Saturday 25th May 2019

Resource Clips


Posts tagged ‘REE’

Ever unconventional

May 24th, 2019

Rick Rule might be even more contrarian than you thought

by Greg Klein

Not for the faint-hearted, resource stocks hardly suit reckless investors either. Rick Rule’s long and successful career in this volatile world likely stems from shrewd insight borne of a non-conformist outlook. The president/CEO of Sprott U.S. Holdings took time to talk with ResourceClips.com about his favourite commodities, mining management, trade wars and critical minerals as well as—if only to demonstrate the principle of enlightened self-interest—the Sprott Natural Resource Symposium returning to Vancouver from July 29 to August 2.

As miners and manufacturers struggle to secure adequate supplies of essential minerals, does he still see justification for gold’s special status?

Rick Rule might be even more contrarian than you thought

“I do,” he replies. “I think gold has a special place of its own among metals in the investment universe in that, while it has fabrication value in things like jewelry, iconography and electronics, it is also simultaneously a unit of exchange and a store of value.

“It is also a metal that attracts a certain class of equity investors precisely because of its volatility, and what that means is that people who have a reputation for being able to either find or produce gold more efficiently than their competitors have the lowest cost of capital of any entrepreneurs in the mining business. So I would suggest that precious metals are unique in the mining space.”

What other metals interest him?

“Well the truth is I’m agnostic as to how I make my money. But traditionally two commodities, iron and copper, have been unusually profitable, although they’re usually the domains of the big mining companies. Iron doesn’t occupy a very large part of the exploration space. What are particularly attractive to me right now are commodities that are so deeply out of favour that, on a global basis, the cost to produce them exceeds the price that they sell for, implying industries that are ostensibly in liquidation. So minerals that especially attract me at present are nickel, zinc, copper and in particular uranium.

“Having said that, Sprott will back a top-quality management team, or will finance what appears to be potentially a Tier I asset, irrespective of commodity.”

Speaking of mining management, that’s a subject he’s previously lambasted with scathing comments. Does he see the problem as unique to mining?

Rick Rule might be even more contrarian than you thought

Rick Rule:
An insider with an outsider’s perspective.

“I’ve spent 40 years in extractive industries and don’t have experience in other industries, so I don’t know how widespread the problem is in other places. I do know that in one study, a young Sprott intern pulled at random financial statements and income statements over I believe five years from 25 junior miners. The median expenditure on general and administrative expenses exceeded 65% of capital raised. That’s not the prescription for a successful industry.

“It’s worth noting that in joint ventures that we’ve observed where a major mining company is earning into an exploration project operated by a junior, the median general and administrative expenses allowed as a percentage of total expenditures is 12%. So that would suggest that the junior public company format is inefficient.

“Now it bears noting that the junior mining industry has been enormously profitable to me personally and also to Sprott. And the conclusion that one has to draw is that functionally all of the value delivered over time by the junior mining industry is delivered by a fairly small number of teams. I would argue that less than 5% of the management teams in the business generate well in excess of 50% of the value created. Their contributions are so valuable that they add legitimacy and sometimes even lustre to a sector that overall has a very poor track record.”

Rule applies his contrarianism to trade wars and legislated efforts to secure critical minerals. He opposes government intervention and considers the U.S.-China dispute unnecessary.

“I believe that tariffs are an indirect form of tax and that protectionism ultimately backfires on the protector by making him or her less efficient. Now having said that, with regards to the Section 232 review of uranium, I would personally be a beneficiary of any action that Trump took. So it would be bad for the United States of America and good for me. I’m an unalloyed believer in free trade and free investment. To benefit a small number of claimants at the expense of a market is, I think, very bad policy.”

While many observers fear the trade war will provoke a second Senkaku with China manipulating its rare earths dominance, Rule thinks the gambit would rebound to the benefit of non-Chinese producers.

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.

“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. So I’m unconcerned about access to those so-called critical metals.”

Meanwhile he thinks the trade war “is political posturing and it is clientelist in the most pernicious sense, seeking to benefit a few interests who might be big campaign contributors at the expense of markets and consumers.”

Does he think the Sino-American conflict will have long-lasting effects?

“I’m not a political analyst, but I hope this is a circumstance where Xi benefits by looking tough to a domestic political constituency and Trump does the same, and nothing much comes of it. My hope is this is just populist puffery on behalf of both executives.

“At least in my lifetime, every tariff that has ever existed is a euphemism for a tax, and has served no useful purpose and in fact has been destructive to global trade and to the nation imposing the tariff. Similarly, so-called free trade agreements are really political pacts that may serve a political purpose for a favoured few. But the truth is, a free trade agreement could be written on one piece of paper. You could say: There will be no legal impediments between the voluntary buying and selling of any willing parties. Period.

“Instead, NAFTA was 3,600 pages.”

Among the challenges facing junior mining is powerful competition from cannabis stocks. Does he see that as a short-term trend?

“Yeah, I do. I think the cannabis craze will wear itself out the same way any other craze does. I don’t know that the hot money necessarily will move back to mining until after it isn’t needed anymore. Frankly I welcome the move of hot money, dumb money, out of mining and into crypto and cannabis. The mining business has been over-funded and the subject of unrealistic expectations for 30 years to the extent that the industry went on a forced diet for a while, a lot of issuers failed and rational expectations returned to the space. I think that would be a very good thing.

I’m also delighted frankly that in places like Vancouver and Los Angeles management teams that were formally in mining have moved on to substances that they’re interested in and familiar with, like cannabis. If you live in Vancouver, it’s very clear that due diligence is conducted nightly on most street corners downtown.

“I’m also delighted frankly that in places like Vancouver and Los Angeles management teams that were formally in mining have moved on to substances that they’re interested in and familiar with, like cannabis. If you live in Vancouver, it’s very clear that due diligence is conducted nightly on most street corners downtown.”

And speaking of Vancouver, what’s Rule got to say about Sprott’s upcoming event?

“We hope to deliver the best possible experience that we can, all the way from big picture commentators like Danielle DiMartino Booth, Nomi Prins, Jim Rickards and Doug Casey, but also including really interesting industry participants. One of the things we’ve been doing for 25 years is we have always made room for speakers who are active in the mining business today after building billion-dollar companies from scratch. This is important because they talk not just about mining but also how the lessons they learned building their companies impact the way they invest their own money, and the way that speculators should invest theirs. Further, unlike any other conference I know, an exhibitor has to be owned in a Sprott-managed account. Our attendees have told us our exhibitors are not from their point of view mere advertisers, but rather they’re content too.

“Finally, while most resource-oriented conferences have shrunk demonstrably in size over the last four or five years, ours has grown every year. One of the benefits investors get attending our conference is that they do so in the company of 700 of their peers, high net worth investors who have been successful in natural resources. And there is a lot to be gained not merely from the dais or the exhibit hall, but also from talking to other experienced, successful and battle-scarred speculators and investors.”

Rick Rule hosts the Sprott Natural Resource Symposium in Vancouver from July 29 to August 2. Click here for more information.

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)

 

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.”

Commerce Resources and two Inuit corporations sign LOI to advance northern Quebec rare earths

May 15th, 2019

by Greg Klein | May 15, 2019

Commerce Resources and two Inuit corporations sign LOI to advance northern Quebec rare earths

The parties consider Inuit involvement critical to this critical minerals project.

 

While a project that would provide essential raw materials continues towards pre-feasibility, a letter of intent ensures Inuit participation, the signatories announced May 15. The Nayumivik Landholding Corporation of Kuujjuaq and the Makivik Corporation signed the LOI with Commerce Resources TSXV:CCE regarding the Ashram rare earths deposit in arctic Quebec’s Nunavik region.

The letter marks “a first for Nunavik mining development, specifically for a pre-development project,” said Maggie Emudluk, Makivik VP of economic development. The LOI ensures “Inuit will be directly involved upstream in any discussions and proposed planning of this project. They will also be enabled to provide insights and share concerns during the progression of the project. Makivik is pleased that the LOI is in accordance with the Nunavik Inuit Mining Policy objectives that look forward to establishing clear lines of communication with the industry.”

Commerce Resources and two Inuit corporations sign LOI to advance northern Quebec rare earths

The Nunavik Mineral Exploration Fund held the recent
Nunavik Mining Workshop to discuss the region’s
mineral potential as well as its rich culture.

With one of the most advanced deposits outside China hosting these elements deemed critical by the U.S., Ashram shows favourable metallurgy as well as grade. The project’s rare earths occur within carbonatite host rock and the minerals monazite, bastnasite and xenotime, which are familiar to commercial REE processing. Near-surface mineralization further optimizes potential cost advantages.

Using a base case 1.25% cutoff, a 2012 resource shows:

  • measured: 1.59 million tonnes averaging 1.77% total rare earth oxides

  • indicated: 27.67 million tonnes averaging 1.9% TREO

  • inferred: 219.8 million tonnes averaging 1.88% TREO

The deposit also features some of the most sought-after REEs, with a strong distribution of neodymium, europium, terbium, dysprosium and yttrium. Metallurgical tests also show potential for a fluorspar byproduct.

“We look forward to working closely with Commerce and Makivik Corporation to implement the LOI during the pre-development phase of the proposed Ashram deposit,” commented Sammy Koneak, Nayumivik Landholding president. “We are confident that continued communication between the parties under the terms and spirit of the LOI will result in ongoing respect for our rights and our environment.”

Commerce president Chris Grove heralded the LOI as “a milestone that speaks to the cooperation between all parties— a document that recognizes the primacy of the James Bay Agreement, the practicalities of advancing our Ashram deposit through the next few years of development, the practicalities of getting our material to world markets, and the best way to achieve our collective goals of a new producing mine in Nunavik through the cooperation of the Inuit and Commerce towards our mutual benefit. We look forward to this future with the Inuit in Nunavik.”

The urgency of securing rare earths and other critical minerals has been recognized in a number of American government initiatives. This week the U.S. exempted rare earths and other critical minerals from tariffs imposed on China, emphasizing America’s reliance on a trade war enemy for commodities essential to the economy and defence. Last week a bipartisan group of U.S. senators proposed legislation to reduce their country’s reliance on unreliable sources of critical minerals.

Looking at other critical minerals, Commerce holds the Niobium Claim Group just a few kilometres from Ashram. Working towards a 75% earn-in, Saville Resources TSXV:SRE awaits assays from this year’s spring drill program. Previous intervals of near-surface, high-grade niobium along with tantalum support the company’s optimism.

Commerce also holds the Blue River tantalum-niobium deposit in southern British Columbia, which reached PEA in 2011.

A Capitol idea

May 7th, 2019

This U.S. bipartisan bill aims to reduce America’s critical minerals dependency

 

This won’t be the first time Washington has seen such a proposal. Announced last week, the American Mineral Security Act encourages the development of domestic resources and supply chains to produce minerals considered essential to the country’s well-being. But the chief backer, Alaska Republican Senator Lisa Murkowski, acknowledges having introduced similar standalone legislation previously, as well as addressing the topic in a previous energy bill.

A U.S. bipartisan bill would reduce America’s critical minerals dependency

This time, however, the proposal takes place amid growing concern. In late 2017, following a U.S. Geological Survey report that provided the first comprehensive review of the subject since 1973, President Donald Trump called for a “federal strategy to ensure secure and reliable supplies of critical minerals.” In early 2018 the U.S. Department of the Interior formally classified 35 minerals as critical. A September 2018 report responded to the presidential order, urging programs to address supply chain challenges that leave the U.S. relying heavily on countries like Russia and especially China.

Even so, Murkowski and the other three senators think Washington needs a little push.

“I greatly appreciate the administration’s actions to address this issue but congress needs to complement them with legislation,” she said. “Our bill takes steps that are long overdue to reverse our damaging foreign dependence and position ourselves to compete in growth industries like electric vehicles and energy storage.”

The senators referred to USGS data from 2018 showing 48 minerals for which their country imported at least 50% of supply. Foreign dependency accounted for 100% of 18 of them, including rare earths, graphite and indium.  

Focusing on energy minerals, Simon Moores of Benchmark Mineral Intelligence lauded the bipartisan group for addressing “a global battery arms race that is intensifying.

“Lithium, graphite, cobalt and nickel are the key enablers of the lithium-ion battery and, in turn, the lithium-ion battery is the key enabler of the energy storage revolution. Globally they are facing a wall of demand, especially from electric vehicles. Yet the U.S. has been a bystander in building a domestic supply chain capacity.

“Right now, the U.S. produces 1% of global lithium supply and only 7% of refined lithium chemical supply, while China produces 51%. For cobalt, the U.S. has zero mining capacity and zero chemicals capacity whilst China controls 80% of this [at] second stage.

These supply chains are the oil pipelines of tomorrow. The lithium-ion battery is to the 21st century what the oil barrel was to the 20th century.—Simon Moores
Benchmark Mineral Intelligence

“Graphite is the most extreme example with no flake graphite mining and anode production compared to China’s 51% and 100% of the world’s total, respectively. And it’s a similar story with nickel—under 1% mined in the U.S. and zero capacity for nickel sulfate.

“These supply chains are the oil pipelines of tomorrow,” Moores emphasized. “The lithium-ion battery is to the 21st century what the oil barrel was to the 20th century.”

Looking at another critical mineral, the White House has until mid-July to respond to a U.S. Department of Commerce report on the effects of uranium imports to American national security. According to the USGS, the fuel provides 20% of the country’s electricity but the U.S. relies on imports for over 95% of supply.

A recent book by Ned Mamula and Ann Bridges points to rare earths as the “poster child for U.S. critical mineral vulnerability.” In Groundbreaking! America’s New Quest for Mineral Independence, the authors say 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.”

Among the proposed act’s provisions are:

  • an updated list of critical minerals every three years

  • nationwide resource assessments for every critical mineral

  • “practical, common-sense” reforms to reduce permitting delays

  • R&D into recycling, replacing and processing critical minerals

  • a study of the country’s minerals workforce by the U.S. Secretary of Labor, National Academy of Sciences and the National Science Foundation

The senators made their announcement at Benchmark Minerals Summit 2019, a private event for industry and U.S. government representatives. In a February presentation to the U.S. Senate Committee on Energy and Natural Resources chaired by Murkowski, Moores issued a “red alert on the lithium-ion battery supply chain and the raw materials of lithium, cobalt, nickel and graphite.”

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

Saville Resources reports favourable geology, plans Phase II drilling at Quebec niobium-tantalum project

April 29th, 2019

by Greg Klein | April 29, 2019

Assays are pending but the first drill program since 2010 has Saville Resources TSXV:SRE optimistic about results. With five holes totalling 1,049 metres, the season devoted four holes to the Mallard target in the property’s southeastern area. Historic, non-43-101 results from Mallard’s previous campaign brought near-surface high grades that included:

  • 0.82% Nb2O5 over 21.89 metres, starting at 58.93 metres in downhole depth

  • 0.72% over 21.35 metres, starting at 4.22 metres
  • (including 0.9% over 4.78 metres)
Saville Resources reports favourable geology, plans Phase II drilling at Quebec niobium-tantalum project

A spring campaign under winter conditions
comprised the project’s first drill program since 2010.

True widths were unknown.

The spring campaign sunk an additional hole 60 metres from another location of high-grade, near-surface results that included an historic, non-43-101 interval of 0.71% Nb2O5 over 15.33 metres, starting at 55.1 metres. The new hole tested the intercept down-dip as well as the strike extension of the main mineralized zone.

“In each hole, favourable rock types and coarse-grained pyrochlore mineralization were visually identified over varying widths and concentrations,” the company stated. “Portable XRF data and detailed geological logging further support these observations.”

Saville plans further drilling at Mallard, as well as Miranna and several other targets, to build a 43-101 resource estimate. Previous boulder samples from Mallard include an exceptional 5.93% Nb2O5, as well as 2.75%, 4.24% and 4.3% Nb2O5. Tantalum samples from the area reached up to 1,040, 1,060 and 1,220 Ta2O5.

Work on the 1,223-hectare Niobium Claim Group takes place under a 75% earn-in from Commerce Resources TSXV:CCE, whose Ashram rare earths deposit a few kilometres away moves towards pre-feasibility.

In early April Saville released assays from last year’s campaign on the Bud property in southern British Columbia’s historic Greenwood mining camp, with samples reaching as high as 4.57 g/t gold, 27.7 g/t silver and 6.7% copper.

A private placement first tranche that closed in December brought Saville $311,919. In March the company optioned its James Bay-region Covette nickel-copper-cobalt property to Astorius Resources TSXV:ASQ. A 100% fulfillment would bring Saville $1.25 million over three years, with Astorius spending another $300,000 on exploration within two years. Saville retains a 2% NSR.

Read more about Saville Resources.

‘The Asian century’

April 4th, 2019

East has surpassed West, whether the West knows it or not, says Peter Frankopan

by Greg Klein

East has surpassed West, whether we know it or not, says Peter Frankopan

“Silk roads” can refer to the process of connecting people and cultures
through trade, according to Peter Frankopan’s recently published book.

 

Less than two years ago tensions along an especially sensitive border area sparked fighting between Chinese and Indian troops. Outside Asia, who knew? “As most of the world focused on the Twitter account of the US president and the circus surrounding Brexit, the threat of the two most populous countries on earth going to war was not just a possibility, it looked like becoming a fact,” writes Peter Frankopan. An uneasy truce eventually stalled hostilities but the West’s ignorance of the wider world remains. That’s both symptom and cause of the West’s decline, the author says.

The decisions being made in today’s world that really matter are not being made in Paris, London, Berlin or Rome—as they were a hundred years ago—but in Beijing and Moscow, in Tehran and Riyadh, in Delhi and Islamabad, in Kabul and in Taliban-controlled areas of Afghanistan, in Ankara, Damascus and Jerusalem. The world’s past has been shaped by what happens along the Silk Roads; so too will its future.—Peter Frankopan

Relatively few Westerners realize the extent of China’s Belt and Road Initiative. Actually a complex suite of alliances concerning resources, infrastructure, trade, security and even culture, the BRI forms just part of an Asian awakening that’s shifting the planet’s centre of importance while strengthening Eastern influence beyond Asia and Africa to make inroads into Europe, the Americas, the Arctic, cyberspace and outer space.

That’s the message of historian Frankopan’s latest book, The New Silk Roads: The Present and Future of the World. While present and future aren’t normally the precinct of historians, it was historical perspective that brought Frankopan to the topic. In context, Western global supremacy has been a recent, short-lived development.

Since announcing the BRI in 2013, China has promised nearly $1 trillion, mostly in loans, for about 1,000 projects, Frankopan reports. That money could “multiply several times over, to create an interlinked world of train lines, highways, deep-water ports and airports that will enable trade links to grow ever stronger and faster.”

That would enhance China’s access to, and control over, resources ranging from oil and gas to mines and farmland; provide markets for Chinese exports including surplus steel, cement and metals, as well as manufactured goods; create projects for Chinese contractors; secure foreign ports and other strategic commercial and military locations; and build closer foreign alliances for geopolitical as well as economic benefits.

Backed by Chinese money and local sovereign debt, Chinese companies have pushed roads, railways, power plants, grids and pipelines through Africa and Asia at a much faster rate than ever seen through Western aid. Of course that can put the supposed beneficiaries at the mercy of their Chinese creditors.

East has surpassed West, whether we know it or not, says Peter Frankopan

In 2011, for example, China forgave neighbouring Tajikistan’s infrastructure-related debt in exchange for several hundred square kilometres of territory. A $7-billion rail line in Laos represents over 60% of the country’s GDP. A rail-building boom in Angola left citizens with a per capita debt to China of $754 out of a per capita income of $6,200. In 2017 a Chinese company got a 99-year lease in lieu of debt on the Sri Lankan port of Hambantota, a strategic site for both commercial and military reasons. Other ports in Maldives, Vanuatu, the Solomon Islands and Djibouti could face a similar fate.

Even so, something like 85% of BRI projects “have proceeded without difficulty,” Frankopan states. China conducts many of its most opportunistic acquisitions openly, like buying a controlling interest in Piraeus, the Athenian port since antiquity. Other seaport purchases have taken place in Spain, Italy and Belgium.

Strategic ports and an alliance with Pakistan help position China in the Indian Ocean, while China continues to expand its South China Sea presence by building artificial islands for military bases. This isn’t just “the crossroads of the global economy” but a ploy to extend military power thousands of miles farther, according to a U.S. Navy admiral. China’s ambitions continue in the disputed East China Sea, location of the 2010 Senkaku conflict, in which China’s rare earths tactics demonstrated yet another weapon in the country’s arsenal.

As an economic powerhouse as well as a “geopolitical alternative to the US,” China can profit from American sanctions on countries like Iran. Russia too challenges U.S. policies towards countries like Saudi Arabia and Turkey, while the latter shows its willingness to trade with Iran and buy arms from Moscow.

Military co-operation can create unlikely allies. Last summer, in Russian’s largest war games since 1981, Beijing contributed 30 fighter jets and helicopters along with more than 3,000 troops. Included in the exercises were simulated nuclear attacks.

While futurologists and networking pioneers often talk about how the exciting world of artificial intelligence, Big Earth Data and machine learning promise to change the way we live, work and think, few ever ask where the materials on which the digital new world [depends] come from—or what happens if supply either dries up or is used as a commercial or a political weapon by those who have a near-monopoly on global supply.—Peter Frankopan

Even India, America’s strongest Asian ally and the Asian country most wary of Chinese expansion, stands to undermine U.S. influence with proposed transportation connections and free trade with Iran and Afghanistan.

Yet obvious perils weaken any notion of a united Asia working harmoniously towards a common goal. Russian-Chinese military co-operation doesn’t preclude Moscow stationing its 29th Army 3rd Missile Brigade, with nuclear missile capabilities, near the Chinese border.

Time will tell whether other countries can overcome the Eurasian chaos that inspired this maxim of Canadian miners: “Never invest in a country with a name ending in ‘stan’.”

Then there’s extremist Islam. Uighurs from western China have fought in Syria for the Islamic State in numbers estimated “from several thousand to many times that number.” China risks wider Muslim anger by running a gulag archipelago for Muslims. The country’s Xinjiang Uygur Autonomous Region hosts “the largest mass incarceration of a minority population in the world today.”

Oddly enough for someone who knocks Western insularity, Frankopan seems to share the current preoccupation with the U.S. president. Among Frankopan’s criticisms of the West is its supposed opposition to immigration, even though that’s a marginal position within liberal countries but official policy in most of the East.

Nor does Frankopan mention the weird ideological zealotry that threatens to destabilize if not destroy the West from within.

Still, history’s greatest value might be perspective on the present. This historian’s view of the present and future can help Westerners understand their not-so-esteemed status in the Asian century.

Infographic: Climate Smart Mining and minerals for climate action

March 14th, 2019

sponsored by the World Bank | posted with permission of Visual Capitalist | March 14, 2019

Climate Smart Mining Minerals for climate action

 

Countries are taking steps to decarbonize their economies by using wind, solar and battery technologies, with an end goal of reducing carbon-emitting fossil fuels from the energy mix.

But this global energy transition also has a trade-off: to cut emissions, more minerals are needed.

Therefore, in order for the transition to renewables to be meaningful and to achieve significant reductions in the Earth’s carbon footprint, mining will have to better mitigate its own environmental and social impacts.

Advocates for renewable technology are not walking blindly into a new energy paradigm without understanding these impacts. A policy and regulatory framework can help governments meet their targets, and mitigate and manage the impacts of the next wave of mineral demand to help the communities most affected by mining.

This infographic comes from the World Bank and it highlights this energy transition, how it will create demand for minerals and also the Climate Smart Mining building blocks.

Renewable power and mineral demand

In 2017, the World Bank published The Growing Role of Minerals and Metals for a Low Carbon Future, which concluded that to build a lower carbon future there will be a substantial increase in demand for several key minerals and metals to manufacture clean energy technologies.

Wind
Wind power technology has drastically improved its energy output. By 2025, a 300-metre-tall wind turbine could produce about 13 to 15 MW, enough to power a small town. With increased size and energy output comes increased material demand.

A single 3 MW turbine requires:

  • 4.7 tons of copper

  • 335 tons of steel

  • 1,200 tons of concrete

  • 2 tons of rare earth elements

  • 3 tons of aluminum

Solar
In 2017 global renewable capacity was 178 GW, of which 54.5% was solar photo-voltaic technology (PV). By 2023, it’s expected that this capacity will increase to one terawatt with PV accounting for 57.5% of the mix. PV cells require polymers, aluminum, silicon, glass, silver and tin.

Batteries
Everything from your home, your vehicle and your everyday devices will require battery technology to keep them powered and your life on the move.

Lithium, cobalt and nickel are at the centre of battery technology that will see the greatest explosion in demand in the coming energy transition.

Top five minerals for energy technologies

Add it all up, and these new sources of demand will translate into a need for more minerals:

 

  2017 production 2050 demand from energy technology Percentage change (%)
Lithium 43 KT 415 KT 965%
Cobalt 110 KT 644 KT 585%
Graphite 1200 KT 4590 KT 383%
Indium 0.72 KT 1.73 KT 241%
Vanadium 80 KT 138 KT 173%

 

Minimizing mining’s impact with Climate Smart Mining

The World Bank’s Climate Smart Mining (CSM) supports the sustainable extraction and processing of minerals and metals to secure supply for clean energy technologies, while also minimizing the environmental and climate footprints throughout the value chain.

The World Bank has established four building blocks for Climate Smart Mining:

  • Climate change mitigation

  • Climate change adaptation

  • Reducing material impacts

  • Creating market opportunities

Given the foresight into the pending energy revolution, a coordinated global effort early on could give nations a greater chance to mitigate the impacts of mining, avoid haphazard mineral development and contribute to the improvement of living standards in mineral-rich countries.

The World Bank works closely with the United Nations to ensure that Climate Smart Mining policies will support the 2030 Sustainable Development Goals.

A sustainable future

The potential is there for a low carbon economy, but it’s going to require a concerted global effort and sound policies to help guide responsible mineral development.

The mining industry can deliver the minerals for climate action.

Posted with permission of Visual Capitalist.

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.

Visual Capitalist: The bull case for energy metals going into 2019

January 10th, 2019

by Jeff Desjardins | posted with permission of Visual Capitalist | January 10, 2019

 

The rapid emergence of the world’s renewable energy sector is helping set the stage for a commodity boom.

While oil has traditionally been the most interesting commodity to investors in the past, the green energy sector is reliant on the unique electrical and physical properties of many different metals to work optimally.

To build more renewable capacity and to store that energy efficiently, we will need to increase the available supply for these specific raw materials, or face higher costs for each material.

Metal bull cases

Ahead of Cambridge House’s annual Vancouver Resource Investment Conference on January 20 and 21, 2019, we thought it would be prudent to highlight the “bull case” for relevant metals as we start the year.

It’s important to recognize that the commodity market is often cyclical and dependent on a multitude of factors, and that these cases are not meant to be predictive in any sense.

In other words, the facts and arguments illustrated sum up what we think investors may see as the most compelling stories for these metals—but what actually happens in the market, especially in the short term, may be different.

Overarching trends

While we highlight 12 minerals ranging from copper to lithium, most of the raw materials in the infographic fit into four overarching, big-picture stories that will drive the future of green energy:

Solar and wind
The world hit 1 TW of wind and solar generation capacity in 2018. The second TW will be up and running by 2023, and will cost 46% less than the first.

Electric vehicles
Ownership of electric vehicles will increase 40 times in the next 13 years, reaching 125 million vehicles in 2030.

Energy storage
The global market for energy storage is rapidly growing, and will leap from $194 billion to $296 billion between 2017 and 2024.

Nuclear
150 nuclear reactors with a total gross capacity of about 160,000 MW are on order or planned, and about 300 more are proposed—mostly in Asia.

Which of these stories has the most potential as a catalyst for driving the entire sector?

Based on these narratives, and the individual bull cases above, which metal has the most individual potential?

Visit Visual Capitalist at Booth #1228 at #VRIC19.

Posted with permission of Visual Capitalist.

Click here for free VRIC registration up to January 11.

Read more about the Vancouver Resource Investment Conference.

Infographic: Igniting innovation

January 2nd, 2019

Infographic by Natural Resources Canada | text by Visual Capitalist

Infographic Igniting innovation

 

Canada’s mineral sector is at the forefront of technological innovation. Industry experts, academics, government scientists and engineers generate the innovations to ensure the discovery and development of mineral deposits, and the operation and closure of mines.

These innovations support jobs, communities and businesses and are leading the way in reducing and improving the industry’s environmental impact and providing the necessary minerals to build a sustainable future.

The above infographic comes from the Canadian Minerals and Metals Plan and it draws out the use of technology and innovation at every stage of mining.

Innovation and discovery

The first stage of mining is discovering sources of minerals. It is not easy but with advances in exploration techniques geologists are uncovering the minerals for the future, today.

The future will require uncommon types of mineral deposits, such as chromite and rare earth elements. Canada is host to the Ring of Fire chromite deposits in northern Ontario and several well-advanced REE exploration projects to meet demand.

In order to improve the discovery of these deposits, the mineral sector deploys the latest in technology to improve the chances of making the next discovery. Field equipment such as laser-induced spectrometers detect the composition of minerals while in the field.

However, the majority of mineral discoveries will be deeper in the Earth’s crust. This requires collaborative data to identify patterns in complex geology at depth.

The Canadian government sponsors the Targeted Geoscience Initiative, a comprehensive source for information on ore systems throughout Canada. Geologists will be able to contrast and compare mineral resources across the country to develop new insights into economic deposits.

Mapping and mineral analysis generate large amounts of data and the patterns of ore systems. New deposits are not immediately apparent from this data. Through the application of machine learning and computer processing power, geologists could identify new sources of minerals.

Data will drive this initiative as 3D mapping technology and geophysical modelling provide the inputs to uncover ore deposits. These technologies can also lead to more efficient and effective mineral exploration and could extend the life of currently operating mines by identifying new zones for mining.

Finding the resources is the first step. The next is mining.

Innovation for productivity

Once a mine is built on top of an economic deposit, it is time to start moving the rocks.

Using alternative energy such as hydrogen fuel cells and battery-powered vehicles could reduce greenhouse gases of an underground mine by up to 25%.

The knock-on effects go beyond reducing the mineral sector’s carbon footprint, but alternative energy offers cost and productivity savings, as well as improved workers’ health.

Once equipment brings the ore to the mill, it is sorted using high-pulse microwave technologies and sensors that can improve crushing and milling.

Extracting minerals through comminution (the process of crushing or grinding rock into smaller pieces) is the most energy-intensive stage of the mining process. Up to 53% of a mine site’s electricity consumption is due to crushing and milling.

Technological innovation in mine management is not limited to the underground or the earth’s surface. GPS satellites will connect and monitor the mine of the future.

High-accuracy GPS can vastly improve mining safety, productivity, efficiency and environmental management by enabling increasingly precise and automated operations.

Areas that will benefit from GPS will include:

  • Road maintenance

  • Drill guidance

  • Surveying

  • Fleet management

  • Autonomous vehicles

Efficient management of mines during operation will improve the restoration of the ecosystem after mining ends.

Innovation for sustainability and resilience

Mining temporarily changes its surrounding environment but its products supply the critical material for a sustainable future. Innovation and technology will provide the greatest benefits to Earth’s other valuable natural resources, its water, land and communities, by minimizing impact.

Water is crucial to mining and is required at every step of the process. Mining operations deploy successful water recycling to minimize usage and the release of potentially contaminated water to the environment.

Canadian mines generate between 200 and 250 million tonnes of tailings waste annually. New mining techniques can extract and recycle valuable minerals from these tailings.

The critical and final stage of mining is ecosystem restoration. Returning the environment of a mine site to its natural state will help build resilience to the effects of climate change.

Industry experts and academia regularly collaborate to develop and update the best practice guidelines to maintain and monitor the high environmental standards all Canadians benefit from.

Coming full circle

At every stage of the life of a mine, innovation will improve mining’s environmental and economic footprint to deliver tangible benefits to all Canadians.

Posted with permission of Visual Capitalist.

Read more about Natural Resources Canada’s Canadian Minerals and Metals Plan.