IM Rare Earths News in Brief 3 – 9 November

By Albert Li, James Sean Dickson
Published: Monday, 09 November 2015

Chinese rare earths miners produce mostly losses; Tantalus enters preliminary insolvency proceedings; Northern Minerals cuts pay for executive staff and issues redundancy notices.

Only China Northern Rare Earth Hi-Tech Group Co. Ltd produced a profit of the five publicly listed Chinese rare earths miners, posting a Chinese renminbi (Rmb) 300m ($47.2m*) income for the first nine months of the year.

China Minmetals Corp. booked an Rmb 70m ($11m) loss, Guangdong Rising Nonferrous Metals Group Co. Ltd recorded a loss of Rmb 90m ($14.1m), while Xiamen Tungsten Co. Ltd, which mainly produces heavy rare earths, reported an Rmb 60m ($90.4m) loss.

Jiangxi Copper Co. Ltd, which has only small rare earths interests, nevertheless saw its profits fall from the wider mining malaise, posting an Rmb 1.2bn ($188.6m) profit figure, down 50% year-on-year (y-o-y).  Finally, Aluminium Corp. of China (Chinalco) posted a turnover of Rmb 95.2bn ($15m) for the three month period, down 9% y-o-y.

Magnet companies performed more strongly, with, among other companies, Ningbo Yunsheng Group Co. Ltd reporting an Rmb 300m ($47.2m) profit, up 58% y-o-y, and Beijing Zhong Ke San Huan Hi-Tech Co. Ltd posting incomes of 180m ($28.3m), down 20.5%.

Meanwhile Reuters suggested that recently announced production curtailments made by all of the "big six" rare earths producers in China will provide little comfort to the sector.

"The cuts caused a short-term bump [in prices], but the real problem is that it’s only a small drop in the ocean," David Merriman, senior analyst at Roskill Information Services told the newswire. "The amount of illegal production (…) is strong enough to keep downward pressure on pricing."

"The decision to reduce output is encouraging and a sign that consolidation of China’s industry into six large groups will help encourage production discipline. That said, it will take more than just a 10% reduction in 2015 to remedy the structural imbalance in China’s industry," agreed Ryan Castilloux, a founding director at Adamas Intelligence.

In Germany, Tantalus Rare Earths AG has entered preliminary insolvency proceedings, as directed to by the District Court of Munich.

Axel Bierbach of Muller-Heydenreich Bierbach and Co. has been appointed preliminary administrator.

Tantalus owns the TRE-AG ionic clay rare earths project in Madagascar. Like the ionic clays of southern China, the deposit is understood to have a higher proportion of higher-priced heavy rare earths (HREE) than other, mainly carbonatite-based, alternative projects.

Japan and Kazakhstan are to collaborate on rare earth exploration in the Karaganda and Kostanai provinces of Kazkahstan, according to report by local news source Tengri.

"Japan’s Oil, Gas and Metals Corp. and Kazgeologiya National geological Exploration Co. are expecting to start exploration works in spring 2015, primarily in territories rich in yttrium," the Kazakh Ministry for Investments and Development said.

A working group will be established under the agreements, which will consider other possible rare earth projects based in Kazakhstan, including in processing.

In Australia, Arafura Resources Ltd has announced a 38% increase in measured and indicated resources at its Northern Territory-located Nolans Bore project, which now contains over 1m tonnes measured and indicated rare earths resources.

Contained measured total rare earth oxide (TREO) content was up 10%, while contained indicated TREO resources were up 45%, for a total contained TREO increase of 20%.

"The impetus for this resource update was the necessity to characterise the project’s life-of-mine waste rocks, including their radioactivity, which is a key component of the Nolans environmental impact statement (EIS) studies that are now nearing completion," Arafura said.

ASX-listed Northern Minerals Ltd has implemented a number of measures to cut its cost of doing business, including executive team pay-cuts.

Northern’s managing director, George Bauk, will see his salary cut by half, in line with a 50% reduction of directors fees. Executives will see a similar cut in salary applied.

In addition to pay cuts, a number of redundancies will be implemented at both the Browns Range project site and at Northern’s head offices.

"These measures have included some difficult decisions, but they reflect the current environment and strike the best balance for the future of the company," Bauk said.

In Canada, Search Minerals Inc. has received an R&D grant of Canadian dollar (C$) 1.25m ($939,390) from the Research & Development Corp. of Newfoundland and Labrador (RDC) and the Atlantic Canada Opportunities Agency (ACOA).

The funds will be used to assist the construction and operation of a pilot plant to test Search’s metallurgical process for rare earths production.

"Our successful collaboration with RDC and ACOA in 2014 led to the metallurgy breakthrough, whereby grinding, flotation, gravity and magnetic separation were eliminated from the simplified process flow sheet," Greg Andrews, Search’s CEO, said.

"This larger scale integrated pilot plant operation will provide Search with the critical engineering data to advance the process through to commercialisation," Andrews said. "The test will also provide Search with sufficient mixed rare earth oxide (REO) oxide to provide to potential partners to test the downstream separation process into individual rare earth elements."

San Diego, US-based Inc. has received additional analyses on two samples that resulted in the discovery of a carbonatite deposit with anomalous rare earth values on the Eldor property in northern Quebec.

Located nearby Commerce Resources Corp.’s Ashram rare earths property, the fresh analyses yielded neodymium concentrations of 546-728 parts per million (ppm) and cerium concentrations of 1,420-1,450 ppm.

*Conversions made November 2015