Earlier this month, Molycorp (NYSE:MCP) agreed to acquire Canada's Neo Material Technologies (TSE:NEM) in a $1.3 billion deal, creating one of the most vertically-integrated rare earth companies in the world.
Rare earths refer to a group of 15 specific elements, known as lanthanides, plus scandium and yttrium, used for everything from smartphones to guided missiles.
The game-changing deal is putting junior players in the rare earths space in focus.
One such player is Medallion Resources, which is focused on rare-earth production from monazite, a waste by-product of heavy mineral sand mining operations.
Monzanite is a crucial mineral that contains rare earth elements. It has been processed for its rare-earth content for over 100 years, and smaller-scale monazite rare-earth extraction plants are in operation today in China, India and Brazil.
Medallion is actively sourcing rare-earth-bearing monazite from present producers of heavy-mineral sands, both through purchase agreements and monazite-processing joint ventures.
King said Medallion's business model is different from that of most other rare earth juniors.
"Medallion isn't focused on hard-rock occurrences with complex mining issues and super-complex metallurgy to get the RE elements out. Medallion wants to leapfrog over the 'build a mine' problem," King said.
King has personally met Medallion management and recommends investors build up a position in the company.
"They know what they're doing, and it's doable. The investment basics are that the company has about $3 million of cash, but a very low burn rate. I expect no fundraising for 12-18 months."
In the near term, King expects to hear about off-take agreements, partnerships with downstream end-users, and arrangements for a concentration plant.
Last month, Medallion received a positive report for a proposed large-scale monazite rare-earth extraction facility.
The report, prepared by internationally-recognized SENES Consultants, concluded that a proposed plant can be operated safely and effectively, while complying with all major national and international mining and environmental safety standards.