23. December 2020 | 08:27 CET
Lynas Rare Earths, Defense Metals, Energy Fuels - Rare Earths, Uranium & Co.
We encounter rare earths in many ways in everyday life in the form of smartphones, notebooks, LED lights and electric cars. However, the raw material is not earth, but metals. The total of 17 elements, which can additionally be categorized as light and heavy, are also not rare. However, the concentration in which they occur is low, and thus economic extraction is often tricky. China has the largest deposits worldwide. Many countries and industries are interested in discovering and producing rare earths outside of China to become less dependent on the market power of the People's Republic. Should supply and demand diverge too sharply, this could - as in the past - lead to drastic price increases at times and cause share prices to move sharply. We introduce you to three exciting commodity companies.
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ISIN: CA2446331035 , AU000000LYC6 , CA2926717083
LYNAS RARE EARTHS LIMITED - largest producer of rare earths outside China
Lynas is the world's second-largest producer of rare earths, surpassed only by its Chinese counterpart. The Company's resource deposit is located in Western Australia. Mt. Weld is considered one of the highest-grade rare earth mines in the world.
In Australia, the metals are processed into a concentrate, and the concentrate is then shipped to Malaysia to the Company's processing plant. Lynas differentiates itself from other producers by offering products with assured provenance from mine to finished product. As part of its medium-term growth strategy, "Lynas 2025," the Company plans to build an additional processing plant in Western Australia.
Lynas is listed on the ASX, the Australian Securities Exchange. The Company is currently valued at AUD 3.55 billion or EUR 2.19 billion. The stock, which made its stock market debut in 1986, has gained around 80% in the last 12 months. For us, the stock is a base investment in the rare earths sector.
DEFENSE METALS CORP - Rain of money
Defense Metals Corp. is a mineral exploration Company focused on advancing its Wicheeda rare earths project in British Columbia. Yesterday, the Company announced that it would receive approximately CAD 632,000 from the exercise of 3.157 million warrants. The proceeds will be used to strengthen working capital and, in particular, to realize the completion of the project's preliminary economic assessment (PEA).
The Wicheeda project is approximately 1,700 hectares in size. The resource estimate includes 4.89 million tons of indicated light rare earth elements (LREO) at an average grade of 3.02% and an inferred resource of 12.1 million tons at an average LREO grade of 2.90%.
These values represent a significant increase over the initial resource estimate conducted in 2019. Total tonnage increased by half and average grade increased by 30%. Share price drivers next year will be the completion of the PEA. The Company is currently valued moderately at around CAD 11 million.
ENERGY FUELS INC - Tailwind from US decision
Energy Fuels is the leading uranium producer in the United States. The Company is also the largest producer of vanadium in the United States. Vanadium is mined as a byproduct of uranium and is used primarily as a metal alloy. It is mainly utilized in the steel industry, but also in battery technology. Energy Fuels produces both raw materials at the Company's facility in White Mesa, Utah.
An announcement yesterday bodes well for the industry and the Company. The US Congress agreed to create a USD 75 million nationally produced uranium reserve next year to prevent commercial and national security risks and become less dependent on imports. The bill is expected to be submitted to the US president for his signature in the next few days.
The stock has already doubled in value in recent weeks. The Company is currently valued at around USD 350 million. It is well-positioned to benefit from the recovery of the uranium price and the "special boom" of the new US law.