Rare Earths gloom seems to be lifting – Ecclestone – by Dorothy Kosich (Mineweb.com – February 6, 2014)


While rare earths have behaved more like scorched earth in recent years, Hallgarten’s Christopher Ecclestone suggests, “The nadir of the sector is now past.”

RENO (MINEWEB) – In analysis published Wednesday, Hallgarten & Company’s Christopher Ecclestone suggests, “The storm of the last two years has winnowed the wheat from the chaff (largely) in the REE space.”

“The two bulk producers managed to get into production after a titanic struggle and have been rewarded for their perseverance with relatively lowly market caps,” he noted, adding that the fact Lynas and Molycorp have started churning out light rare earths products “are undermining Chinese dominance in some metals.”

Meanwhile, “Tensions between Japan and China over disputed islands may yet be the touchpaper to set REEs and other specialty metals alight,” he speculated.

Nevertheless, Ecclestone suggested that “the behemoth properties with gargantuan capex budgets have gone the way of the brontosaurus. Only Lynas and Molycorp have got away with the creation of mega-mines/complexes and they have paid the price in valuation for such ambitions.”

Hallgarten remains bullish “on virtually all the rare earths, except for the ubiquitous Lanthanum and Cerium,” he observed. “These two really spoil the mix and the onset of production from Molycorp and Lynas, which are both biased to these two elements, has made the price appreciation prospects for them look grim and put the lid on any and all projects that are overly weighted towards these ‘mass-market’ metals.”

“The mantra now is ‘small is beautiful,’” he stressed. ‘Those with bloated capex and NOT advanced into production are destined to, as the Bard put it, spend ‘all the voyages of their life bound in shallows and miseries.’”

“The more serious of the juniors have spent their dark days of 2012 and 2013 conserving cash, moving production studies forward and tweaking their business model and industrial/processing aspirations,” he noted, adding “pure explorers can be discarded at this point.”

“The nadir of the sector is now past,” Ecclestone proclaimed. “Financing will not be easy to get but super-focused projects should get the most traction with those investors wanting to take a strategic position in a sector that is more beaten down than most.”

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