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Jack Lifton
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Jack Lifton is an Independent consultant and commentator, focusing on the market fundamentals and future end use trends of the rare metals. He specializes in the sourcing of nonferrous strategic metals and on due diligence studies of businesses in that space. His work includes exploration,... More
My company:
Technology Metals Research
My blog:
The Jack Lifton Report
  • Why do Newsletter Writer's Think Great Western Minerals Group is Chopped Liver? 34 comments
    Jul 22, 2010 11:45 AM | about stocks: LYSCF
    Two newsletter writers who write extensively on the rare earth junior mining sector have in the last couple of days each reacted to news of Chinese rare earth producer price increases. One of the two is a very savvy gentlemen who analyzes corporate balance sheets, announcements, business models, and management skills with a scalpel's precision, and the other is better known but seems to me to use a meat axe rather than a scalpel in his analyses.

    I count one of the above two gentlemen as a friend, and I generally agree with him.

    That having been said I want to make a point about the overlooking of the demand driver which can be described as the critical need for higher atomic numbered rare earths for the most important segment of the rare earth end-using industry, the manufacturing of rare earth permanent magnets.

    Yesterday I bought the first shares of a publicly listed company that I have bought in 41 years-yes, you heard me correctly, 41 years. I bought 25,000 shares of Canada's Great Western Minerals Group at (USD$) 0.175. Why did I do that?

    Two reasons:

    1. I still think, as I did last November at the Hard Assets Conference in San Francisco, where i first said this, that Great Western will be the first non-Chinese producer of significant commercial quantities of the heavy rare earths, dysprosium and terbium. I also think that this will make GW a target for acquisition by Molycorp, Lynas, and all of the others trying to put together a balanced output of rare earth elements. GW is still the ONLY REE junior that has any more than one of the multiple of supply chain requirements to be a mine to magnet alloy (market) supplier. In fact it is the adoption of this same strategy by Molycorp that gives me hope that Molycorp will be successful in restoring America's self sufficiency in the REE "Business." Last year Molycorp tried very hard to buy GW's Less Common Metals, Ltd, wholly owned subsidiary, so that it, Molycorp, could progress on a mine to magnet strategy now detailed in its SEC filing. The mistake that Molycorp made was in not going after the whole of the GW "Business" including its, GW's, ore bodies in Canada and South Africa (and the USA for that matter). I doubt that a well financed Molycorp will repeat that error, and I suspect it will be back at the front lines of such an acquisition shortly after obtaining the proceeds of the IPO>

    2. A rising tide lifts all boats. China has begun rationalizing its rare earth industry and has ordered a remediation program to resolve that industry's environmental problems. Both tasks will require huge amounts of capital. China therefore must force REE prices to rise to increase the REE mining industry's revenues. This will be first accomplished by shutting down rogue operations within China that have traditionally kept prices low by fierce internal competition. Then, or now, inventories will be built up to maintain a buffer for China's domestic and preferred foreign customers for this material. One man's "hoarding" is another man's "inventory building," but at the moment increased prices and the need for revenues are trumping all other business factors. This is perfect timing for the Molycorp IPO which one of the newsletter writers above has called for July 28.

    You don't have to agree with me, but please, if you don't, and you want to comment please make your criticism constructive. I will respond to all constructive criticism of anything I write about anything. Like all of you I am trying to learn about the factors that drive the market not create them.

    On August 2 I will address the Chinese Society for Rare Earths 6th annual general meeting on "The American Perspective on the Rare Earths Supply Issue." I'll publish my presentation on SA and on my own web site, www.techmetalsresearch.com, right after it is delivered.



    Disclosure: I now own directly 25,000 shares of GWG.V
    Themes: Molycorp Stocks: LYSCF
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Comments (34)
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  • bangwhiz
    , contributor
    Comments (2235) | Send Message
     
    Forgive my ignorance, but what does .V stand for?
    22 Jul 2010, 12:44 PM Reply Like
  • Alan Young
    , contributor
    Comments (2360) | Send Message
     
    Vancouver exchange, I believe.
    23 Jul 2010, 05:07 PM Reply Like
  • Albertarocks
    , contributor
    Comments (2230) | Send Message
     
    TSX Venture Exchange (this is what used to be the Vancouver Stock Exchange, which no longer exists).

     

    en.wikipedia.org/wiki/...

     

    You didn't deserve a drive-by thumbs down for that Alan. I give you a green thumb.
    28 Jul 2010, 04:23 PM Reply Like
  • vinster22
    , contributor
    Comments (6) | Send Message
     
    V for victory! (just kidding...stands for venture exchange...junior listing of the TMX)
    11 Aug 2010, 06:07 AM Reply Like
  • optionsgirl
    , contributor
    Comments (5053) | Send Message
     
    Dear Jack: Welcome to the monkey house!
    But why do you have the ticker for Lynas referenced?
    22 Jul 2010, 12:50 PM Reply Like
  • tripleblack
    , contributor
    Comments (13444) | Send Message
     
    "Equity - CDNX" (Canadian Exchange).
    22 Jul 2010, 08:18 PM Reply Like
  • tripleblack
    , contributor
    Comments (13444) | Send Message
     
    Pink Sheets symbol for Great Western is (GWMGF.PK).
    22 Jul 2010, 01:13 PM Reply Like
  • Mayascribe
    , contributor
    Comments (9606) | Send Message
     
    Jack: Congrats on (re)entering the world's greatest casino!

     

    Intriguing premise that Molycorp will buy Great Western. If true, then buying Great Western will be tantamount to a backdoor portal into Molycorp.

     

    This concerns me somewhat, in that I've witnessed recent IPOs take off and zoom up in value, and then drift backwards. That's because of the hype that takes place before the IPO, as in (AONE).

     

    Being out of the country, and living without a TV for many weeks (where I am CNBC doesn't exist!) I'm wondering how much hype this IPO is getting?

     

    I'm guessing your forey back into the world of stock ownership is with the mind of a longterm hold of Great Western, whether Molycorp obtains Great Western, or not.
    22 Jul 2010, 01:33 PM Reply Like
  • DRich
    , contributor
    Comments (4428) | Send Message
     
    You've mentioned GW's refining capability in S. Africa. Does that facility output end-user grade material or just enriched oxides?

     

    Also, I'm not sure I've seen you comment on this, but I've been told that GW has refining facilities in N. American, specifically Michigan. Is that true? And if so, to what degree do they refine toward metal?
    22 Jul 2010, 02:12 PM Reply Like
  • Jack Lifton
    , contributor
    Comments (409) | Send Message
     
    Author’s reply » DRich,

     

    GW currently has no refining capacity that I know of. It may have the capability for some high purity metals production. Its facility in the UK, Less Common Metals, in Birkenhead is a manufacturer of rare earth magnet alloy powders and other specialties produced from Chinese feedstock. Its facility in Troy, Michigan is currently doing alloy research and some limited production; it has a DARPA contract for, I believe, aluminum-scandium alloy development.

     

    Most of the analyst's commentary on the in-house technical capabilities of companies such as GW and Molycorp is completely uninformed. Some of it is downright ignorant of metallurgy altogether.
    22 Jul 2010, 02:55 PM Reply Like
  • Alan Young
    , contributor
    Comments (2360) | Send Message
     
    This begs the question, who DOES have refining capacity? I see lots of miners (or wannabe miners) and magnet-makers, but where are the refiners?

     

    If that's the bottleneck, then it's the most likely place to see growth.
    23 Jul 2010, 05:10 PM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10803) | Send Message
     
    Mr. Jack, Lifton: Greetings. Be careful sir you may be accused of being a Renegade. I see some of them have made comments on your blog. LOL.
    22 Jul 2010, 02:46 PM Reply Like
  • DM99
    , contributor
    Comments (30) | Send Message
     
    Good Job Jack

     

    Mr. Lifton will you be back in time, to talk at Great western Minerals AGM? Last year your presentation was excellent. Also happy to see you bought some shares. As always thanks for telling the world how it is.

     

    Good luck to all the GWG holders out there
    22 Jul 2010, 06:42 PM Reply Like
  • Jack Lifton
    , contributor
    Comments (409) | Send Message
     
    Author’s reply » DM99,

     

    This year I am going to China to address the Chinese Society for Rare Earths as a guest speaker, and I will return only on August 9. I have a meeting on the 11th, the day of the GW AGM, in Detroit.

     

    I have found out however that Gary Billingsley, the Executive Chairman of GW will be on the speaker's paltform in Beijing also, and I have also found out that he and i will be on a panel on Rare Earth pricing at the World Commodity Forum in London on October 5.

     

    I have also suggested to INDABA, Capetown, Feb., 2011, that I chair a panel on South African rare earth developments, and if they agree I will invite GW to appear on the panel to discuss Steenkampskraal.
    22 Jul 2010, 07:27 PM Reply Like
  • prescient11
    , contributor
    Comments (250) | Send Message
     
    Mr. Lifton,

     

    Funny you should mention this, because the newsletter writer that I believe you count as a friend, Mr. Kaiser, (and I know you have enjoyed having speaking arrangements with him and during the interviews you seem to have gotten along well), just published this evening an extensive writeup on GWG.

     

    I agree with your position that a rising tide will float all boats, and you are probably fine at these levels.

     

    I also like the team involved and the strategy of mine to market in theory. However, GWG has continued to drop the ball on many fronts for years, frustrating to death long term shareholders and just the market in general.

     

    Bottom line from Mr. Kaiser's analysis - there are much much more compelling stories in the REE space to invest in and management continues to screw up the business side of every decision - rather than focusing on how to make the mine to market strategy profitable - as it is an excellent strategy to pursue.

     

    Love your work and please keep contributing as it is valued.
    26 Jul 2010, 09:28 PM Reply Like
  • bangwhiz
    , contributor
    Comments (2235) | Send Message
     
    "there are much much more compelling stories in the REE space to invest in"

     

    Could you point me to some information resource that would allow me to discover and investigate the more compelling stories? Thanks
    26 Jul 2010, 10:16 PM Reply Like
  • Mayascribe
    , contributor
    Comments (9606) | Send Message
     
    Here we go, Jack. The e-spammer game is now onto Great Western. Surprise, surprise. How predictable! Foretelling a 2000+% gain!

     

    Tip of the hat to OptionsGirl for this Gumshoe breakdown of GWM e-spam. Somewhere, deep in the text, your name appears:

     

    www.stockgumshoe.com/2...

     

    26 Jul 2010, 11:39 PM Reply Like
  • Jack Lifton
    , contributor
    Comments (409) | Send Message
     
    Author’s reply » Ladies and gentlemen,

     

    Predicting the future "probability' of commercial success, which is what I do, involves my personal assessment of the details of some 20 factors that combined give a numerical value for this "probability of commercial success." I designed this metric in conjunction with Dr. Gareth Hatch and the factors I have chosen to include and evaluate include many suggested by either the writings of, in conversations with, John Kaiser, John Petersen, Tony Mariano, James Clark, Dave Trueman, Dudley Kingsnorth, and Clint Cox to name just some of the leading lights of geology and mining analysis who specialize in the study of rare elements.

     

    Note that I am not naming any corporate 'executives" above. This is because they are the men and women whose performance I am rating with regard to the probability that their companies, with or without them, will be commercially successful.

     

    I don't agree with everything everybody else says. In that case my analysis would be information about others rather than my own judgment.

     

    Personally I am trying to do my bit insure that America will be self-sufficient in critical raw materials that impact our health, welfare, and security.

     

    I have come to the conclusion that in a world where resources are distributed by the results of the historical forces of five billion years of geological processing, and in which the borders of nations, are the recent results of human history it is unwise to believe that globalization of trade will do anything at all to redress imbalances of natural resources. Until the USA learns to capitalize security of supply we are on a path to second-class nationhood. You don't have to agree with me, but you need to respect my position as, I believe, everyone named above does.

     

    I think that the probability that GWMG will be the first to supply HREEs outside of China is very high. Therefore I think that GWMG is a logical target for aquisition by Lynas, Molycorp, or a fund backed ETF looking to consolidate the sector. If GWMG solves its immediate practical problems of validating a metallurgy and hiring or partnering with a skilled refiner then the money will flow to it in SA and we may even see GWMG being used as a platform for a consolidation of the REE industry.

     

    I'll publish my talk in Beijing here on SA next week after I deliver it.
    27 Jul 2010, 09:42 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10803) | Send Message
     
    Mr. Jack, Lifton: Greetings. Thanks for your insight. As Yogi Bara is credited with saying " Making predictions is really hard. Especially about the future.". What is your assessment of the Molly Corp (MCP) IPO? Looking forward to your postings regarding the conference in China. Thanks again.
    27 Jul 2010, 10:00 AM Reply Like
  • giorgio gobbo
    , contributor
    Comments (5) | Send Message
     
    Jack, I remember listening / reading to a conversation / interview where you and the CEO of GW stated that all of GW production from Steenkampskraal (2000 t/y) would be consumed by GW itself.
    If so, none of the HREE would reach the market.
    Am I remembering incorrectly?
    27 Jul 2010, 07:17 PM Reply Like
  • Jack Lifton
    , contributor
    Comments (409) | Send Message
     
    Author’s reply » Your memory is correct, but I do not understand your conclusion that if GW utilizes its mined REEs in its own downstream operation it "doesn't reach the market. It would of course reach the market for rare earth permanent magnet alloy powder, and the added value there would flow to GW's bottom line. This is precisely why I think GW has the best chance among juniors its size to be successful in the commercial marketplace.
    27 Jul 2010, 09:44 PM Reply Like
  • koz30mm
    , contributor
    Comment (1) | Send Message
     
    Mr. Lifton,
    Do you think there are any properties in the US that may produce REE. I see GWMG has projects in Canada and South Africa. Do you see them aquiring more rights in the US like their Deep Sands project?
    28 Jul 2010, 12:58 PM Reply Like
  • Jack Lifton
    , contributor
    Comments (409) | Send Message
     
    Author’s reply » The prime acquisition targets in the USA today are Rare Element Resources and UCORE. I don't know who will acquire either one of them, if anyone, but if I were Molycorp I would target them. Both RER and UCORE are beginning drilling programs to determine the extent and grade of their deposits, so I suspect that those in the market for heavy rare earths in the USA are taking a wait and see approach.
    28 Jul 2010, 02:26 PM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10803) | Send Message
     
    Molly Corps (MCP) IPO was not well received. It opened low and has slid since then.
    28 Jul 2010, 03:41 PM Reply Like
  • truman2000
    , contributor
    Comments (2) | Send Message
     
    Jack, Appreciate your fine writings and insight, had picked up my shares of Great Western the day before you posted yours, gives me much more confidence!
    Could you comment on Dacha Capital as a way to play rare earths longer term? Thanks
    29 Jul 2010, 05:18 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10803) | Send Message
     
    here is an interesting article brought to us by top 10 commentator tripleblack: www.rmetals.com/R+Meta...
    29 Jul 2010, 03:49 PM Reply Like
  • Jack Lifton
    , contributor
    Comments (409) | Send Message
     
    Author’s reply » Robert,

     

    Chris Ecclestone and I are friends, but we don't always agree on the details. It is the same with me and John Kaiser. John Kaiser, Patrick Wong of Dacha Capital, and Garteh Hatch along with yours truly will be doing a webinar for Infocast on August 18 at 10:30 AM, PST. Please tune in and please ask pithy questions. I'm going to make sure Chris is on a future webinar on my web site, techmeatlsresearch.com, real soon. It will be lively.
    29 Jul 2010, 09:01 PM Reply Like
  • Gareth Hatch
    , contributor
    Comments (134) | Send Message
     
    FYI, the full Infocast webinar line up includes Dr. John Hykawy, John Kaiser, Jack Lifton, Patrick Wong and myself as moderator. More details can be found here: www.infocastinc.com/in...
    29 Jul 2010, 10:42 PM Reply Like
  • Ozzyfan
    , contributor
    Comments (2) | Send Message
     
    GWG and LYSCF both up more than 10% today. Good call!
    9 Aug 2010, 04:15 PM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10803) | Send Message
     
    Great Western Minerals Group (GWMGF) is preparing to do a reverse split. Probably on the order of 10:1.
    9 Aug 2010, 04:41 PM Reply Like
  • MaverickAB
    , contributor
    Comments (2) | Send Message
     
    Hi Jack,

     

    Now that your a share holder in GWG, what is you view on the possible reverse split? Myself have had bad experiences with reverse splits, and being a GWG stock holder for the Last 8 years it's a hard pill to swallow.
    9 Aug 2010, 05:31 PM Reply Like
  • norcat
    , contributor
    Comments (3) | Send Message
     
    Why is lynas never spoken about in USA?This company is five months
    away from production,not years No dept. And long term sales contracts in place.Wake up and stop listening to experts with their own barrow to push.Lynas will have first producer status for at least two years and will become the dominant company in this field.Think about it and do your own research
    26 Jul 2011, 11:15 PM Reply Like
  • norcat
    , contributor
    Comments (3) | Send Message
     
    self funded retiree living in australia
    26 Jul 2011, 11:15 PM Reply Like
  • norcat
    , contributor
    Comments (3) | Send Message
     
    I live in Australia and manage my own super fund
    26 Jul 2011, 11:15 PM Reply Like
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