The Anchor House, Inc.

By Clint Cox

First of all, Alaska is beautiful – even in the rain!

It was my first trip to the great state, and I thoroughly enjoyed the scenery and the people. It all began in Ketchikan, starting with dinner and a good night’s sleep before we headed to the plane the next morning for the short hop to Bokan Mountain.

We arrived at the Ucore Uranium’s barge and talked for a bit with Jim McKenzie, Ucore’s CEO. We waited until Harmen Keyser, their head Geo, returned from the field to get an update and hopefully get out on the Mountain. Harmen gave us a great description of what we would see.

We were going to get wet, and any suggestion that my “waterproof” raingear and boots would probably keep me dry was politely smiled at as we headed into the bowels of the barge to grab some all-repelling “rubber”.

By the time we jumped in the boat and headed across the bay toward Bokan, I realized that rubber was the way to go!

We first went to the coreshack to get a bearing on the mineralization and what we would be looking for out in the field:

Inside, they were busy logging core, but they happily stopped to listen to Dr. Mariano, an expert rare earth geologist, discuss both the core and the complexity of rare earth mineralogy.

The rare earths at Bokan are contained in veins that run along the Dotson Trend.  You can see the peachy-pink flecks and the elongated whitish diamond-shaped mineralization in the core below.  These contain the rare earth mineralization. The minerals present may include (but may not be limited to):

• kainosite
• synchysite
• parasite
• bastnaesite
• euxenite
• samarskite
• allanite
• fergusonite
• armstrongite
• iimoriite
• thalenite
• tengerite
• tombarthite
• xenotime, and
• monazite

We took a sample and tested it with their Niton analyzer. Sure enough — rare earths!

After gaining a little better understanding of how to split and interpret core, we headed back out into the rain to walk the Dotson Trend – the current rare earth area that is being explored.

We followed the trend though the woods and muck, from outcrop to outcrop:

Walking the Trend was fascinating and insightful.  There were three geologists on this walk, and they all had excellent input.  This is complex stuff – so I need all the help I can get!

The mineralization is in veins that run along the trend. It is not yet known what the primary REE target mineral (or group of minerals) will be. It is clear that there is REE mineralization here – now we wait as they determine if the grade, tonnage, and metallurgy exists to make the project economically viable.  We will watch it closely!

A view from Bokan looking back at the barge:

Special Thanks to Jim McKenzie, Harmen Keyser, Cliff Hanson, Suzy, and the entire barge staff!

By Clint Cox

As announced by The Wall Street Journal in an article entitled, “Lynas Turns to Market for Funds After China Deal Sours”, Lynas has found alternative funding for their Mt. Weld project:

The miner’s fully underwritten raising is pitched at 45 Australian cents a share and comprises a A$88 million placement to institutional investors, a A$295 million one-for-one entitlement offer to existing shareholders and a A$67 million underwritten conditional placement.

The offer price is a steep discount to Lynas’ last traded share price of 90 Australian cents.

This certainly doesn’t help their share structure, but it does help satisfy their immediate needs.  We will look next for their timeline on restarting construction in Malaysia and the building of the concentrator in Australia.

By Clint Cox

The Lynas Corporation deal with China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC) is dead.

CNMC  pulled out of the deal after the Australian Foreign Investment Review Board (FIRB) requested that the CNMC stake be pushed below 50% and that they would have less than half of the seats on the board.

This deal was worth hundreds of millions to Lynas — CNMC was going to assist in financing the completion of the Mt. Weld project. Now Lynas will have to go back to the well and look for more money.

Nick Curtis has proven to be extremely resourceful when looking for money — so don’t count them out. The rare earths have experienced quite a run lately, especially in North America, but it is unclear if there will be an appetite for a project that requires this much capital. The world economy is still sputtering, but there may be interest in a project such as this.

We will follow the story.

By Clint Cox

The sheer volume of stories being published about rare earths lately has been staggering. I have wanted to include a number of links to these stories, but I realize that it might be frustrating because a number of the sources require subscription.  Many of the stories have had a distinctly Western slant on the recent issues, but several stories that have come from The New York Times, Science, and Metal-Pages.com have begun to reflect the Chinese thought behind the issues as well.

I would like to quote from a recent New York Times article entitled, “Backpedaling, China Eases Proposal to Ban Exports of Some Vital Minerals”,  because I believe it gives excellent insight into the current Chinese view on the recent MIIT draft:

Wang Caifang, deputy director general of China’s Ministry of Industry and Information Technology, tried on Thursday to allay concerns that the draft rules would become the final policy, saying the regulatory review was still under way.

“China is very responsible. We will not take arbitrary decisions. All our decisions will be consistent with scientific development,” she said in a speech at the Minor Metals and Rare Earths 2009 conference in Beijing. “China will not close its doors.”

During an interview after her speech, Ms. Wang said that China would continue to set an annual quota for the export of each mineral, adding, “I don’t think it will be zero.”

So there you have it, “I don’t think it will be zero.” Perhaps some of the hooplah will die down for a bit as we await the final REE policy from the Chinese.

And now for a video in which it becomes clear that the Chinese view resources from the standpoint of reserves, not just production. Thus, this video suggests a mindset that is very different from the Western approach of looking at production as the primary way to view rare earths. In other words, the Chinese recognize that they have the largest reserves in the world, but others have reserves as well — it’s just that they have chosen not to produce from these reserves for one reason or another (mostly pricing).

It is true that the United States does have vast reserves of rare earths, but are not currently producing from these reserves, although there is some production from above-ground stocks. Of course, this is a vast oversimplification of the issue.  For example, the United States does not have great reserves of the heavy rare earths, and each country has its own unique set of mining laws and restrictions. So reserve numbers, in and of themselves, do not tell the whole story, but it provides another frame of reference.

Also, in the video, we meet a gentleman who is directly involved in the production of rare earths, and he explains the problem of rare earth pricing with so much internal competition in China. This is part of what China is currently addressing — they wish to consolidate rare earth operations into fewer companies to create more efficient use of resources and provide better environmental controls. Of course, with fewer competitors, it will also help to better control the pricing.

Keep in mind that the Chinese will most probably not ban export of any of the REEs, but the commentator speaks of restriction in the piece.

And now, the video:

China to restrict exports of strategic rare earth metals – CCTV 090509

By Clint Cox

The controversy surrounding the recently released Chinese rare earth policy DRAFT by the Ministry of Industry and Information Technology (MIIT) has grown considerably, and I wanted to address some of the issues in a little more detail.

Please keep in mind that the document in question is a DRAFT, and it will undergo thorough review and revisions. When referenced below, “are being considered” means just that – we have to see the FINAL policy before we draw final conclusions.

Now some facts from the DRAFT:

• Yttrium (Y) is NOT being considered for prohibition from export. Many reports have stated that yttrium would be prohibited, but it is ytterbium (Yb) that is being considered for export prohibition – not yttrium. This is key, as Y plays a much more important role in the world REE market than Yb (which is almost negligible).

• All forms of europium (Eu), dysprosium (Dy), and terbium (Tb) are NOT being considered for prohibition from export. Co-precipitates containing Y/Eu and La/Ce/Tb ARE BEING CONSIDERED TO BE PERMITTED (for use in phosphors), as will certain compounds and metals containing specific percentages of Tb and Dy. Some forms of Eu, Dy, and Tb are being considered for the export ban, but there are important forms that will be allowed.

• Ytterbium (Yb), thulium (Tm), and lutetium (Lu), are being considered for the export ban. These elements have exceedingly small sales and are currently marginal in the rare earth market.

• Consolidation and Centralization is being considered to continue. By cutting producers and consolidating operations, the Chinese hope to create better efficiencies in handling waste and preserving their assets.

The point is, we just don’t know yet. Many articles and press releases have treated this DRAFT as if it were final policy – tiptoeing along the boundary of available facts and favoring what is presently fiction. The storyline of China banning export of HREEs makes for good copy and great stock prices, but it ignores both the facts above as well as the integrity of the Chinese political process for creating FINAL policy from a DRAFT.

To be clear – this is not to say that much of the DRAFT won’t become policy – but premature speculation has taken the coverage of this industry down a dangerously speculative path.

I have to remind myself again and again (with varying degrees of success): Beware of over-simplification and easy answers with the rare earth elements.