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Good Morning Readers
Last
week we saw a major selloff of our mining stocks. I can only assume that all
of the stocks moved in lockstep as the dubious report of the creation 244,000
new jobs caused a “dead cat bounce” in the dollar as it
strengthened and caused a selloff of gold, silver and oil. All commodities
were down so I am not worried but instead I looked at this as an opportunity
to buy into some of these companies at extremely oversold levels. In the last
week of April I had sold out of my positions in the GLD and SLV ETF’s
and had built up a large cash position which I used to add to such names as
General Moly (GMO), Ucore (UURAF) and Tasman Metals (TASXF). I have not
written an overview of Tasman Metals and thought I would spend today’s
post focused on this very interesting mining company.
Tasman
Metals is a Scandinavian based mineral exploration company with extensive
claim holdings in Sweden, Finland and Norway. What makes Tasman’s Rare
Earth Element (REE’s) projects so appealing to me is that they possess
a first rate management team, an infrastructure that is second to none with
roads, power and a skilled labor force in close proximity. The flagship
project of Tasman Metals is the Norra Karr project. It is located 300
kilometers from Stockholm and is the only 43-101 compliant project in Europe.
As we
are aware until January of this year China exported 97% of the worlds REE
supply. They are increasingly reserving them, maybe rightfully so, for their
own industries. China now only exports about 30,000 tons a year and to add
insult to injury on April first they have placed a 10% tariff on what they do
export. This is one fourth of the world’s current needs and a fraction
of the 200,000 tons that will be needed by 2014. Worse, they are
now threatening to completely stop the export of REE’s by the end of
this year. This has caused the prices of REE’s to skyrocket as
companies all over the world look to secure these ores for their own domestic
consumption and are paying market prices to do so. This has left the rest of
the world scrambling to fast track the development of their own mines into
operation lest they be forced to slow production or worse close their doors.
In America, Britain, Europe and elsewhere we are just waking up to the fact
that there is an urgent need to secure the supply of Rare Earths from sources
outside of China.
Europe
is no different as they are slowly awakening to the fact that a REE crisis is
looming and that decisive action is needed to secure supplies. The
European Union, which compromises 26 member nations have applications
pending. Most of these nations are highly industrialized and enjoy an
enviable standard of living. Those that are less developed are striving to
match the success of their more prosperous neighbors. The key is that they
are all dependent on imports of REE’s needed to maintain or increase
their industrial growth. Europe’s domestic supply represents a meager
3% of global production. The European Union has finally acknowledged the fact
that they need to secure their own sources of REE’s or they will not
remain competitive in the global market place. Trade, economic growth, social
stability and jobs all depend on reliable supplies of REE’s.
Another
major factor for the Europeans is that manufacturers and consumers are
increasingly concerned with global warming and other environmental issues.
They have placed a lot of trust in technological solutions to these problems
such as wind turbines, more efficient vehicles and cleaner energy which are
precisely the sectors most dependent on REE’s. The 16 REE’s, plus
zirconium, yttrium and niobium are highly sought after due to their unique
chemical properties that make them essential in electronic, optical, magnetic
and catalytic applications. They are used in computers, fiber optic cables,
vital military applications and even humble farm machinery. Other
applications include household appliances, industrial motors, MRI machines,
cell phones and IPods. They have already become an indispensable part of our
everyday lives and new uses for these elements are continually being
discovered. Many environmentally beneficial applications, the so called
“green” technologies, are particularly dependent on REE’s,
including wind turbines, low energy light bulbs and hybrid car batteries. Hybrid
vehicles like the Toyota Prius simply cannot be built without REE’s.
Many technological initiatives to combat global warming and other pressing
environmental issues are threatening to become derailed unless more stable
sources of REE’s can be brought into production.
This is
where Tasman Metals with its Norra Karr project is well placed to take
advantage of the current and future demands of REE’s in Europe. This
project has the capacity to deliver secure supply of these REE’s to
nearby European customers.
Tasman
Metals which is the only 43-101 compliant project in Europe will be able to
supply elements such as:
1. Scandium which is used in aerospace alloys and an additive in mercury
vapor lamps.
2. Yttrium which is used in Infrared lasers, high temperature superconductors
and microwave filters.
3. Lanthanum which id=s used in high refractive index glass, flint,
hydrogen storage, battery electrodes, camera lenses and a cracking catalyst
for oil refineries.
4. Cerium which is used as a chemical oxidizing agent, polishing powder,
yellow colors in glass and ceramics, self cleaning ovens and a cracking
catalyst for oil refineries.
5. Praseodymium which is used in the production of rare-earth magnets,
lasers, ceramics, core material for carbon arc lighting colorant in glasses
and enamels and flint products.
6. Neodymium which is used in the production of rare-earth magnets,
lasers, violet colors in ceramics and glass and ceramic capacitors.
7. Promethium which is used in the production of nuclear batteries.
8. Samarium which is used in the production of rare earth magnets,
lasers, neutron capture and masers.
9. Europium which is used in the production of red and blue phosphors,
lasers and mercury vapor lamps.
10. Gadolinium which is used in the production of rare-earth magnets, high
refractive index glass, lasers, x-ray tubes, computer memories and neutron
capture.
11. Terbium which is used in the production of Green Phosphors, lasers,
fluorescent lamps and makes electric lights 80% more efficient.
12. Dysprosium which makes electric motor magnets 90% lighter.
13. Holmium which is used in the production of lasers.
14. Erbium which is used in the production of lasers and vanadium steel.
15. Thulium which is used in the production of portable x-ray machines.
16. Ytterbium which is used in the production of infrared lasers and
chemical reducing agents.
17. Lutetium which is used in the production of PRT Scan detectors and
high refractive index glass.
As I
already mentioned the Nora Karr project is the only 43-101 compliant project
in Europe. At first glance there is nothing particularly remarkable about the
Norra Karr site. It is located in the small township of Granna, an area of
mixed farming and poplar and spruce trees typical of southern Sweden. It is
under the thin covering of earth, however, that things become more
interesting. All of the above mentioned REE’s are in abundance at this
project and this project could fill the needs for Europe for many years to
come. A look at the chart below will show that this stock has moved in lockset
with the rest of the mining stocks – down!
Last
week I added to my position and will continue to do so on any further pull
backs. Sooner or later the world will wake up to the fact that Gold and
Silver are not the only precious metals and I believe that once Gold and
Silver stabilize and the institutional investors become aware that China has
learned to play hardball these stocks will have their day as the world
scrambles to stockpile supplies of these coveted Rare Earth Elements for
their own use.
Stay Tuned for Further Updates!
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