Calling Next-Generation Rare Earth Element Investors

rare earthsIf you thought you had rare earth element mining (NYSEARCA:REMX) all figured out, think again. Dr. Anthony Mariano and his son, Anthony Jr., work as geological consultants to many rare earth companies, and say even they have more to learn. But if you’re looking for a sector that will nurture your inner nerd, rare earth elements may be the play for you. In this interview with The Metals Report, geek out with the Marianos as they talk rare earths and igneous, metamorphic and sedimentary rocks.

The Metals Report: Without heavy rare earth elements (REEs), can the worlds’ chemists and engineers develop metal alloys sufficient to meet the demands of today’s high-tech devices? If not, why not?

Anthony Mariano: My son and I are neither chemists nor engineers—our expertise lies in the area of geology and mineralogy of REE deposits, which are much more complicated than that of other commodities, such as base metals or precious metals.

However, we do believe REEs have unique properties that may be difficult to obtain from other elements.

TMR: How has the REE space changed for investors?

AM: The buzz of the high-demand years was a result of political or economical implications surrounding REEs, which were largely controlled by China. Investors then became interested in REEs. Now the drop in REE prices has changed the game. At this point, investors are not getting as involved, so companies that were attempting to explore potential deposits can’t. You need a budget for that. But a lot of our technology requires the use of REEs. The demand is going to be there. There’s been a period of quiescence because people have been acquiring REEs from stockpiles, but when those stockpiles are diminished, REE demand is going to pick up again.

TMR: Tony Jr., anything to add at this point?

Tony Mariano Jr.: I am certainly not a market analyst, but we have seen ups and downs in the REE market, as with any commodity. I suspect investors may have also realized that the development of REE deposits often happens at a slower pace than other commodities. The beneficiation of REEs can be very complex. REEs occur in many varied mineral hosts. Complex rock textures, complex mineralogy and mineral chemistry, and varied lanthanide distribution in the REE minerals all contribute to complexities in physical concentration and chemical processing. Many companies are developing innovative techniques to concentrate and process REEs. This takes time and can slow progress toward taking these commodities to the marketplace. Investors may be developing a better awareness of these complexities.

TMR: Apart from money, what’s the single biggest hurdle to the development of HREE deposits outside of China?

AM: First and foremost, miners have to understand the type of igneous, metamorphic or sedimentary rock they’re dealing with in order to determine if the geology and mineralogy are amenable to economic processing. Some deposits may not even occur within rocks, but soils, sands or river placers. The mineralogy will decide whether you have something with potential. On top of that, miners have to pay attention to permitting, environmental restrictions, the cost of energy and the cost of reagents.

TMR: How would you rank the various mineral sources for REEs, like bastnaesite?

AM: Bastnaesite has historically been a source of light lanthanides or light rare earth elements (LREEs), and it will probably continue to be the best source for LREEs. HREEs and yittrium can be obtained from other REE deposits in North America, such as Kipawa, Quebec; Pajarito, New Mexico; Mineville, New York; and Bokan Mountain, Alaska. Some will be very costly. These are not bastnäsite deposits but contain various HREE minerals. No development has been conducted on Pajarito or Mineville, whereas Matamec Explorations Inc. (MAT:TSX.V; MRHEF:OTCQX) has conducted a considerable amount of exploration work at Kipawa, as has Ucore Rare Metals Inc. (UCU:TSX.V; UURAF:OTCQX) at Bokan Mountain.

TMR: And monazite?

AM: Monazite could be an even more important source than bastnaesite for LREEs. It could also be a low source for HREEs and yittrium if it’s mined on a large level. It occurs in many places in the world, but there is a problem associated with it—the presence of thorium. From the ’50s to the early ’80s, there was a lot of environmental leniency, and you could transport monazite in ships even though it was radioactive. That’s no longer the case. Much of it was brought to La Rochelle in France, and they ended up with a large accumulation of radioactive thorium. They finally decided they could no longer pursue this direction and switched from monazite to bastnaesite. Monazite is an LREE phosphate. It runs around 70% rare earth oxide (REO), whereas bastnaesite runs at around 75% REO.

TMR: What about fergusonite?

AM: A beautiful and relatively rare mineral. If you have a garden or a plant on your fire escape and get your fingernails dirty and analyze what’s under them, you may run into fergusonite. You may find fergusonite in many places using the current advanced technology. Although fergusonite occurrences are being investigated in a few areas in the world, we’ve never established a deposit that could provide a sustained source to the marketplace. Fergusonite is an oxide mineral rich in yittrium, HREEs and niobium.

TMJ: Another mineral source worth mentioning is xenotime. Xenotime is an yttrium, HREE phosphate, rich in HREEs. The techniques for chemical processing to extract the yttrium and HREEs have already been established. The problem is finding a deposit with enough xenotime to be economic. There are a few potential xenotime deposits being evaluated now outside of North America.

In addition, eudialyte is a silicate mineral and has not traditionally been a resource for providing HREEs to the marketplace. In the past, there were problems in the chemical processing to extract the REEs, but several companies claim to have resolved these issues. In North America, eudialyte is known to exist at the Kipawa, Quebec deposit, at Pajarito Mountain, New Mexico, at the Red Wine deposit in Labrador and at Dora Bay, Alaska.

There are many other potential REE mineral sources, but for the HREEs, the minerals we have mentioned are those that are being most actively pursued.

TMR: If you were an investor looking at companies with various types of mineral sources, what would be your top names?

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