IM Rare Earths News in Brief 8 – 14 December

By James Sean Dickson
Published: Monday, 14 December 2015

No bidders for Molycorp as single entity according to reports; Ossen profits up over 600%; Tantalus signs agreement for the sale of TRE project stake to exit insolvency proceedings.

US-based former rare earths producer Molycorp Inc., which is currently attempting to exit bankruptcy proceedings, has seen no bidders come forward for the business as an entire company, meaning that the firm will likely see its assets sold off in chunks, according to reports.

Quoting sources familiar with the matter, Bloomberg said that offers are only being made by potential buyers for the company’s overseas businesses, and not its Mountain Pass mine and processing facility in California.

Molycorp, which has total debts of around $1.9bn, applied for Chapter 11 bankruptcy protection in Delaware in July and put its Mountain Pass site into care and maintenance later in October.

As part of the bankruptcy process, Molycorp and its creditors have put forward plans to potential buyers for either an entire company sale, in which the purchaser would acquire all arms of the company, or, alternatively, an asset strip model, in which business divisions are sold off to the highest bidders.

In Shanghai, China, Ossen Innovation Co. Ltd posted a 7.6% rise in margins to $30m for Q3 2015, compared to the equivalent period in 2014.

The coatings company, which uses zinc and rare earths to surface pre-stressed steel materials for bridges and other infrastructure projects, also recorded net income growth of 601% year-on-year (y-o-y), to $3.3m.

"While our revenues grew by 7.6% y-o-y, gross margin, operating margin and net earnings all reached the highest levels in four years as a result of low material costs and strong sales volume across all major product categories that more than offset decline in average selling prices," Liang Tang, Ossen Innovations’ chairman said.

Germany-based Tantalus Rare Earths AG has signed a sale and purchase agreement with Singapore-headquartered Apphia Minerals SOF PTE Ltd, under which it will sell 60% of its shares in Tantalum Holding Mauritius Ltd.

Tantalum Holding owns 100% of the shares in Tantalum Rare Earth Malagasy SARL, which in turn holds a total of 300km2 concession areas in Madagascar, divided into 768 individual blocks, forming the basis of Tantalus’ TRE rare earths ionic clay project.

Apphia will pay Tantalus €3.7m ($4.08m*) for the stake, after which the company will withdraw its application for insolvency.

Subject to a number of operative milestones being reached, Apphia has also elected to procure not less than €8m in debt funding for the TRE project.

TSX-V-listed Ucore Rare Metals Inc. has entered an agreement with a foreign investment fund for total proceeds of $5m in consideration for a royalty or profit share on the sale of products and services related to the processing of rare earths using the company’s SuperLig-branded molecular recognition technology (MRT).

The first payment of $2.5m is due on 30 April 2016, and the investment may be increased by up to $1m in exchange for a larger royalty.

MRT is a development-stage separation technology. While used successfully in other industries, the process, which uses customisable ligand molecules to scavenge for specific molecules, is new to the rare earths processing sector.

"We're pleased to announce the agreement for yet another significant royalty financing", Jim McKenzie, Ucore’s CEO, said. "The obtainment of repeated financings during this challenging time in the resource sector is an exceptional achievement. We believe this shows the potential for MRT as a revenue maker in both pro-cyclical and countercyclical environments."

Vancouver, British Columbia-based Canada Rare Earth Corp. has agreed to receive a promissory note due on 30 November 2018 for $1.2m in exchange for an equity investment in a privately held company with property in the West Indies.

"The promissory note proceeds, once collected, will provide additional financial resources for our rare earth initiatives in line with our corporate strategy," Tracy Moore, Canada Rare Earth’s CEO, said.

"We continue to consider the West Indies as a suitable location for a rare earth processing facility and, in this regard, we are considering two other sites in the region."

Also based in Vancouver, Search Minerals Inc. has entered a debt settlement agreement with multiple creditors which will see it issue an aggregate of 617,143 shares at a deemed price of Canadian dollar (C$) 0.07/share ($0.05/share).

The total debt paid back by the company in the share agreement amounts to C$62,665, of which C$25,000 is payable to the NunatuKavut Community Council. The remaining $37,665 is required by a rental agreement between the company and its former landlord for a property in Port Hope Simpson, Newfoundland and Labrador.

"We are very appreciative of the continued support by the NunatuKavut Community Council for the development of the Foxtrot project," Greg Andrews, Search’s CEO, said.

Search said that it chose to pay the debt with shares in order to preserve its remaining cash for operations and the settlement of other obligations.

TSX-V-listed Medallion Resources Ltd has received positive feedback from processing companies regarding its mixed rare earth concentrate product samples.

"Based on those responses, it is clear that this concentrate product, once capable of being produced in commercial quantities, is suitable for input into standard commercial rare earth refineries or separation plants," Medallion said.

"This is a welcome and expected response as well as validation of our approach. Rare earth processing can be technically challenging, so we have taken a straightforward approach to get to production. Our strategy is to purchase by product monazite sand. This will serve as a high-grade feedstock for our planned commercial extraction plant," Don Lay, Medallion’s CEO, added.

Australia-based Northern Minerals Ltd has appointed Argonaut as its financial advisor, in which capacity it will assist the company in delivering "optimal short term and long term financing outcomes" to take the Browns Range rare earths project into production.

"We acknowledge heavy rare earth prices, including those for dysprosium are currently depressed, along with the general commodity market," said Eddie Rigg, managing director and head of corporate finance at Argonaut, said.

"Browns Range is regarded as one of the world’s best undeveloped heavy rare earth ore bodies. This coupled with Northern Minerals’ quality management team will ensure this project is financed in the medium term as prices recover."

In the US, geologists with the US Geological Survey (USGS) are finalising a work programme consisting of exploration of Adirondack Mountains in Upstate New York via low-level flights.

Anji Shah, the head of the USGS project, told SF Gate that the area was identified as a potential rare earths source in 2010. Extensive iron mining occurred in the late 1800s and early 1900s, Shah said, suggesting that rare earths could be locked up in tailings or gangue material.

*Conversions made December 2015