Glass Half Full for Rare Earth Elements in 2012

Jan. 03, 2012 6:45 PM ETIQ
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Mike Niehuser is the founder of Beacon Rock Research, LLC which produces research for an institutional audience and focuses on precious, base and industrial metals, and substitutes, oil and gas, alternative energy, as well as communications and human resources. Mr. Niehuser was nominated to BrainstormNW magazine's list of the region's top financial professionals in 2007. Mr. Niehuser was previously a senior equity analyst with the Robins Group where he was a generalist and focused on special situations. Previously he was an equity analyst with The RedChip Review where he initially followed bank stocks but expanded to a diverse industry range from heavy industry to Internet and technology companies. Visit his site: Beacon Rock Research (http://www.beaconrockresearch.com/)
Molycorp, Inc. (MCP) reported that it has completed off-take agreements for 78% of its 2012 rare earth production estimated at 19,050 metric tonnes. They also note that another 6% is in advanced stages of discussions. This meets the company’s goal of completing off-take agreements for 75% of production. This is impressive considering falling light rare earth prices, and production is anticipated to come from completion of a new facility. It is important to note that 20% of the output accounted for in agreements is dedicated for internally advancing its own Cerium-based XSORBX water purification product. Should this product experience growth, as Molycorp will be accountable for both significant new supply and demand of Cerium, we anticipate the potential for improving pricing for some light rare earth elements in 2012.
We are looking forward to Namibia Rare Earths Inc. (NRE) completing a heavy rare earth resource at its Lofdal project in Namibia early in the third quarter of 2012. They have completed the first phase of exploration drilling and have identified Area 4 to be the focus of a new heavy earth resource. Drilling should commence in January, with results reported in April/May, possibly leading to a resource estimate in July/August. Nambia Rare Earths is also completing ongoing review of geophysical surveys to prioritize further exploration.  In addition, the company has initiated multiple metallurgical surveys in advance of economic studies. Namibia Rare Earths’ Lofdal project may present the best opportunity for new discoveries of heavy rare earth deposits in the current metal cycle.

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