Burst bubbles offer salutary lessons for mining industry – by Simon Rees (MiningWeekly.com – March 21, 2016)

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TORONTO (miningweekly.com) – Speculative bubbles offered useful templates for those seeking to identify new ones through which value can be realised before their inevitable burst, newsletter writer Mickey Fulp told an audience at the recent Prospectors and Developers Association of Canada conference.

But bubbles also acted as warnings for inexperienced or over-confident investors who believed the hype and failed to recognise the latent risks.

Fulp identified six bubbles since 2009: lithium 2009 to 2011; rare earths 2009 to 2011; the Colombia 2010 to 2011; the Yukon 2010 to 2012; graphite in 2012; and medical marijuana in 2014. The lithium bubble witnessed more than 60 juniors enter the space, although Fulp argued only a couple of success stories had resulted. For example, Lithium One was advancing the Sal de Vida lithium carbonate project in Argentina when it was acquired by Galaxy Resources in the first half of 2012.

Of those that faltered and failed, Fulp highlighted the bankruptcy of RB Energy that followed its merger with Canada Lithium and the subsequent shuttering of its Quebec-located spodumene operation.

The rare earth element bubble was larger than its lithium counterpart, with more than 200 juniors entering the space and trying to advance projects worldwide. Much of it was driven on supply concerns as China accounted for around 97% of global output.

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