Published on Thursday August 04 2011
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In the race to produce rare earths outside China, which supplies most of the world's output of the metal elements used in high-tech, Australian explorer Northern Minerals (NTU.AX) could be the next hot play.
That sets it apart potentially from the two companies outside China producing rare earths elements, Lynas Corp (LYC.AX) and Molycorp Minerals (MCP.N), which mostly have light rare earths elements.
Northern Minerals was particularly excited about its find as the geology shows it should be able to produce a concentrate relatively easily, cheaply and quickly.
The Browns Range project could be developed for about one-tenth the typical billion dollar cost of a rare earths project, as the company plans to sell the elements in concentrate rather than building an expensive processing plant, he said.
"The industry needs this product as soon as possible. If we spent a lifetime trying to crack it ourselves, we may miss a critical window of opportunity," he said.
"They're definitely exposed to the right end of the spectrum," said David Brennan, an analyst at Daiwa Securities.
Moves by China to restrict production of heavy rare earths elements, partly due to environmental concerns, have sent prices for dysprosium, used in magnets for wind turbines, mobile phones and hybrid cars, rocketing to $2,840 (1,744.36 pounds) per kilogram from $400 per kg at the beginning of 2011.
Yttrium, used to make phosphors used in energy efficient lighting, TV screens and computer displays, has nearly doubled in price to $179 per kg over the same period.
Lynas produces just 44 tonnes of dysprosium out of 22,000 tonnes a year of rare earths produced, while Molycorp has none.
"There's no current issues that we can perceive," Bauk said of the radioactivity.
Lynas owns 7.9 percent of Northern Minerals, and the company's top 10 owners own 50 percent of the stock.
Its shares last traded down 3 percent at A$0.80, valuing the group at A$137 million. It hit a three-month high of A$0.90 last week.
Bauk said the company was already talking to potential off-takers for the project, including Japanese companies whom he declined to name, and said those rare earths elements buyers would be one potential source of funding for the project.
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