Saturday 7th December 2019

Resource Clips


Posts tagged ‘australia’

Lynas CEO Amanda Lacaze comments on a six-month permit extension for its rare earths processing plant in Malaysia

September 30th, 2019

…Read more

Lower cost, higher grade

August 30th, 2019

Denison Mines considers the Athabasca Basin’s first ISR uranium operation

by Greg Klein

Less than 80 kilometres from the technological marvel of Cigar Lake, another uranium project could introduce an extraction method that’s less innovative but a regional novelty just the same. Denison Mines TSX:DML now has testing underway for in-situ recovery at the Wheeler River project’s Phoenix deposit. Should the studies succeed and the mine become a reality, this would be ISR’s first application in Canadian uranium mining.

Denison Mines considers the Athabasca Basin’s first ISR uranium operation

Denison Mines hopes to apply low-cost extraction
to high-grade resources. (Photo: Denison Mines)

ISR finds common use in Kazakhstan, Uzbekistan, the U.S., Australia and enough other countries to account for 48% of global uranium production in 2016, according to the World Nuclear Association. The lower-cost method has often been associated with lower-grade deposits that have geological conditions making the process viable. With a Phoenix probable reserve averaging 19.1%, Denison was able to consider other options. In fact the company originally planned to use Cigar Lake’s jet-boring technique.

But the experience of Cameco Corp TSX:CCO proved to be a cautionary tale. “Among 
the most technically challenging mining projects in the world” according to the company, Cigar Lake took nine years to build, with setbacks that included two serious floods. Finally opened in 2014, its jet-boring extraction makes the very high-grade operation “one of the technically most sophisticated mines in the world.”

Two years later, when Wheeler River reached PEA, Denison was still considering jet-boring for Phoenix. But capex, opex, length of construction and technical risks similar to Cigar Lake’s “catastrophic events” persuaded the company to pursue other options.

That Denison did, examining some 32 extraction techniques over two years before selecting ISR for Phoenix in the pre-feasibility study released last October. Wheeler’s Gryphon deposit, about three kilometres northwest, has more conventional underground mining proposed.

Both deposits are classified as Athabasca Basin unconformity-related. But Gryphon features basement-hosted mineralization while Phoenix mineralization is unconformity-hosted and also shows ISR potential.

Denison Mines considers the Athabasca Basin’s first ISR uranium operation

With its current drill program, Denison hopes to find
potential satellite ISR deposits. (Photo: Denison Mines)

Put simply, the process involves drilling wells into the deposit, injecting a liquid solution that leaches uranium from ore, then pumping the uranium-bearing liquid to a surface processing facility. No tailings or waste rock come to surface. The solution then gets recharged with fresh reagents for re-use in a closed system.

ISR, also known as ISL or in-situ leaching, can be used for copper and other minerals as well.

However Phoenix differs from many ISR projects by the permeability of the deposit’s sandstone walls, which will require freezing to contain the solution. Ground freezing involves pumping very cold brine into holes outside the deposit’s circumference to extract heat from the surrounding rock. Cigar Lake also uses underground freezing to contain the jet-boring process. One advantage of Phoenix over other ISR projects, however, is the relatively compact size of the high-grade deposit, about one kilometre by 50 metres.

Should geology, engineering, permitting and financing come together, Phoenix would take only about two and a half years to build, according to the PEA. With an estimated 11-year lifespan, production would average six million pounds U3O8 annually for nine of those years.

Hinting at satanic numerology, Gryphon would spend six years in construction and another six in operation, producing six million pounds a year. Processing would take place at the McClean Lake mill, now chewing through Cigar Lake ore. Denison holds 22.5% of the mill, along with Orano Canada (70%) and OURD Canada (7.5%).

As for Wheeler River ownership, Denison maintains a 90% stake, with JCU Canada holding the rest.

Denison Mines considers the Athabasca Basin’s first ISR uranium operation

With a deposit lying below Patterson Lake South,
Fission Uranium now has second thoughts
about open pit mining. (Photo: Fission Uranium)

Denison has further ISR tests now underway, part of the project’s feasibility studies. With work conducted by Petrotek Engineering Corp, the program has so far sunk two pump/injection wells and four observation wells along a 34-metre portion of the deposit’s strike. This week president/CEO David Cates described early results as encouraging, “with initial pump and injection tests confirming hydraulic connectivity between all of the test wells within the ore zone.”

The tests also suggest the basement rock beneath the unconformity would contain the solution, unlike the sandstone walls which would require freezing.

Three more test areas will be evaluated up to summer 2020 to compile a hydro-geological model to simulate ground water flow and other factors. The current campaign also includes environmental baseline studies and a 10-hole, 5,000-metre drill program searching for potential satellite ISR operations along the project’s K West trend.

While Wheeler River holds the largest undeveloped deposits in the eastern Basin, the Patterson corridor extending beyond the Basin’s southwestern rim claims fame for two even larger projects.

A pre-feas released by Fission Uranium TSX:FCU in May for Patterson Lake South’s Triple R deposit examined a hybrid open pit and underground mine, but the company was quick to reconsider. An alternative pre-feas began in July to evaluate an underground-only operation. The May pre-feas foresaw four years of construction, six years of open pit operation and two years of underground operation to produce 87.5 million pounds U3O8 over the eight-year span.

The company hopes its new pre-feas, expected in September, will find “further-improved economics, even lower capex and a reduced construction time.” Permitting might also have been a concern, however, for open pit mining on a uranium deposit currently underneath a lake. With the new report using the same resource estimate, Fission plans to compare both scenarios before moving on to feasibility.

Another basement-hosted deposit, NexGen Energy’s (TSX:NXE) Arrow deposit on the Rook 1 project reached pre-feas in December. The proposed underground mine would begin production during the second year of development, ultimately producing 228.4 million pounds U3O8 over a nine-year life, enough to give the company an estimated 21% of global output, just behind first-place Kazatomprom’s 22%, NexGen says.

The company plans full feasibility for Arrow in H1 next year.

New neodymium and dysprosium sources needed by 2030 to avert shortages: Adamas Intelligence

June 19th, 2019

by Greg Klein | June 19, 2019

As the U.S.-China trade conflict intensifies concern about critical metals, Adamas Intelligence publishes a readable guide to rare earths—what they are, where they come from and what they’re used for.

“In just a period of decades, rare earth elements have seeped deeply into the fabric of modern technology and industry and have proven exceptionally challenging to duplicate or replace,” states the report entitled Rare Earth Elements: Small Market, Big Necessity.

New neodymium and dysprosium sources needed by 2030 to avert shortages: Adamas Intelligence

Image: Ascannio/Shutterstock.com

Of eight categories of end uses, permanent magnets and catalysts garnered over 60% of world demand for total rare earth oxides last year, according to the independent research and advisory firm.

By value, permanent magnets alone surpassed 90% of TREO consumption. “This share is poised to expand further as demand (and prices) for neodymium, praseodymium, dysprosium and terbium continue to rise strongly in the years ahead.”

Looking forward a decade, Adamas forecast that “global annual demand for neodymium oxide and dysprosium oxide (or oxide equivalents) will substantially exceed global annual production by 2030, leading to the depletion of historically accumulated inventories and, ultimately, shortages of these critical magnet materials if additional sources of supply are not developed.”

Outside China, Adamas reports only 8.49 million tonnes of in-situ TREO in 17 deposits considered compliant by NI 43-101, JORC or South Africa’s SAMREC regulations. Located in 10 nations on five continents, just two are in operation: Lynas Corp’s Mount Weld mine in Western Australia and MP Materials’ Mountain Pass mine in California.

The numbers shoot way up and China takes prominence when U.S. Geological Survey data on both compliant and non-compliant deposits is considered. China’s share of the approximate world total of 120 million tonnes comes to about 38%. Another 19% each is ascribed to Brazil and Vietnam, 10% to Russia, and the rest to India, Australia, the U.S. and other countries “presumably dominated by Canada and Greenland.”

Mine production demonstrates China’s overall dominance, which is further confirmed by refining.

Adamas estimates last year’s global TREO and TREO-equivalent mining at 184,000 tonnes, with the Middle Kingdom responsible for 68% of primary production and nearly 100% of secondary production.

Last year’s global production rose 21% over 2017, which Adamas attributed to substantial production hikes in China, Myanmar and the U.S., where Mountain Pass re-opened following the bankruptcy of its former owner.

Additional primary producers were Myanmar (11%), Australia (10%), the U.S. (9%) and others (2%). Virtually all non-Chinese miners rely on China for concentrating and separating rare earths. Lynas stands out as the prominent exception.

The company has a processing facility in Malaysia, but that country has threatened to shut it down by September if Lynas doesn’t remove 450,000 tonnes of low-level radioactive waste accumulated over seven years. Malaysia’s energy and environment minister and Western Australia’s mines minster were to discuss moving the waste to WA, but the Malaysian counterpart postponed a meeting scheduled for June 20 “pending further developments,” Reuters stated. The WA state government has already stated its refusal to accept the waste.

Download the Adamas Intelligence report Rare Earth Elements: Small Market, Big Necessity.

Read more about rare earths and other critical metals.

U.S. critical minerals strategy includes Canada and other allies

June 5th, 2019

by Greg Klein | June 5, 2019

The country’s tariff tactics might present an image of Fortress America battling its adversaries, but a new critical minerals strategy advocates greater co-operation between the U.S. and its friends. The manifestation of Washington’s growing concern about securing resources and building supply chains, a federal report released June 4 announces six calls to action, 24 goals and 61 recommendations accompanied by timelines for accomplishment.

The U.S. includes Canada and other allies in its critical minerals strategy

Clearly, the Donald Trump administration recognizes the problem of relying on potentially unreliable sources, especially when they’re economic and geopolitical rivals: “If China or Russia were to stop exports to the United States and its allies for a prolonged period—similar to China’s rare earths embargo in 2010—an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains.”

Rare earths provide an especially stark example of the problem, the report emphasizes. “The REE industry has experienced downsizing, business failure, and relocation in all phases of the supply chain, including mining, separation, metal reduction, alloying and downstream manufacturing of advanced technology products such as high performance rare earth permanent magnets.”

The report, A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Minerals, follows a number of American initiatives including the formal classification of 35 critical minerals and a Secretary of Defense study released last September.

For 31 of the 35 critical minerals, the U.S. imports over 50% of its supply. For 14 of them, imports account for 100% of supply, creating “a strategic vulnerability for both our economy and our military with respect to adverse foreign government actions, natural disasters, and other events that could disrupt supply.”

If China or Russia were to stop exports to the United States and its allies for a prolonged period—similar to China’s rare earths embargo in 2010—an extended supply disruption could cause significant shocks throughout U.S. and foreign critical mineral supply chains.

Apart from finding new deposits, the report calls for specific measures to encourage R&D, new supply chains, additional and publicly available exploration data, land access and permitting, a workforce with appropriate skills and expertise, as well as international trade and co-operation.

On the latter topic, the report notes significant American reliance on Canada and Mexico for many essentials. “Working with them to develop their critical mineral deposits can help improve the security of U.S. supply.”

Washington’s agenda also calls for expanded collaboration with Canada, Australia, the EU, Japan and South Korea on a range of issues, from finding and developing resources to creating supply chains.

Although the U.S. began addressing the issue early in Trump’s administration, the report’s timing coincides with fears that another Chinese rare earths embargo could happen imminently. The U.S. relies on China directly for 80% of its imports, while much of the remainder comes from China indirectly. America’s sole REE mine, Mountain Pass in California, exports all its production to China.

That leaves Western Australian miner Lynas Corp as the only major producer outside China that is, as CEO/managing director Amanda Lacaze stated, “focused on rest-of-the-world markets, that is non-Chinese markets.” Although her company faces tremendous challenges meeting Malaysian government demands for its processing facility in that country, the government has made mildly conciliatory statements in advance of a June 28 meeting with Lynas.

Update: Following a June 20, 2019, meeting between Trump and Prime Minister Justin Trudeau, the two leaders “instructed officials to develop a joint action plan on critical minerals collaboration,” according to Reuters.

Senkaku revisited

May 29th, 2019

China-U.S. trade tactics highlight rare earths peril and potential

by Greg Klein | May 29, 2019

China-U.S. trade tactics highlight rare earths peril and potential

 

They’re vital to several categories of modern essentials including military defence. But rare earths have themselves become weapons in an escalating conflict between China and the U.S. Despite Washington’s heightened awareness of its critical minerals conundrum, the U.S., like the rest of the non-Chinese world, remains almost completely dependent on its rival-turned-enemy for the rare earths that China threatens to cut off.

Among recent hints, comments and implied threats was last week’s well-publicized visit to a Chinese RE plant by President Xi Jinping and his top trade negotiator, where the leader reportedly steeled his country’s resolve with talk of an impending “Long March.” Additionally significant and non-cryptic code came in a May 29 admonition from the state-run People’s Daily: “Don’t say I didn’t warn you.”

China-U.S. trade tactics highlight rare earths peril and potential

Northern Minerals’ Browns Range pilot plant readies
a Western Australia project for Chinese customers.

If a full-blown trade war’s imminent, it’s not without irony. In a change of plans the U.S. has dropped rare earths from a long list of tariff-attached imports, tacitly acknowledging its dependency on China. China did the opposite, increasing its tariff from 10% to 25% on RE imports from America, a small portion of China’s supply but nevertheless an increase to the cost of its trade war weaponry.

The 17 elements comprise essential components for a host of modern necessities including phones, computers and other communications and electronic devices, electric vehicles, batteries, renewable energy and military defence.

China already mines over 70% of global supply, according to 2018 data from the U.S. Geological Survey, and that doesn’t include illegal Chinese production. The U.S. relies on China for 80% of RE compounds and metals. America imports another 11% from Estonia, France and Japan, but that stuff’s “derived from mineral concentrates and chemical intermediates produced in China and elsewhere,” the USGS added.

The risks of an all-out trade war might be demonstrated by the 2010 East China Sea conflict, where China and Japan both claim the islands of Senkaku. When a Chinese fishing boat captain felt emboldened to twice ram a Japanese naval vessel, Japan arrested him. Within days, China banned all rare earths exports to Japan, crippling its globally important but RE-dependent manufacturers. China also imposed heavy cutbacks and duties on exports to other countries.

China-U.S. trade tactics highlight rare earths peril and potential

A Greenland Minerals MOU would commit the
proposed Kvanefjeld mine’s total RE production to China.

Desperate for RE supply, some non-Chinese manufacturers relocated to China. Meanwhile Western resource companies strove to develop alternative supplies. By 2013 two new mines reached production, Lynas Corp’s Mount Weld in Western Australia and Molycorp’s Mountain Pass in California. The following year the World Trade Organization ordered China to drop its export restrictions on rare earths, as well as tungsten and molybdenum.

China complied with a vengeance, flooding the world with cheap RE supply. America’s WTO victory proved Pyrrhic as a burgeoning non-Chinese supply chain failed to compete. The most salient casualty was Mountain Pass, which suspended operations during 2015 bankruptcy proceedings.

The mine resumed production in early 2018 under new owner MP Materials. But with China’s Shenghe Rare Earth Company a minority shareholder, North America’s only RE producer exports its entire output to China.

Lynas, meanwhile, remains committed to serving non-Chinese markets through a non-Chinese supply chain. But skeptics might consider the company’s strategy precarious. Plans announced last week include a refinery in Texas that’s merely at the MOU stage, an AU$500-million financing commitment that appears inadequate to the company’s needs and an unconvincing proposal to meet a Malaysian ultimatum with alternative ideas.

Home to Lynas’ refining and separation facility, Malaysia insists the company remove over 450,000 tonnes of radioactive waste by September or face a shutdown. The country also wants future Mount Weld material rendered non-radioactive prior to arrival. (Update: On May 30 Malaysia’s prime minister said the government will likely allow Lynas’ plant to continue operation, according to Reuters.)

China-U.S. trade tactics highlight rare earths peril and potential

At a northern Quebec rare earths deposit, Commerce
Resources’ Ashram project moves towards pre-feasibility.

An AU$1.5-billion takeover bid from deep-pocketed giant Wesfarmers might offer a made-in-Australia solution. But Lynas has so far held itself aloof.

The CEO’s commitment to non-Chinese markets, however, differs from some other Australian companies. ASX-listed Northern Minerals, self-described as “the first and only meaningful producer of dysprosium outside of China,” has committed the total production of its Western Australia Browns Range project to China, apparently at the behest of minority shareholder Huatai Mining. Last August ASX-listed Greenland Minerals signed an offtake MOU with majority shareholder Shenghe Resources, which would give China the proposed Kvanefjeld mine’s total RE production.

Technology metals expert Jack Lifton emphasizes the need for non-Chinese resources and expertise: “If we don’t reconstitute a total American supply chain, if the Europeans don’t do the same, for the critical materials like rare earths, cobalt, lithium, we’re going to be out of luck,” he told ResourceClips.com.

Heightened awareness in Washington led to 35 minerals getting a formal “critical” classification, a prelude to last year’s Secretary of Defense study calling for government initiatives to encourage domestic supply chains. More recently, a bipartisan group of U.S. senators proposed legislation to prod the country into action.

That approach rankles those who prefer laissez-faire solutions. Moreover government meddling in the form of trade wars can backfire, libertarians believe. As Rick Rule said last week, “If the Chinese decided to obviate their competitive advantage with some stupid political ploy, they would find themselves with a much smaller proportion of the global market.”

Many investors seem to have agreed. Following China’s May 29 rhetoric, stock prices surged for advanced-stage RE projects.

Turbulent times for Lynas

May 17th, 2019

Rare earths provide a cautionary tale about supply chain weaknesses

by Greg Klein | Updated May 21, 2019

Rare earths provide a cautionary tale about supply chain weaknesses

One of the world’s biggest supplies of magnet metals
undergoes separation at Lynas’ Malaysian facility. (Photo: Lynas Corp)

 

Update: On August 15 the Malaysian government granted Lynas a six-month licence extension. Read more.

 

How often does an investor presentation draw such keen interest from non-investors?

No doubt representatives from a number of governments and industries watched intensely on May 21 as Lynas CEO/managing director Amanda Lacaze accentuated her company’s “will to win.” Lynas has plans in place and funding en route to overcome what previously appeared to be an unattainable ultimatum. Far from becoming a takeover target, let alone a jurisdictional fatality, the miner expects to continue building a rare earths supply chain “focused on rest-of-the-world markets, that is non-Chinese markets.”

That was her message, and if stirring delivery could convince listeners, Lacaze made her case. But insufficient details cast a pall of uncertainty. Clearly the company can’t meet a September 2 deadline to remove over 450,000 tonnes of radioactive waste from Malaysia and thereby avert a processing plant shutdown in that country which would render useless the company’s Mount Weld mine in Western Australia.

Rare earths provide a cautionary tale about supply chain weaknesses

One of the world’s richest rare earths deposits, Mount Weld boasts reserves expected to give over 25 additional years of production at 22,000 tonnes of rare earth oxides annually. Included is an especially bountiful distribution of the magnet metals neodymium and praseodymium. Lynas concentrates ore in WA before shipping material to Malaysia for refining and separation. But while rare earths metallurgy has stymied some other non-Chinese operations, this facility has operated successfully since 2012.

At least it did so under Malaysia’s previous government. Its first electoral defeat since the country’s 1957 independence brought to office a party long opposed to Lynas’ operation in Kuantan. Concerns about waste containing thorium and uranium brought to mind a Malaysian RE refinery operated by Mitsubishi up to 1992. The plant closed down after an increase in leukemia and birth defects that critics attributed to the operation’s waste.

Following an environmental review of Lynas’ facility late last year, the new government delivered two formidable demands: Ensure that all material brought into the country has been rendered non-radioactive. And remove seven years of accumulated radioactive tailings from the country by September 2. Failure to do so will shut down the plant, the government warned.

An enormous logistical problem notwithstanding, Lacaze and her “dream team” told investors they have solutions backed by a AU$500-million “capital envelope” from senior lender Japan Australia Rare Earths (JARE) and the Japanese trading company Sojitz Corp.

“Of course we cannot do this on the smell of an oily rag, much as we might like to,” Lacaze acknowledged.

Rare earths provide a cautionary tale about supply chain weaknesses

Lynas managing director Dato’ Mashal Ahmad at the
podium, CEO Amanda Lacaze holding the microphone
at the company’s May 21 shareholder presentation.

A new cracking and leaching plant to be built in WA would “detox” Mount Weld material. Plans to pour money into Malaysia to upgrade the company’s Kuantan facility also sounded an optimistic note. But accumulated waste remains troublesome.

As managing director Dato’ Mashal Ahmad explained, the company will counter the ultimatum by asking the government to choose one of two options: Allow Lynas to treat the waste by producing a type of fertilizer, or allow Lynas to build another waste depository in Malaysia. The company already has four years of research backing Option 1. As for Option 2, “which Lynas is prepared to do anytime,” the company has already chosen three potential sites.

To those skeptical that Malaysia would accept the proposals, Ahmad said the environmental review, which hasn’t been officially translated, pronounced the Kuantan operation safe. Politicians, not the report’s authors, issued the ultimatum, he maintained. Discussions with the government continue and another decision will come from the entire government, not individual politicians, Lacaze added. Based on what she termed “relatively constructive” public comments from Prime Minister Mahathir Mohamad, she expressed “confidence in the outcome.”

An entirely different possibility for Lynas arose last March when Wesfarmers launched a AU$1.5-billion bid for the miner. One of Australia’s largest listed companies and a multi-billion-dollar conglomerate with interests including chemicals, energy, fertilizers and industrial products, Wesfarmers imposed a daunting condition: Kuantan must retain a valid permit for a “satisfactory period following completion of the transaction.” 

Lynas spurned the offer, provoking talk from Wesfarmers of going hostile. Undeterred, and the day before proclaiming its “will to win,” Lynas joined one of its customers, downstream rare earths processor Blue Line Corp, to announce a memorandum of understanding to build an RE separation plant in Texas. The proposed joint venture “would be the only large-scale producer of separated medium and heavy rare earth products in the world outside of China,” the companies stated.

Of course the Blue Line MOU lacks certainty, as does the strategy of presenting options in the face of a government ultimatum. $500 million isn’t all that much. To industry observers, the predicament once again emphasizes the need to create non-Chinese supply chains.

Rare earths provide a cautionary tale about supply chain weaknesses

A founding principal of Technology Metals
Research LLC and a senior fellow at the
Institute for Analysis of Global Security,
Jack Lifton has over 55 years’ experience
with technology metals.

Speaking with ResourceClips.com the week before Lynas’ May 20-21 announcements, Jack Lifton discussed the urgency of addressing critical minerals challenges.

A chemist specializing in metallurgy, a consultant, author and lecturer focusing on rare earths, lithium and other essentials that he labels “technology metals,” Lifton was one of four scientists hired by the previous Malaysian government to evaluate the Kuantan facility prior to its initial permit.

Wesfarmers “would have the money and the time” to solve Lynas’ problems, he said. “A $38-billion company can spend a year fixing problems and stay in business. If Lynas were shut down for a year, I think that would be the end of it.”

Earlier this month Wesfarmers offered AU$776 million for ASX-listed Kidman Resources, which shares a 50/50 JV with Sociedad Quimica y Minera de Chile SA (SQM) on the advanced-stage Mount Holland lithium project in Western Australia.

“Wesfarmers clearly knows all the problems with Lynas but they’re still interested in buying it,” Lifton pointed out.

The possibility of a Chinese buy-out, on the other hand, could meet opposition from either of two governments. Malaysia’s previous administration feared Chinese influence, Lifton says.

As for Australia, “I do not think that the government, as it will be constituted after this election, will allow the Chinese to buy what is basically the largest high-grade deposit of magnet rare earths on the planet,” he says. Even so, Chinese control could eliminate the Malaysian problem. “China has immense facilities and excess capacity for treating ore like that. They wouldn’t need the Malaysian plant, not at all.”

Control need not mean total ownership. Following Molycorp’s bankruptcy, California’s Mountain Pass mine quietly resumed production last year under MP Materials. With China’s Shenghe Rare Earth Company a minority shareholder, North America’s sole rare earths producer exports all its output to China.

Shenghe Resources comprises the world’s second-largest RE company by output. It holds a majority stake in ASX-listed Greenland Minerals, which describes its Kvanefjeld polymetallic deposit as having “potential to become the most significant Western world producer of rare earths.” Last August the companies signed an offtake MOU for the proposed mine’s total RE production.

Huatai Mining, a subsidiary of Chinese coal trader Shandong Taizhong Energy, holds 15.9% of ASX-listed Northern Minerals, which plans to become the “first significant dysprosium producer outside China” at the Browns Range project in Western Australia.

“Everything from Browns Range is now going to China for refining and use,” Lifton notes. “My understanding is that’s what’s going to happen in Greenland.”

Neither Greenland nor Northern can handle separation, he explains. “They can concentrate the ore, but where are the facilities to separate individual rare earths from the mixed concentrate? They are, today, overwhelmingly in China. The Chinese have an advantage in excess refining capacity.”

While Lifton thinks Malaysia would welcome Japanese ownership of Lynas, the Japanese no longer have processing abilities. They’re also burdened by Mitsubishi’s legacy.

“China does not, to the best of my knowledge, have ore as rich as Mount Weld. I don’t know of any other deposit on earth that’s so high-grade and well-distributed with magnet materials. So anyone who has processing would love to have that.”

If we don’t reconstitute a total American supply chain, if the Europeans don’t do the same, for the critical materials like rare earths, cobalt, lithium, we’re going to be out of luck.—Jack Lifton

Such a fate is now pure speculation but should Lynas face a Sino-scenario, it would only intensify a trend well underway, he adds. “They already have the largest RE industry on the planet and they’re buying RE, cobalt and other critical assets in Greenland, Africa, Australia, South America.

“If we don’t reconstitute a total American supply chain, if the Europeans don’t do the same, for the critical materials like rare earths, cobalt, lithium, we’re going to be out of luck. The Chinese in my opinion are already self-sufficient in rare earths, lithium and cobalt. They have mines all over the world that they own and operate, they have the bulk of chemical processing. They’re going to take care of their domestic needs first, and then if they want to export, they’ll control the price, the supply, and they do control the demand because at this time about 60% of all world metals goes to China.

“In America there’s a lot of talk now about critical minerals and some people are saying we need ‘a conversation’ on the subject. So while we think about it and have conversations, the Chinese are setting themselves up for the rest of this century.”

Got the minerals?

March 4th, 2019

A new book says self-imposed obstacles block U.S. self-sufficiency

by Greg Klein

“The Middle East has oil, China has rare earths.”

Deng Xiaoping’s 1992 implied threat became all too real eight years later in the Senkaku aftermath, when RE dependency put Japan and the West at China’s mercy. But just as the United States overcame the 1973 OPEC embargo to become the world’s leading oil producer, that country can overcome its growing reliance on dodgy sources of mineral production and processing. So say authors Ned Mamula and Ann Bridges in Groundbreaking! America’s New Quest for Mineral Independence.

Their country’s problem isn’t geology but policies, the book argues. Repeatedly pointing to Canada and Australia as role models, the authors say their own country’s mining potential can restore mining self-sufficiency, or at least minimize a crippling dependency.

A new book says self-imposed obstacles block U.S. self-sufficiency

Indeed, the mighty nation has a mighty problem with minerals: Imports supply many critical minerals and metals in their entirety, with heavy reliance on Russia and especially China, “countries we consider at best our competitors, and at worst our adversaries.”

Rare earths stand out as the “poster child for U.S. critical mineral vulnerability.” As the authors note, REs remain “essential for military and civilian use, for the production of high-performance permanent magnets, GPS guidance systems, satellite imaging and night vision equipment, cellphones, iPads, flat screens, MRIs and electric toothbrushes, sunglasses, and a myriad of other technology products. Since they offer that extra boost to so many new technologies, these rare earth metals rival energy in importance to our 21st century lifestyle.”

Industrial countries not only surrendered rare earths mining and processing to China, but gave up technological secrets too. That happened when China forced RE-dependent manufacturers to move their operations to China. After Apple transplanted some of its manufacturing to that country, China copied and reproduced the company’s products, at times outselling the iPhone with knock-offs.

A new book says self-imposed obstacles block U.S. self-sufficiency

Other intellectual property faces threats. “U.S. companies—Intematix, GE (Healthcare/MRI Division), Ford (Starter Motor Division), and Battery 1,2,3—have all added manufacturing capacity in China, and so has Japan’s Showa Denko, Santoku, and scores of other global electronics companies.”

RE dominance has also allowed China to lead the world in technology for electric vehicles, renewable energy and next-generation nuclear power. And America relies on its rival for defence: “Most of the U.S.’ advanced weapon systems procurement is 100% dependent on China for advanced metallurgical materials.”

Foreign dependency includes tantalum, “critical to the economy and national defense,” gallium, cobalt, uranium and the list goes on.

According to a just-published report from the U.S. Geological Survey, “in 2018, imports made up more than half of U.S apparent consumption for 48 non-fuel mineral commodities, and the U.S. was 100% net import-reliant for 18 of those.

“For 2018, critical minerals comprised 14 of the 18 mineral commodities with 100% net import reliance and 15 additional critical mineral commodities had a net import reliance greater than 50% of apparent consumption. The largest number of non-fuel mineral commodities were supplied to the U.S. from China, followed by Canada.”

The takeover of former TSX listing Uranium One by Russia’s state-owned Rosatom brings threats worse than most observers realized, the authors say. The acquisition granted the Russian government membership in trade organizations and therefore valuable intel formerly available only through espionage. Uranium One also gives Russia the ability to curtail future American uranium production and use its influence on Kazakhstan, the world’s top producer, to flood the U.S. with cheaper, subsidized supply. That could put both U.S. production and processing out of business in a tactic reminiscent of China’s RE machinations.

China’s communist government uses a ‘debt trap’ model of economic development and finance which proffers substantial financing to developing countries in exchange for an encumbrance on their minerals resources and access to markets. This predatory model has been particularly effective in countries characterized by weak rule of law and authoritarian regimes.—Ned Mamula
and Ann Bridges

The Chinese “are now masters at securing and controlling core natural resources globally, especially minerals.” The country uses long-term contracts, equity investments and joint ventures, as well as the “debt trap” that provides “substantial financing to developing countries in exchange for an encumbrance on their minerals resources and access to markets. This predatory model has been particularly effective in countries characterized by weak rule of law and authoritarian regimes.”

The U.S., meanwhile, suffers not only from naivete and short-term thinking, but from self-induced challenges. The authors devote an entire chapter to Alaska’s Pebble project, maybe the world’s largest undeveloped copper-gold-molybdenum deposit. After more than two decades and over $150 million in spending, “Pebble is still more about politics than geology, much less mining the minerals known to exist there.”

The story stands out as “the classic cautionary tale in U.S. history of how a powerful federal regulatory agency can go rogue and impose its will on an unsuspecting permit applicant.”

Suggestions to alleviate these ills include streamlining the permitting process, among other recommendations to open up domestic production and re-build supply chains. One of the authors’ more interesting ideas concerns teaming up with environmental activists to promote ethical green supply chains that would shut out conflict minerals.

The book’s marred by repetition, sloppy English and some bold-faced typographical shouting. It’s also cluttered with a few questionable information sources and excerpts from a novel that would have been better left unwritten. The portrayal of Canada as a role model, moreover, might induce bitter laughter from this side of the border. But Groundbreaking offers a vital message to general readers. In doing so, it could reinforce a growing awareness in the U.S. about the need to minimize foreign dependency.

Read more about U.S. efforts to secure critical minerals here and here.

Mixed messages

December 14th, 2018

Perspectives differ on 2018 small cap performance

by Greg Klein

Perspectives differ on 2018 small cap performance

Not everyone agrees, but some sources represent 2018 as a comeback year for mining and exploration.
(Photo: PwC Junior Mine 2018)

 

It was the best of times, the worst of times or some middling but still promising times—you’d have the dickens of a time trying to reconcile these conflicting viewpoints. Such was the state of junior miners this past year, when varying fortunes eluded generalization. Just how the sector performed depended on who did the talking.

Outright despair came from Peter Clausi last October, as the CEO of GTA Resources and Mining TSXV:GTA discussed the company’s proposal to sell its assets amid a change of business:

A look at some different perspectives on 2018 small cap performance

In this difficult Canadian mining environment, it was almost impossible for the board not to come to this decision. The lackluster commodity markets, the depressed public market for junior explorers and the severe challenge of raising further capital all contributed to this decision. We believe GTA’s shareholders will be better served in a growth industry other than junior exploration.

Not every CEO would turn a press release into such a cri de coeur, but stats show GTA’s hardly alone. Evaluating 378 mining and other companies with market caps ranging from $4 million to $588 million, the S&P/TSX Venture Composite Index shows a nearly 35% drop in valuations since the relatively heady days of last January.

Yet an entirely different perspective came from PricewaterhouseCoopers in December, with the 2018 edition of its annual Junior Mine report. Unlike the S&P/TSXV Composite, this data focuses only on miners and comes from 12 months ending June 30. Furthermore it examines the Venture’s top 100 miners by market cap, a selection that could tilt results in favour of success.

And a degree of success PwC found, with the aggregate valuation growing to $12.9 billion, a 6% increase over the previous year, the third consecutive annual increase and the best performance “since the heydays of 2011.”

Not just the top 100, but Venture miners and explorers overall increased their total market caps by 5% to $21.1 billion, PwC reported.

Even so they were outperformed by cannabis, fintech and cryptocurrencies. “As a result, mining companies’ share of the TSXV’s total value declined to 43.8%, down from 47.4% a year earlier. Nevertheless, mining remains by far the dominant sector on the exchange, with life sciences (13%), finance (11%) and technology (9%) representing the next-largest industries by valuation.”

Investors favoured top 100 companies moving from development into production, while royalty streaming and the energy metals lithium, cobalt and nickel took on greater prominence at gold’s expense.

Financing for Venture miners overall rose 6.5% to $2.7 billion, almost $2.2 billion of that from equities that mostly went to explorers and development-stage companies, PwC stated. Companies in the production stage increasingly turned to debt financing, which rose 65.9% over the previous 12-month period.

Fifty-one of the top 100 raised more than $10 million apiece, while 10 companies each raked in over $50 million.

Apart from market caps and financings, spending provides another guide to the sector’s health. Some upbeat numbers came in October from Natural Resources Canada, following a survey of companies’ 2018 commitments for Canadian projects. If all went to plan, exploration expenditures for the year came to $2.36 billion, an 8% increase over 2017 and the highest amount since 2012. Juniors, struggling or not, accounted for over 45% of the total commitments.

With coffers at their fullest in seven years, equity and debt financings on the rise and commodity prices relatively stable, the industry has entered a long-awaited period of opportunity.—The PwC Junior Mine 2018 report

The exploration category included engineering, economic, feasibility and environmental studies, as well as general expenses. All that’s part of the much larger category of total Canadian mineral resource development investments, which totalled $11.86 billion this year, compared with $10.61 billion in 2017, NRCan found.

In fact Canada leads an encouraging global trend among juniors, according to S&P Global Market Intelligence. Using different methodology, the group found budgets for nonferrous exploration leaping by 19% worldwide this year to hit $10.1 billion. Juniors showed the highest budget jump at 35%, their first increase since 2012.

Canadian companies lead the world in nonferrous exploration, boasting a 31% budget increase this year, leaving Australia and the U.S. in second and third place, S&P added.

Of course all that can sound like smiley-faced consolation to companies struggling with jurisdictional difficulties, commodity performance, investor negativity or other challenges. But in an industry not always shy about basking in reflected glory, the continuing success of some companies must offer reassurance to the sector as a whole.

The Sydney Morning Herald reports incidents of Chinese arrogance towards Australian politicians

November 23rd, 2018

…Read more

Drill-ready money

November 19th, 2018

Canada’s hitting a six-year high in exploration spending

by Greg Klein

Canada’s hitting a six-year high in exploration spending

Osisko Mining’s (TSX:OSK) Windfall project offers one reason why
Quebec leads Canada and gold leads metals for exploration spending.
(Photo: Osisko Mining)

 

Blockchain might offer intrigue and cannabis promises a buzz, but mineral exploration still attracts growing interest. A healthy upswing this year will bring Canadian projects a nearly 8% spending increase to $2.36 billion, the industry’s highest amount since 2012. According to recently released data, that’s part of an international trend that puts Canada at the top of a worldwide resurgence.

The $2.36 billion allotted for Canadian exploration and deposit appraisal forms just a small part of the year’s total mineral resource development investments, which see $11.86 billion committed to this country, up from $10.61 billion in 2017.

Those numbers come from Natural Resources Canada, which surveyed companies between April and September on their spending intentions within the country for 2018. The $2.36-billion figure includes engineering, economic and feasibility studies, along with environmental work and general expenses.

Canada’s hitting a six-year high in exploration spending

Trial extraction for Pure Gold Mining’s (TSXV:PGM)
Madsen feasibility studies encourages interest in
Ontario’s Red Lake region. (Photo: Pure Gold Mining)

Of that number, Quebec edges out Ontario for first place with $623.1 million in spending this year, 26.4% of Canada’s total. Ontario’s share comes to $567.5 million or 24%. Last year’s totals came to $573.9 million for Quebec and $539.7 million for its western neighbour. Prior to that, however, Ontario held a comfortable lead year after year.

Third-place British Columbia gets $335.5 million or 14.2% of Canada’s total this year, an increase from $302.6 million in 2017.

On a per-capita basis, Yukon’s enjoying an exceptional year with an expected $249.4 million or 10.6% of Canada’s total. That’s the territory’s second substantial increase in a row, following $168.7 million the previous year.

Saskatchewan dips this year to $187.2 million (7.9%) from $191.2 million in 2017. But the Fraser Institute’s last survey of mining jurisdictions placed the province first in Canada and second worldwide.

Nunavut drops too, for the third consecutive time, to $143.9 million (6.1%), compared with $177 million in 2017. The Northwest Territories’ forecast declines to $86.2 million (3.7%) this year after $91.2 million last year.

Canada’s hitting a six-year high in exploration spending

Among companies leading Yukon’s exceptional performance
is White Gold TSXV:WGO, with substantial backing from
Agnico Eagle Mines TSX:AEM and Kinross Gold TSX:K.
(Photo: White Gold)

Especially troubling when contrasted with Yukon’s performance, data for the other territories prompted NWT & Nunavut Chamber of Mines president Gary Vivian to call on federal, territorial and native governments and boards to help the industry “by creating certainty around land access, by reducing unnecessary complexity and by addressing the higher costs they face working in the North. Sustaining and growing future mining benefits depend on it.”

The pursuit of precious metals accounts for $1.5 billion in spending, nearly 64% of Canadian exploration. Ontario gets almost 31% of the precious metals attention, with 27% going to Quebec.

Base metals, mostly in Quebec, B.C. and Ontario, get 15.5% of the year’s total. Uranium gets 5%, almost entirely in Saskatchewan. Diamonds get nearly 4%, most of it going to the NWT and Saskatchewan. But nearly 11% of this year’s total goes to a category vaguely attributed to other metals, along with coal and additional non-metals.

Getting back to this year’s exploration total ($2.36 billion, remember?), senior companies commit themselves to nearly 55%, compared with nearly 51% last year. But the juniors’ share remains proportionately much larger than the pre-2017 years.

Additional encouragement—and on an international level—comes from S&P Global Market Intelligence. Using different methodology to produce different results, the Metals and Mining Research team found worldwide budgets for nonferrous exploration jumping 19% this year to $10.1 billion.

Juniors have been reaping the biggest budget gains at 35%. Over 1,651 functional exploration companies represent an 8% improvement over last year and the first such increase since 2012. But that’s “still about 900 companies less than in 2012, representing a one-third culling of active explorers over the past five years.”

The most dramatic spending increase hit cobalt and lithium, this year undergoing an 82% leap in exploration spending. That’s part of a 500% climb since 2015, SPGMI says.

Canada’s hitting a six-year high in exploration spending

Nemaska Lithium’s Whabouchi project in Quebec
contributes to the enthusiasm for energy metals.
(Photo: Nemaska Lithium)

Even so, precious and base metals retained their prominence as gold continues “to benefit the most from the industry recovery.” The global strive for yellow metal will claim $4.86 billion this year, up from $4.05 billion in 2017. Base metals spending will grow by $600 million to $3.04 billion. “Copper remained by far the most attractive of the base metals, although zinc allocations have increased the most, rising 37% in 2018, the report states. “Budgets are up for all targets except uranium.”

SPGMI finds Canada keeping its global top spot for nonferrous exploration with a 31% year-on-year budget increase. Second-place Australia achieved a 23% rise. The U.S. total places third, although with a 34% increase over the country’s 2017 performance.

In each of the top three countries, over 55% of the budgets focused on gold.

“Improved metals prices and margins since 2016 have encouraged producers to expand their organic efforts the past two years,” commented SPGMI’s Mark Ferguson. “Over the same period, equity market support for the junior explorers has improved, leading to an uptick in the number and size of completed financings. This allowed the group to increase exploration budgets by 35% in 2018.”