelving Phase 2 should effect your entire company analysis or you are not really doing one. Const. mentioned they had the equipment but that is a small part of the cost here. It would take Moly a long time to start up phase 2. So what we have is a Company at Phase 1 (that will not be up to speed till mid-2013 now). This is a sizable construction/ start-up delay for phase 1 at this last stage. Note also, the new technology being applied to Phase1. A delay like this raises serious questions about those technologies and the commissioning process in my opinion. And Const. talking about bottleneck concerns is responsible talk, but should be viewed with caution by investors.
Moly now competes with a producing Lynas. This will make Moly off take contracts much harder. We cannot know the current state of Moly contracts. To simply assume all prior contracts hold when production is cut in half is strange to me. Volume pricing, production costs, reliability of supply, amount of supply, quality of supply, timing and even ratios with new technology should be questioned in my opinion. Const. did the right thing by coming clean and kitchen sinking this. But this is a much blacker box with much greater risk than before. And with the debt this company already has I cannot appreciate the risk here.
But the problem is even more severe if we look at the Mountain Pass ore. These guys are very light. The CREE prices they need are on half the product (hopefully). And that small some can easily be eaten up by a single contract. Cutting production in half does not solve the LREE oversupply. The ratios remain the same (hopefully). The only difference is a supplier needing CREE's can only get a small sum from Moly. Lynas gets much more per tonne; has it ready now; and has the potential of Duncan in the future.
The Ce and La may even be a wash at current production costs. It seems obvious those cost estimates are going up since they are admitting (by omission) that they have been using some Phase 2 money to run things already. If the new technology works well then the CREE's could save them. But nothing in the rear view mirror offers assurance with Moly and the technology is delayed and unproven. And if I did not have confidence in Const., I'd say his bottleneck comments hint at engineering concerns as well.
Bottom line: Anytime a miner says they will cut the plan in half and delay six months on the eve of when they are suppose to reach their full run rate, a major reassessment is needed in my opinion. I don't know what happens here, but if this were coal or timber I'd say they go to zero. Being REE's I don't know. Good luck to all but I would use the weekend on this thing.
Lynas doing the majority of their financing with equity has created a ton of outstanding shares. Everybody hates it because it takes a while to rotate through, so they can stay along the bottom longer than investors/traders like but it was definitely the better long-term business decision.
Just my opinion. I don't own either one right now, wish I had enough powder to own some LYSDY though.
"Shelving Phase 2 should effect your entire company analysis or you are not really doing one."
Correct. I was not doing one. Really. But you seem intent on one, so let's wade through. I believe we are in agreement on many points anyway:
"Const. mentioned they had the equipment but that is a small part of the cost here. It would take Moly a long time to start up phase 2."
In my opinion MCP should put a hold on Phase 2 until they have contracts in hand (real vs Xsorbix hopium). They appear to have about 20kmt/year in contracts, which means that they might be able to meet those levels with Phase 1 Phoenix later this year, though I would agree that they will be limping along at something between 5kmt and 10kmt between now and then (and this could be a kind estimate).
It has been a long time since we have seen a good update from either Lynas or MCP about their contracts, many of which may include performance clauses which have lapsed due to all the delays. This is news to watch for.
"So what we have is a Company at Phase 1 (that will not be up to speed till mid-2013 now). This is a sizable construction/ start-up delay for phase 1 at this last stage."
Obviously, as you and I have both predicted would probably occur. Mid-2013 is realistic, if not even a little kind. The results of their ongoing lawsuit against their contractor may reveal some details as time goes on.
"Note also, the new technology being applied to Phase1. A delay like this raises serious questions about those technologies and the commissioning process in my opinion. And Const. talking about bottleneck concerns is responsible talk, but should be viewed with caution by investors."
The word from MCP is still a lot of vague reports without details. MCP's metallurgical goals were, indeed, ambitious, and I suspect some of the delays could represent problems with new proccesses. Presumably the construction problems, delays and cost overruns are involved as well, but we have only a very vague announcement to go by. If there were no bottlenecks Smith would still be running the show and Phoenix would be in production at 20kmt levels now, with short term prospects for 40kmt.
Lynas' technological goals have been much more modest, focusing on just 2 discrete rare earth products plus didymium. I still hope that this will mean that they will have limited problems meeting customer requirrements, but again prudence would require accepting the likelihood that they, too, may experience teething issues with a new plant.
"Moly now competes with a producing Lynas. This will make Moly off take contracts much harder. We cannot know the current state of Moly contracts. To simply assume all prior contracts hold when production is cut in half is strange to me."
As I indicated above, a review of both company's existing contracts is necessary. Perhaps they will both issue an update soon. MCP was claiming a high percentage of nameplate under contract, but they cheated (as I indicated earlier) by including their own Xsorbix division as taking over a quarter of the whole. Dropping the estimate to just half what was claimed seems reasonable, but yes, it would be great to hear details from them.
As for a "producing LAMP", this remains to be seen, and at what levels, but I too am hopeful.
When looking at the likely impact of delays and failure to deliver upon sales contracts, it would be logical to look at the dates involved for both companies in the comparison. Lynas is now running about 17 months behind schedule, whereas MCP is now looking to run about 8-12 months behind schedule. Not knowing the details of any of these contracts, this is all just speculation, but if any company has already run into contract deadline difficulties it would seem more likely to be Lynas, although of course their current likelihood to start delivering new product undeniably looks much better than MCP's.
"Volume pricing, production costs, reliability of supply, amount of supply, quality of supply, timing and even ratios with new technology should be questioned in my opinion. Const. did the right thing by coming clean and kitchen sinking this. But this is a much blacker box with much greater risk than before. And with the debt this company already has I cannot appreciate the risk here.
But the problem is even more severe if we look at the Mountain Pass ore. These guys are very light. The CREE prices they need are on half the product (hopefully). And that small some can easily be eaten up by a single contract. Cutting production in half does not solve the LREE oversupply."
Adding 60+KMT to the world markets every year was a larger problem than adding 40kmt is what I said. No one indicated that cutting back Phoenix production was a "solution". It brings the plans at Mountain Pass from the absurd into something like reality, and puts a tourniquet on MCP's bleeding. Now Lynas and MCP numbers are at least roughly comparable to a reasonable level of future demand ex-China.
"The ratios remain the same (hopefully). The only difference is a supplier needing CREE's can only get a small sum from Moly. Lynas gets much more per tonne; has it ready now; and has the potential of Duncan in the future. "
Actually, the only way any customer gets CREEs from Lynas later this year will be from some form of tolling agreement through a third party (this has been speculated upon here and elsewhere, but if there is a solid plan in place, I have not seen the announcement from Lynas). MCP claims to have that technology, but its questionable, as we discussed earlier, since they have not revealed either the details of the metallurgy or the source for the ore. Lynas will be seeking that capability when it develops Duncan, agreed, but for now that lies somewhere years downstream. Lynas will be stockpiling the byproducts containing the CREEs, it seems, but its real early to check that box on the reliability survey.
MCP has never revealed details of its precise plans in those areas, Chi, and there are many who have questioned those points, including both of us here on this blog in the past. We still don't know, hence the rampant speculation.
"The Ce and La may even be a wash at current production costs."
I would like to see an update from both MCP and Lynas as to their real production costs once they get up and running. NC has gradually increased his rough estimates, true, but even so it would be good to have real world numbers (which we might not see until next year, really). This is one reason why I mentioned that some critics might have missed the added sales generated by the synthetic gypsum and other byproducts mentioned recently by Lynas. Time will tell, though.
"It seems obvious those cost estimates are going up since they are admitting (by omission) that they have been using some Phase 2 money to run things already."
As I recall, MCP's cost estimates (which I rained all over at the time as unrealistic) were very low, a fraction of those from Lynas. At this time I would consider both numbers to be interesting fiction until we know a lot more and the companies actually operate their new plants long enough to generate legible numbers.
"If the new technology works well then the CREE's could save them. But nothing in the rear view mirror offers assurance with Moly and the technology is delayed and unproven. And if I did not have confidence in Const., I'd say his bottleneck comments hint at engineering concerns as well."
I believe its possible to assume problems in all the various areas we've mentioned, but quantifying them and laying them out in some sort of useable timetable is far beyond the information available to us. This was one reason I couched my earlier comments with limited conclusions directed more toward how this might impact the entire sector rather than as a due diligence effort focused solely upon MCP.
"Lynas doing the majority of their financing with equity has created a ton of outstanding shares. Everybody hates it because it takes a while to rotate through, so they can stay along the bottom longer than investors/traders like but it was definitely the better long-term business decision."
Lynas has $212mm long term debt, wheras MCP has $193mm. Equity-based funding of various kinds have been used by both companies, though so far Lynas has not done things like notes convertible into common stock.
"Just my opinion. I don't own either one right now, wish I had enough powder to own some LYSDY though".
Chi, I didn't know that you exited Lynas completely. I hope you didn't take too bad a beating.
Thanks for the contributions, as always.
P.s. you mixed up mine and chi's post a bit. He never stated he is out of LYSDY, that was me, and the only reason was to take my very short term profits over to axpw, I wish I had more cash to spread around b/c I would still own LYSDY.
My apologies, Chi, my fault. Everyone please take note.
As for Lynas and me... I'm fully in and of course I have taken a beating. Anyone in rare earths over the last year and half probably has taken a beating. There will be some that associate that with credibility on blogs. I don't. I find many that gloat are neither honest nor content based in posts. I hope we are all judged on content mostly. And everyone has my sympathy if they lost in REE stocks in recent months or years. Even in the stocks I don't like I feel the same. To paraphrase: Love the playa, not the stock.
Anyhow, on content I consider the above a good read on all sides.
Molycorp: Underdog or Just a Dog?
http://aol.it/W3uLQd
The Next Oil?: Rare Earth Metals
http://bit.ly/13vjKgK
also,
Chris Berry on REE prices: (PDF)
http://bit.ly/W0axaJ
Only 10,000 shares traded by 11:30
Great Western Minerals Group appoints mining industry accounting professional to Board
http://yhoo.it/W3InLl;_ylt=AjZ7GQrvcsbqby6n...
My read is that everyone is waiting for the warrants to expire tomorrow, plus the PEA to be released.
http://bit.ly/Y5Ccw0
I discount these rumors.
This could be a good point for a belated exit for those who have waited this long, particularly in the common stock.
Caveat emptor -- if you want to buy place limit day orders. I have begun buying between 890 and 912, and not in the size I'd like...
http://1.usa.gov/10wUzeV
http://preview.tinyurl...
http://mwne.ws/11xOtKH
http://bit.ly/SaE1oj
Lynas story is about 3/4 of the way through the broadcast and include China quotas.
Also tonight, this Nick Curtis interview has lit up the Hot Copper bulletin board. Hasn't lit up the LYC price in Oz, though. "Lynas looks to lock in cash flow FY14" http://bit.ly/Xuqbd8
http://bit.ly/10z1cfT
Also an interview with the new CEO http://bit.ly/Xt2geH
MCP news. This was expected...
Whiplash in common shares in the premarket is over 13% and rising...
Moly was supposedly fully funded through Phase two with considerable cash to spare as late as the start of Q4 of 2012 right?
So now they say they will shelve half of the production (Phase 2) AND raise $300 million? I realize there is a CEO change and an SEC investigation so we knew we didn't have the full story before. But we are looking at a $180 million shortfall that may be widening due to the outlook warning today. The stock is cheap, but not without reason. Honestly, this is way too grim for me. I don't know anything more than the next guy, but I see the stock going to zero. The bleed is too large for me. Just MO.
The recent announcements ex-Smith pointed toward this development.
Most of the cost of Phase 2's buildout has already been paid, but they have wisely determined that they had no market for the extra 22kmt per year (never did, barring huge orders for Xsorbix, which would be surprising), and have lowered their sights by that amount.
What we have yet to hear are any details on the remaining contracts. Given the ex-China Neo capacity which will presumably be added to the roughly 16-17kmt (ignoring Xsorbix), it seems likely they have sufficient customers to take what they can make with Phase 1 alone.
I view this new round of funding as prudent. There is little doubt that it would have been much better had prior management been competent and avoided overextending themselves building too much capacity at Mount Weld. The company's shares are pricing below book... But it is yet a VERY risky investment, particularly non-dividend paying common stock.
Oy.
There's an interesting comment by "Inscrutable" on the ProEdge site regarding the Senior Note offering that made me laugh:
http://bit.ly/11RXgam
I agree with your points. But I have to say with revenues in doubt and the pace of the bleed I do not see any Moly stock as safe. I know several here have the preferred. It does pay a great dividend. But it trades like it is not safe. And I can't see the research to suggest it is safe. And the bleed can kill the dividend and a restructure could wipe out the preferred as well. OG, put the numbers in very plain English. They tell a clear story in my opinion.
The offering also seems doubtful to me too. They may get a Lynas in December type result. That was bad, but this would be far worse. They need every bit of what they are asking. This can severely depress the stock. And the preferred will be hit as well. It is a mandatory conversion so I expect them to continue to trade in a similar direction.
Lynas quarterly CC schedule. Stock is currently trading down 3% downunder...
MCP data.
Lynas can't really move much right now I think. They simply mismanaged the Malaysian politics. By failing to control the dialogue they left investors with the impression that the ruling party could lose and that the opposition party would do SMSL's bidding. I disagree with both of those concerns but investor fear controls. That fear is also heightened by the Malaysian legislature and courts apparently "moving the goal posts" throughout their year and a half of indecision and delay.
I think the dumbest comments I read these days come from the common Stockhouse view that GWG has somehow already managed their political situation in South Africa by complying with mandatory BEE requirements. My honest view is South Africa is a mess and politics is one of several reasons why the Chinese are doing nothing for Steen.
I'm done with political correctness on blogs. I don't want anyone to lose money. But I never trusted Moly or GWG. I do think Moly's stock goes to zero and GWG has no future either. It's not about blog socializing, it's research. Lynas looks like the only real company in the space. That does make them a good long term investment in my opinion. But this is going to take some time to move up significantly the way I see it.
Main products include:
Neodymium iron boron and samarium cobalt alloys for the permanent magnet industry
Other rare earth alloys, including magneto-optic and magnetostrictive materials, hydrogen storage systems and master alloys
High purity rare earth metals
Sputtering targets
Ultra high purity indium
Our extensive technical expertise and competitive philosophy make LCM the ideal supplier for a vast range of complex alloys and other specialised metal products.
The Steens site is only for supplying LCM with inhouse feedstock for their processing requirements
GWMG is not just a miner and processor for producing LREE oxides as Lynas is going to be selling at very low margins, they are going to be lucky to make a profit or break even.
I accept the difference of opinion. I am well aware of all of the facts you mention AND how long GWG has been producing these products and pursuing their vertical integration. I also see they have failed to have a profitable year in the last thirty-four years. Engdahl was also honest that the profitable year will not come until Steen is providing feedstock. Their progress is minimal in 2012 and 2011 in my opinion. I suppose we can debate some of this but clearly the goals of most of their presentations during that time remain unfulfilled.
We also have considerable speculation to suggest they will need more capital. They already have a large share count when measured against tangible book (especially if the mining assets are properly valued); they have a large compensation package for shares in the fifty cent area and they have $80 million in convertibles at 8% already.
So this is a company that has had many ideas over the years; currently appears in transition and under funded; and talks a lot and executes as much or less than several similar REE stocks. That seems like fair analysis in view of their recent history and balance sheet. Might the Chinese come through for them and they make money soon? Maybe. Honestly, I think they fail, but I don't own them. Good luck to them either way.
Lynas- 1.7 bil shares
GWG- 418mil shares
GWG also has approx 50mil on hand with a high grade deposit that so far has atleast a 14year mine life with the latest NI. They also do not need to depend on spot prices as it will feed LCM (which is expanding)
Chihawk is a well documented GWG basher that just can't let it go.. tunnel vision you might say.
Mike
I freely admit I do doubt GWG. I think they have "mined the street" for decades and I think they eventually go to zero in a restructuring. Right or wrong, I think some of our differing view comes from my prior experience as an investor in miners. When I look at the status of the two companies and the distance from free cash flow and the financing terms I see the same numbers as you and reach the opposite conclusion. Lynas has too many shares but I think they make it and will be able to address the problem with near term profitability.
Time will tell as always, but this is investing. My view is Lynas is surviving in a field with a future and with big long term advantages over other non-Chinese competitors (cash flow, deposit, first mover, ect.). GWG appears to have financing issues and a clock ticking. Will LCM save them? Maybe. But, I do not think they are moving fast enough and I think the story is very hyped for something with no near term profitability scenario and little built at Steen to support it.
I think the Chinese are baulking because they realize the cost or the thorium at Steen is an issue in processing in South Africa that they have never really had to address previously in China. That is just my honest opinion.
I respect that the SH gang disagrees, but this is not a popularity contest. I read the blog but have not seen sufficient content to change my mind. I think this can be a respectful debate if it remains focused on content. I see no reason to give an insincere view to comfort emotions. That just does not serve readers IMO.
http://bit.ly/10WXo9x
http://1.usa.gov/V5qJbF
Welcome aboard.
http://bit.ly/Uv7r0i
Even if this man is a member of a green think-tank in Germany and paid by SMSL, this could... again... hurt a little bit the share price on monday and maybe it's a bad news just before the judicial review on 01/29
There is no "if", the article indicates that this is, indeed, a hireling of SMSL talking, and referencing no new facts nor providing any new insight into, well, anything.
There is a loud worldwide minority which has a kneejerk reaction to the word "radioactive". Next week they will find one of these that hails from the UK, the US, or perhaps claims kinship with ancient aliens.
There is a reason why the LAMP (unlike, say, the Steenkampskraal operation of GWM) does not require a high level of nuclear permitting allowing them to process and store truly radioactive materials. The ore is simply not very rich in radioactive elements.
Looking at GWM, GDLNF, or UURAF, for instance, one finds that the primary ore is high in radioactive values and requires much more attention to the processing of the byproducts and waste.
Even so, it is necessary to parse the Lynas topic carefully, which has been done here multiple times in the past.
As for still another Malaysian court review, these have become quite pro-forma. The preponderance of the official and regulatory data favors the continued operating of the LAMP, and so does even the keystone kop activities of the Malay bureaucrats and courts.
Of course, none of us knows what the Malay system will do from day to day, but the best guess would be that this will be another non-event and more likely to support the share price slightly.
Another cycle of delays while the courts polish their political image would probably be the safest bet.
Lamentably, SMSL lacks the resources to compensate Lynas for damages even should Lynas win a large suit.
The court dismissed the case. This was posted after the close down under, so we could see the results here today.
I think we knew this already? Unsure.
http://prn.to/UxaB3y
HardToLove
http://bit.ly/ViEZvR
the tree and apple and all that.
Update from GWM.
Good news is of course that the expanded Resource estimate was done in January.
Disappointing news is that the promise that the PEA would be completed in January has slipped to "later in Q1". I find this to be unsurprising, given the recent additions to the board and the new CEO, all of whom have a lot of expertise in these evaluations. There are several new brooms in the Board Room, and this Update and the delayed PEA will be their introduction to the investors.
My take on the Update in more detail, quotes from the update in parentheses:
"The Company now estimates that the PEA will be completed and the results released prior to the end of the 1st Quarter of 2013, as GWMG's new Chief Executive Officer and his senior management team are gathering additional metallurgical testing and capital expenditure data in order to properly evaluate the options available in the context of the expanded Resource Estimate."
I expect a more complete, professional, and detailed presentation than we have seen in the past from GWM management. The delay is a minor point and predictable, but only if, indeed, we start seeing an upgrade to their results going forward.
"Less Common Metals ("LCM"): The relocation of U.K.-based LCM from its Valley Road location in Birkenhead to its new facility at Hooton Park in Ellesmere Port is now virtually complete. The new facility houses LCM's first strip casting furnace with provision for substantial expansion. All equipment that had been in operation at the Valley Road site, including the analytical laboratory, has been relocated to Hooton Park and is now fully operational."
Big news, and particularly when one remembers that GWM is a processor first of all that also owns some claims and a mine, rather than just a miner. These improvements at LCM have been very extensive, long running, and expensive. While most of the news and analysis focuses on Steenkampskraal, it is my belief that the heart of the company lies with their position at the end of the cycle rather than the beginning. Make or break will come at LCM in the end.
"LCM continues its evaluations of the new strip cast furnace capabilities with its customer base. Sampling has been undertaken for all key customers and LCM is progressing into advanced stages of commercial supply contract / technical approval stages."
This is not dissimilar to what all new processors go through, as their very choosy customers review samples and the company strives to meet quality standards. LCM is being held to exquisitely high standards by very demanding customers.
"GWMG Presentations and Marketing: GWMG management will be representing the Company in the following venues in early 2013:
â– February 1, 2, 3: GMP Securities Mining Jamboree in Hermanus, South Africa - presentation to attendees and investor meetings."
Interesting, and something we have not been seeing done by GWM management. I think this could also be a marketing effort for more than just the company's stock, but getting the word out (such as to certain titanium producers in South Afrika with interesting waste byproducts containing critical rare earths) about GWM's capabilities.
"â– February 5, 6, 7: African Mining Indaba in Cape Town, South Africa - corporate booth, investor meetings and investor/analyst tour of the Steenkampskraal mine site."
Same comment as above, though I believe this will feature a dog and pony presentation for analysts and major investors.
"â– March 3: Pro-Active Power Breakfast at PDAC in Toronto - presentation and investor meetings.â– CEO Marc LeVier's interview and presentation at the Power Breakfast will be posted to the GWMG website and to Pro-Active's Stocktube.com site following the event."
"â– April 21, 22: Pro-Edge Wire Technology Metals Summit 2013 in Toronto - presentation and investor meetings."
Canadian dog and pony show for the homefolks in Canada.
Excellent and fair comment as usual.
I'm surprised by the sell off today. I mean if you believe in these guys after all that has happened... why sell today?
My reaction to the report is like my attitude toward Malaysian politics..... It is Groundhog day. Always the same disappointments and false optimism and a new delay. GWG updates are like "Peace in the Middle East" headlines.
The GWG faithful make plenty out of LCM IMO. The real problem here is they claim it is so world class, so advanced, so critical, so key to the story... but it has never made the company a profitable year? REE prices go to the moon and back and LCM still does not make GWG profitable at any margins. I know the explanation is the drilling. But seriously, the real spending on Steen has not started. Look at the mine site pictures. This will be a smaller mine I know. But that place looks like my back yard on a Saturday after a trip to Home Depot. As my accountant wife says "Got the receipt?".
No surprise there is no "cash on hand" update. This burn should be watched very closely at this stage. I'm curious to see what all of the board shuffeling has done to that subject. I also think the generous option grant at progressively lower strikes deserves a mention:
"The Company announces that it has granted to newly appointed Company director, Ron Hochstein, 400,000 options to acquire common shares of the Company. The options are exercisable into common shares of Great Western Minerals Group Ltd. at a price of $0.25 per share for a period of five years from the date of grant, January 7, 2013, and will vest in accordance with the Company's stock option plan. The Company also announces that it has granted to newly appointed Company director, Lenard Boggio, 400,000 options to acquire common shares of the Company. The options are exercisable into common shares of Great Western Minerals Group Ltd. at a price of $0.315 per share for a period of five years from the date of grant, January 14, 2013, and will vest in accordance with the Company's stock option plan"
Bottom line: Same ole GWG. More company compensation. More delays. And the same hope over and over.
Management is revisiting their Capex requirements. Why?
Expanded resource.....think about it.
It won't look like your backyard swing set any longer.......;-)
Also the resource increase is based on a 1% cut-off. That is OK but with such a high Thorium count at Steen is the resource portion at lower grades worth mining? And will LCM and the customers for the feedstock buy up the increased production? Some of this is good "problems" to have if GWG gets there, but I hope the PEA will tell us more on the topics.
Investors and news media representatives interested in participating in the live call from the U.S. should dial +1 (866) 831-6162 and reference passcode number 64941332. Those calling from outside the U.S. should dial +1 (617) 213-8852 and reference the same passcode as above.
Should be very interesting.
Lynas' Financial Quarterlies.
http://bit.ly/VwxaZ5
Lynas Quarterly Report.
http://on.barrons.com/...
also, probably old news to everyone here: Rare Earth article that features Molycorp on Scientific America:
http://bit.ly/Xlo3oi
http://bit.ly/11YCH7O
http://bit.ly/XpoY7k
http://bit.ly/WH42Lp
HardToLove
cost of the plants at Mt Weld and Kuantan and almost getting for free one of the world’s largest and richest rare earth deposits. Not to mention that there is little value being factored for the future earnings that are imminent. LYC is trading at less than 5x and 2x PE on FY14 and FY15. It is trading at less than 1x EV/EBITDA on FY15. Accordingly, we retain a Buy recommendation with a price target or $2.33/share."
Do you guys agree with this assessment? Thanks for the feedback.
I would expect them to start planning to exploit these metals after Duncan is built out.
I agree with the assessment, overall, though I would certainly like to know more about the sales contracts which were written about 1.5 - 2 years back. They are getting long in the tooth without fulfillment.
The current liberal government running Australia enjoys the most narrow of majorities... Should they lose control (which appears likely) in the future, the timing for a surge of M&A in Australia's resource sector could trigger...
Another factor would be early indications of a resurgence in rare earth prices, particularly the critical group present in Duncan. Should Lynas overcome the A$.75 resistance, that could be a signal.
Chinese Workers—In Greenland?
http://buswk.co/11OACku
also interesting, Nick Xenophon, a Senator from Australia was booted out of Malaysia for participating in an election-related street rally:
http://yhoo.it/12WVGjB
The link is http://econ.st/YtgbTJ but you may have to google the above title to read.
Many, including Lynas and Great Western, that have significant investements in the separation and refinement process, might be adversely affected if this hits large commercial capability too quickly and starts gets getting licensed for others to use the process.
HardToLove
There is still a lot of "we hopes" in the article, and as we saw with the note that the process was originally published in 1997, its not really very new. And my bs detectors start to beep when the author talks about "industrial scale" simultaneously with a metallurgical smelting operation contained within a small house.
The article is also none-too tightly wrapped. Talking about replacing steel with titanium is pretty lame, other than the sorts of things already made from titanium. For one thing our technological culture uses approximately 10,000 times the tonnage every year of steel vs titanium. The materials which go into steel are extremely common commodities, whereas the occurance of commerically exploitable titanium is very rare.
As I recall the largest expense to produce aluminum, for instance, is electricity. Only by co-locating the smelters near extremely cheap sources like large hydroelectic dams located in remote regions can they shave their costs.
This reminds me of the quite old (but still fascinating, of course) stories of utilizing electrolysis to seperate dozens of valuable metals and minerals from sea water, with byproducts like perfectly pure fresh water and oxygen. All that was required was enough electricity to halt the moon in its orbit, and a few minor things like room temperature superconductors and cold fusion...
These sorts of topics were wild fun at the science fictions conventions of the 70's, back when we were still sending missions to the Moon and science was cool. I really miss those days.
http://on.wsj.com/XouBW6
We are approaching the time originally projected post-first feed when we might expect news that they have produced samples to present to the waiting customers...
As for the Malay elections...
If I were not invested in Lynas, I might almost wish that the Malaysian flat-earthers and Chinese agents would win...
As it is, ANY company investing heavily in Malaysia's future must be viewed as a doubtful investment. This includes Lynas, of course, as poster child.
Of course, then I ruined their whole day when I mentioned that Exxon-Mobil were idiots to keep their headquarters in the US...
About the same time Halliburton bolted for Abu Dhabi, I believe.
I think an interesting filter could be constructed just from picking resource companies (miners, oil companies, etc.) that are positioned to produce in countries which are NOT major Western nations suffering from "Kyoto disease", and who avoid the worst risks in the third world as well. This would probably exclude about 80% of the potential investments, and picking the best of the remaining crop could be an interesting exercise...
Canada flirted with a similar route, hugely increased resource taxes, and when they eliminated the canroy's, it was looking pretty scary. I think they have been letting Australia and Europe lead (ie, test the economic mine fields the old fashioned way, by walking straight ahead with their eyes wide-shut). This was wise.
Australia has no NAFTA with their major customer (China).
The thing to find is the rare resource investment which does NOT suffer from these drawbacks.
it seems a lot of rich folks are buying it in quantity, along with Tesla stock.
Other possibilities include tedium, delirium, impossibleium, and unobtainium.
A couple of weeks at most, prepare to load up.
Heck, there's some evidence that even the excrement is re-hypothecated and the "prop wash" when it hits the impeller will be larger than the 'Nank expected.
Being painted into a corner of his own devising, he'll be awash in the stuff since he can't escape ... easily, and would likely attempt to escape too late, just like almost all the Fed chiefs that preceded him.
HardToLove
We are due an update from Lynas about their first run at the LAMP.
"SASKATOON, Feb. 21, 2013 /PRNewswire/ - Great Western Minerals Group Ltd. ("GWMG" or the "Company"), (TSXV: GWG) today announced that as a result of an internal investigation into the activities of Vincent Mora, who had previously provided services to the Company as Project Director and was terminated for cause, suspicions were raised about invoicing, purchasing and contracting activities. Because irregularities were found during the Company's review, GWMG filed a complaint and cooperated with the South African police to investigate the possibility of criminal activity. As a result of this investigation, police have arrested Vincent Mora on suspicion of fraud and money laundering.
GWMG, through its South African legal counsel, has been actively engaged in assisting the South African police with the criminal proceedings and is completing the Company's full assessment of the nature of the activity that took place. The Company is also conducting a review of compliance with its internal controls.
Investigation into the activities of East Rand Engineering Services ("ERES"), the contractor that was awarded the earthworks and mine refurbishment contract, led GWMG to terminate its contract with that company (see GWMG news release November 26, 2012). The Company has paid ERES approximately C$10.62 million to date out of an invoiced amount totaling approximately C$13.32 million (exclusive of VAT). The Company's quantity surveyors and engineers are assessing the completed and partially completed works and GWMG is pursuing all available options, including the commencement of civil claims, to recover any damages which may have occurred.
GWMG President and Chief Executive Officer Marc LeVier said, "GWMG will pursue every legal avenue available to recoup any losses that may have arisen through this situation. We will continue to assist the police in their investigation of the criminal acts that have violated the trust of the Company."
Mr. LeVier went on to say, "Steenkampskraal remains a great project with one of the few real opportunities to be a leader in the rare earth sector. Our plans to become a vertically integrated mine-to-market company, with unique market access, continue to guide our efforts. We have great employees, with high levels of integrity and values, with whom we will continue to build a team of excellence and the actions of a few persons should not reflect upon the rest of our team. GWMG has the ability to deliver the Steenkampskraal project and we will do so as we build a relationship of trust with our investors."
Because this matter involves an ongoing criminal investigation and civil matter, the Company and its spokespersons will not be able to provide additional information at this time."
This explains a lot. The termination of the engineering company in November - and the subsequent withholding of over $2million they had invoiced GWM - the puzzling sloth of construction - is now explained. This may also reflect upon the reasons for the shakeup in GWM's management and Board.
I expect that GWM will be seeking compensation from Mr. Mora and ERES.
What we don't know, of course, is the quality of work performed by ERES, and how this might affect the timeline and finances going forward.
I like the sunlight which is now present upon this months-long mystery, however, and this should provide a clean slate for the company to build from.
For those who have been waiting for an entry point for GWM, this could provide it.
I have been very harsh on GWG for a long time. I have even said I am not comfortable trusting them. Maybe it's all the contractor, but if the old board ends up involved I will not be surprised. All the same, GWG never acts trustworthy IMO. And saying "The money is gone; we are working with the police; and we might sue" is not enough light on the subject to impress me.
GWM is not large enough to self-insure for this sort of loss, so yes, it would seem that they SHOULD have had insurance. Kicking those reponsible for NOT having insurance off the Board or out of Management would seem a speculative but possible motive for the major changes to Management and the Board...
"For those who have been waiting for an entry point for GWM, this could provide it."
Perhaps I should have added the word "ultimately".
For anyone confused by my flat cautionary tone, I do NOT consider this a current buy signal.
People will read what they want to or see for themselves. I think your thoughts are clear. I get accused of giving investment advice all of the time and I think I never do it. I respect the information and opinion.