Gold

Protection Metals Corp.: Uncommon Earth Metals Play with Tiny Market Cap however Large Potential

These are thrilling occasions for this firm and others prefer it, with costs for uncommon earth components on the rise and geopolitical components in play, says Peter Epstein of Epstein Analysis.

There was fairly a little bit of ink spilled currently relating to the Chinese language—U.S. standoff and potential implications for uncommon earth metals. Rick Mills of Forward of the Herd has written the very best articles that I’ve learn up to now. Many uncommon earth metals firms have seen their share costs improve, some considerably. But, we’re most likely nonetheless within the early innings of a protracted, drawn-out recreation. After all, nobody is aware of how it will finish, however choose uncommon earth (REE) costs have begun to maneuver increased. As an example, mild uncommon earth ingredient (LREE) neodymium oxide (Nd) is up > 22% in simply the previous few weeks. As of Friday, Could 24, costs of praseodymium-neodymium oxide stood at 330,000-340,000 yuan/tonne, up from 264,000 yuan/tonne the week prior, in accordance with SMM. That is up 26% in per week.

From a International Instances article: “Why did the U.S. threaten to lift tariffs on basically all remaining imports from China, whereas sparing uncommon earth metals? And not using a dependable home provide, the U.S. should depend on China to provide industries of excessive strategic significance. China can elevate costs of uncommon earth metals exported to the U.S. in response to increased tariffs on Chinese language merchandise. The U.S. resolution to omit uncommon earths from the China tariff checklist exhibits how a lot the Nation will depend on these minerals. Within the brief time period, U.S. customers wouldn’t be capable to discover options, so that they must settle for increased costs. China has varied instruments to affect costs, slicing the variety of rare-earth mining licenses, elevating market entry requirements for miners and decreasing exports of major rare-earth merchandise.”

Along with uncommon earths being within the crosshairs, safety of provide of cobalt can also be being mentioned by trade members, authorities, and commerce officers within the U.S. Whereas much less important then the very best worth uncommon earth metals, lithium and cobalt are vital, particularly for grid-scale vitality storage Programs. Final week, execs from cobalt firms with initiatives within the U.S. and Canada met in Washington, D.C., to debate cobalt’s tortured provide chain. Provide is at grave danger as a result of ~65% of it coming from a single nation in Africa. Politicians speaking about cobalt provide is useful in framing the uncommon earth metals state of affairs. Proof that the commerce warfare is heating up might be seen in increased uncommon earth metals costs. It’s so simple as that, and we’re seeing increased costs of choose metals.

The largest will increase have come from dysprosium (Dy), Nd and praseodymium (Pr), up by 56%, 22% and 22%, respectively, from 2019 lows, as of Could 27. These three metals simply occur to be three of essentially the most important metals for nationwide protection purposes, and are extensively utilized in tremendous magnets and in different essential high-tech fields. In lots of makes use of there are few, if any, substitutes. Uncommon earth metals juniors are catching a bid: Appia Vitality Corp. (APAAF:OTCQB), GéoMégA Assets Inc. (GMA:TSX.V), Rainbow Uncommon Earths (RBW:LSE), Greenland Minerals & Vitality Ltd. (GGG:ASX), Northern Minerals Ltd. (NTU:ASX) and Peak Assets Ltd. are up a median of 114% from 52-week lows.

Curiously, three of the highest six performers I discussed are Australian-listed, an trade that almost all readers (and me) hardly ever, if ever, commerce on. There usually are not that many North American-listed REE shares to select from. And, lots of the united statesand Canadian listed names have initiatives that require a whole lot of hundreds of thousands of U.S. dollars in capex. Others that had been thrilling within the final REE bull market have metals which can be now not as extremely prized. In 2010–2011, there may need been six to eight REEs value proudly owning. Immediately, solely three to 4 uncommon earth metals are really bankable for the long term.

With that in thoughts, (look forward to it; I’ve a inventory thought to debate) readers ought to need to put money into firms with LREE deposits, extra particularly with deposits containing as a lot Pr, Nd and Dy as potential, and firms which have tight share constructions in order that in the event that they transfer, the uptick may very well be very important. Readers ought to search for firms with small market caps. Much less cash is being deployed into pure useful resource shares, it is rather a lot simpler to maneuver an organization with a market cap CA$100M. Lastly, a robust administration workforce and board are paramount.

Protection Metals Corp. (DEFN:TSX.V; DFMTF:OTC; 35D:FSEQB) has the entire attributes I discussed and extra. Earlier this 12 months, the share worth hit CA$zero.30 on pleasure over the uranium spot worth climbing above US$29/pound (the corporate has promising Athabasca uranium belongings), a terrific administration workforce and an inexpensive valuation (solely 24 million shares excellent). Since then, the uranium worth has settled to round US$24.5/pound and firm information move has been slower than hoped for. SGS Canada is performing a battery of assessments and can write various vital reviews, principally about metallurgy. SGS is working with a 30-tonne bulk pattern from Protection Metals’ Wicheeda deposit.

Nonetheless, the administration workforce, board and advisors are as robust as ever, and choose mild REE costs are rising. Growing costs? That is unusual. Lithium, cobalt, vanadium, gold, silver, copper, zinc, lead, uranium—all down over the previous month or longer. Marijuana (hashish) costs are down as nicely! In accordance with Mr. David Merriman of Roskill, “LREE initiatives have comparatively higher concentrations of lanthanum, cerium, praseodymium, neodymium and samarium, usually forming roughly 75%–99% of contained REEs in a deposit.” Protection Metals has a LREE deposit with all 5 of these metals.

Protection Metals has two of simply three or 4 uncommon earth metals which can be completely important to the worldwide financial system, and some metals which can be modestly to reasonably vital in enabling a rising center class to proceed shifting to cities and shopping for their first good telephones and electrical automobiles. The concentrations of Nd and Pr might sound low at nicely beneath 1%, however these metals commerce at about US$70Okay/t. Examine that to ~US$35Okay/t for cobalt, ~US$18Okay/t for vanadium, ~US$12Okay/t for nickel and ~US$6K/t for copper.

One cannot speak about China and the U.S. with out discussing uncommon earth metals. If one talks about uncommon earth metals, those that come to thoughts are Nd, Pr and Dy. Earlier this 12 months I requested Mr. Merriman concerning the dominance of choose metals and, after all, China. He stated:

“China leads in manufacturing of each mined uncommon earth merchandise and refined uncommon earth compounds, with Chinese language manufacturing accounting for 86% of worldwide refined manufacturing in 2017. Uncommon earth manufacturing outdoors China is forecast to develop considerably by way of 2028 as quite a few initiatives in Australia, Russia, the Americas and Africa come on-line. Demand for uncommon earth everlasting magnets is forecast to point out robust progress by way of 2028, which is anticipated to additional distort uncommon earth demand ratios with Nd, Pr and Dy forming a higher proportion of complete demand.”

Administration expects much more information move in June than in April and Could as SGS Canada completes extra metallurgical take a look at work on the 1,780-hectare Wicheeda undertaking bulk pattern. The timing might hardly be higher. If the corporate receives extra optimistic information, a mini-pilot plant can be constructed to additional advance and derisk a course of move sheet. Choose head assay outcomes for the 30-tonne bulk pattern included 2.34% Ce oxide, 1.77% La oxide, zero.52% Nd oxide and zero.18% Pr oxide. Whole LREO (mild uncommon earth oxide) was four.81%.

From a latest firm press launch:

“The outcomes verify, together with earlier metallurgical head grades returned from smaller drill core samples, the presence of great Pr values. . .The Firm considers the outcomes to have potential financial significance to the development of the Wicheeda Property given latest indicative LREE oxide costs and their potential affect on Wicheeda, which has been traditionally seen as a cerium-lanthanum-neodymium deposit.”

I look ahead to information on this thrilling LREE undertaking. Wicheeda may very well be in small-scale business manufacturing comparatively rapidly, if the metallurgy is nearly as good as administration believes it is perhaps. The undertaking has a lot smaller upfront capex than many legacy initiatives world wide which can be nonetheless on the drafting board. The reviews and knowledge from SGS ought to convey an amazing quantity of details about the potential feasibility of a mining operation. It is thrilling occasions for REE & LREE juniors, particularly so for Protection Metals Corp. shareholders.

Peter Epstein is the founding father of Epstein Analysis. His background is in firm and monetary evaluation. He holds an MBA diploma in monetary evaluation from New York College’s Stern College of Enterprise.

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Disclosures: The content material of this text is for info solely. Readers totally perceive and agree that nothing contained herein, written by Peter Epstein of Epstein Analysis [ER], (collectively, [ER]) about Protection Metals Corp., together with however not restricted to, commentary, opinions, views, assumptions, reported info, calculations, and many others. is to not be thought of implicit or express funding recommendation. Nothing contained herein is a suggestion or solicitation to purchase or promote any safety. [ER] just isn’t accountable beneath any circumstances for funding actions taken by the reader. [ER] has by no means been, and isn’t at present, a registered or licensed monetary advisor or dealer/seller, funding advisor, stockbroker, dealer, cash supervisor, compliance or authorized officer, and doesn’t carry out market making actions. [ER] just isn’t straight employed by any firm, group, group, celebration or individual. The shares of Protection Metals Corp. are extremely speculative, not appropriate for all traders. Readers perceive and agree that investments in small cap shares can lead to a 100% lack of invested funds. It’s assumed and agreed upon by readers that they may seek the advice of with their very own licensed or registered monetary advisors earlier than making any funding selections.

On the time this text was posted, Peter Epstein owned shares of Protection Metals and it was an advertiser on [ER].

Readers perceive and agree that they need to conduct their very own due diligence above and past studying this text. Whereas the creator believes he’s diligent in screening out firms that, for any causes by any means, are unattractive funding alternatives, he can’t assure that his efforts will (or have been) profitable. [ER] just isn’t answerable for any perceived, or precise, errors together with, however not restricted to, commentary, opinions, views, assumptions, reported info & monetary calculations, or for the completeness of this text or future content material. [ER] just isn’t anticipated or required to subsequently comply with or cowl occasions & information, or write about any explicit firm or subject. [ER] just isn’t an knowledgeable in any firm, trade sector or funding subject.

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