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 Thu Sep 29, 2011
Kaiser Research Summary for August 28 to September 24, 2011
    Publisher: Kaiser Research Online
    Author: Copyright 2011 John A Kaiser


Kaiser Research Summary for Week of August 28 to September 24, 2011

A Pox on the Pixies of Inconsequentiality

September has not been a good month for rare earth juniors as the market suffered from eurozone and Tea Party inspired fears of a market crash leading to a thirties style depression that will sink the global economy and send us back to caves where rare earths are of no use. The kick in the groin was delivered on September 20 by an incompetent analyst from JP Morgan who belatedly noticed that rare earth oxide prices were not only at unsustainably high levels, but that they were rapidly retreating and had already passed on the downside the basket price he was using for his valuation of Molycorp's Mountain Pass project. I deal with that below in an Index Member Comment also published separately as Molycorp takes market hit after JP Morgan analyst notices lower REO prices - September 20, 2011.

On top of that, in a promising sign that we are close to a bottom for the rare earth sector, Bloomberg gave front page focus on September 29 for a negative article about rare earth demand destruction, Rare Earths fall as Toyota develops Alternatives, written by Sonja Elmquist, a writer who normally reports on the gold sector and whose recent experience with the rare earth sector is limited to a brief article about an old style OTCBB stock promotion involving a hopelessly marginal deposit identified earlier this year by the USGS as an example of the non-solutions the United States has in its backyard. Not surprising given her lack of perspective, she quotes those pixies of inconsequentiality, Jack Lifton, Chris Ecclestone and Jon Hykawy, who push the peculiar message that there is no room for future major non-Chinese rare earth suppliers, but there sure is for inconsequential future suppliers such as Great Western, Ucore and Matamec which for some reason indiscernible to uncompromised observers are worthy of future valuations in excess of $400 million.

Anybody who has followed the rare earth sector closely or at least read my commentaries should not be surprised that spot prices are retreating, nor that non-China based end-users are seeking ways to avoid utilizing rare earths in their applications, or are capitulating by moving their manufacturing operations to China. Jack Lifton, who jets around the world offering his wisdom about rare earth supply potential, manages to get quoted in a manner that makes him sound like a Simple Simon contestant: "if you think you can keep raising the prices for those materials and still keep your customers, you're crazy". Who does he think is actually thinking this? By default it must be the Chinese, who produce 95% of the world's rare earths. Come on Jack, you know better than to be lured into calling the Chinese stupid.

The message that Molycorp's Mark Smith broadcast in his congressional testimony last week was that the Chinese no longer care whether or not end-users outside of China secure any rare earths for their products. Byron's Jon Hykawy, who spent 5 minutes during his June Cambridge Critical Materials presentation talking about how much time he spent touring China and talking to rare earth experts, offered a similar conclusion (he did not elaborate on the reliability of his translators, but in this case I think he did not misunderstand). All of this was already obvious last January to anybody who listened to Dr Chen, the oracle of Chinese rare earth policy, who in effect declared that China was serious about reducing its output to its running joke target of 90,000 tonnes, that in the case of some rare earths it would in the not too distant future become a net importer, and that it would behoove the rest of world to develop substantial non-Chinese rare earth supply if they have any desire to fulfill demand projections.

Even Dudley Kingsnorth, the prophet of Chinese over-supply who has wandered so far ahead of the curve he has ended up behind the curve, acknowledges official Chinese figures that indicate domestic consumption of 87,000 tonnes in 2010, though he manages to get quoted elsewhere as asserting that this represents 58% of global consumption, which implies 150,000 tonnes of global production. Whatever stockpiles may have existed after the 2008 Crash, the sharp rise of domestic Chinese REO prices this year suggest that these stockpiles have vanished, that China is delivering on its threat to stop being the world's cost dumping ground, and that a severe imbalance between supply and demand has developed. These circumstances have driven up domestic spot prices during 2011, which has not made for happy campers among the foreign end-users who put their intellectual property at risk by moving the production of rare earth dependent components to China. But to make matters worse, not only has China maintained export quotas at only 30,000 tonnes and taken steps to plug smuggling channels such as embedding rare earths in iron alloy material, quota holders have adopted a dangerous game of speculative hoarding that has driven the FOB spot prices for most rare earth oxides to the moon in a manner that make the uranium and molybdenum price spikes of the past decade look modest. But because these quotas expire at the end of the year, there is now a scramble afoot to unload exportable rare earth oxides, and it is no surprise that FOB spot prices are tumbling, particularly for the more abundant light rare earths.

The real problem the Bloomberg story misses is that non-China based end-users cannot secure their rare earth needs at any price, and that the demand destruction we are witnessing is a physical necessity rather than an economics based price revolt. The short term supply gap in the chart above for 2011-2012 explains everything, and may very well extend into 2013 if Lynas cannot solve its thorium disposal problem in Malaysia. I know from personal communications that Jack Lifton understands this, so it is unfortunate that he gets quoted in a manner that suggests the end-users have a choice and that the long term consequence of the supply rare earth squeeze is permanent demand destruction. Although paid consulting retainers by a host of inconsequential future potential rare earth suppliers, Jack Lifton has no special reason to cheer for a collapse in demand, unlike Jon Hykawy who shamelessly pumped Great Western with a $1 billion valuation target after the junior agreed to pay his firm $360,000 for its consulting wisdom. Jack Lifton is a former scientist who appreciates the magic of the rare earth elements, and his greatest lament has been end-users who have insufficiently shared that appreciation to take advance measures to secure future supply of their needs. Hykawy is nothing more than a corporate finance poodle who will spin any story that serves his master's agenda, such as going on and on about how some Japanese end-users have made a big capital investment in future scrap metal as a way to get around interim cerium polishing powder shortages.

Hykawy is opportunistic in adopting the "demand destruction" narrative because major supply contenders have resisted Byron's penchant for insisting on total corporate finance control, something that inconsequential future suppliers are less inclined to resist, with the result that Byron has financed a bunch of rare earth juniors whose success mostly hinges on China remaining the primary global rare earth supplier with a handful of small non-Chinese producers servicing premium priced needs such as military demand which cannot afford to be at the mercy of Chinese rare earth export policy. Reasonable rare earth prices for the rest of the world are only feasible if major full spectrum rare earth projects such as Avalon's Nechalacho and Quest's Strange Lake come on stream some time after 2015. In persuading naive reporters to propagate the "demand destruction" message Hykawy is trying to undermine the valuation of major supply contenders so that his firm is better positioned to benefit from "new information" about the future of the rare earth sector, while keeping the valuations alive for inconsequential supply contenders of the sort his firm has financed. I'm not whining that he should not do this; I'm just making sure everybody understands his agenda.

Those of you who missed my explanation as to why Hykawy's top rare earth pick is in fact the worst pick may wish to read my Index Member Comment - February 11, 2011 (I also recommend it as a refresher for those who did read it earlier - absolutely nothing has improved for Great Western since I wrote this analysis - it is no longer restricted to KRO members, so feel free to spread the link around). The Bloomberg article makes a point of comparing the relative performance of Great Western to that of Quest during the past 6 months, an observation not present in the initial version of the story published on Bloomberg, which makes one wonder once more about the agenda of the article's editor, Simon Casey . Headlines that separate the paragraphs are never written by the author in a organization that has editors, and the headlines in the Bloomberg article ("share performance", "huge savings", "demand destruction", "GM's plans") have a spin sufficiently oblique to the content that one can conclude that Simon Casey is an agent for the rare earth shorts and has manipulated the article and its positioning within Bloomberg to maximize market fallout for the rare earth sector, inconsequential juniors excluded. The author does provide balancing quotes from Molycorp's Mark Smith and Neo Material's Constantine Karayannopoulos, who finally seems to have grasped that his company is a victim rather than beneficiary of the rare earth bear attack. But the article has clearly been structured to put pressure on the valuations of the rare earth juniors.

Of course, it is true that Great Western has outperformed Quest during the last three months, which is not inconsistent with the platitude that stupid investors outnumber smart investors (admittedly, holding a stock declining in price does not make me feel like a member of the smart camp, whose eligibility does not include being right as a necessary condition). As of September 29, 2011 Quest's Strange Lake has an implied project value of only $174 million compared to $423 million for Great Western Steenkampskraal. Does this mean Quest is a screaming buy or Great Western a monster short? In the supply evolution chart below Great Western's output is that inconsequential brown puddle at the top which qualified professionals may very well evaporate, while Quest's output is the thicker slice of green for which a prefeasibility study will be published in Q1 of 2012.

Well, before you act hastily, I recommend waiting at least until Great Western publishes its September 30 quarterly financials, and preferably until the company gets around to publishing a 43-101 resource estimate and something resembling a preliminary economic assessment (PEA), while hoping the stock meanwhile does not settle down to where it belongs. The company is in no imminent danger of delivering either, but progress is being made. During the past three months while Quest released nothing Great Western disclosed that it has managed to get government approval for the conditions under which workers can safely enter its radioactive bat cave, has encased the walls of the adit with concrete along 45 metres from the entrance, has found a driller who will venture onto the property in order to begin the task of delivering a 43-101 compliant resource estimate (remember, all we have are historical estimates generated by a company which sold out to Great Western for $19 million in cash), has got a former magnet division dumped by Siemens to sign a "non-binding" letter of intent to "commit" to buy at least 50% of its unspecified rare earth material needs from Less Common Metals at unspecified prices (is it possible to construct a more meaningless agreement than this?), has hired somebody to source those mountains of monazite sands Hykawy dreams about feeding the Steenkampskraal processing facility (no word at all about acquisition costs), and has got a Chinese group to design a separation facility for what amounts to a 25% equity stake in the facility with no mention of any terms. Oh yes, Great Western has also declared that during Q4 of 2011 the junior will commence with a development cycle that includes resource definition, flowsheet confirmation, permitting, mine and separation facility construction, all of which Hykawy believes will result in commercial production within 2 years.

By the way, did anybody notice that the Dalai Lama was denied a visa to visit South Africa in order to attend the 80th birthday party of Bishop Desmond Tutu, a failure widely attributed to the extent that the Chinese have their financial mitts embedded in this major raw material supplier? Do you think Julius Malema's constituency of young black South Africans who enjoy an unemployment rate in excess of 22% will like the Chinese masters more than their BEE masters?

Given the obstacles Great Western faces in turning Steenkampskraal from what would qualify as a Superfund site in the United States into an operating mine, one really has to wonder what it is that enamors the pixies of inconsequentiality so much about Great Western. Jack Lifton, I suspect, retired before spreadsheets became an everyday tool of scientists. Chris Ecclestone is burdened by his status as a know-it-all which denies him the opportunity to adapt to new information. And Hykawy, well, he is a committed Mister Wrong Way Hykawy.

As an example, consider what he has done to one of my few "small is beautiful" rare earth recommendations. On September 19 Hykawy recommended Matamec Explorations Inc as a potential small scale heavy rare earth supplier with a $2 price target, which cheered us because Matamec is already a Good Relative Spec Value Buy recommendation. Much to our dismay, Hykawy's endorsement translated into a 25% price drop for Matamec. It's as if the market has caught on that whatever Hykawy likes is doomed to failure. Spec Value Hunters have a right to be angry. Rather than waiting like the rest of us for Matamec to publish a PEA which outlines the proposed mining scenario and quantifies the cost structure associated with the optimal flowsheet it has developed to cope with the historically difficult eudialyte rare earth host mineral, Hykawy simply invents a 6,000 tpd mining plan, hauls a bunch of cost figures out of an orifice best left nameless, and plunks them into a DCF model whose underlying algebra one suspects has never been proofed (the nightmare of all DCF modelers is a mistyped equation or a reference that somehow ends up pointing to the wrong cell, though not a nightmare for doctors of philosophy who never make simple mistakes, just really big ones). Believe me, I have tried to get approximate numbers out of Matamec's Andre Gauthier, but, to his credit, he is a stickler for protocol, and I have been paralyzed on the sidelines until he unveils these key numbers in Q4 of 2011. So here comes Jon Hykawy with his "best guess" anticipatory numbers for Kipawa, and instantly neutralizes the market's cautious optimism, tipping Matamec into the garbage can. I suppose we should thank him, for making Matamec cheap ahead of milestone news, but that is hard to do by those already long Matamec like myself. In the case of Ucore we are eagerly awaiting a metallurgical flowsheet and mining plan for Bokan whose cost a PEA would quantify, which will test the wisdom of our current recommendation of Spec Cycle Hold 75% Sell 25% issued in March.

Whatever the intentions of the pixies of inconsequentiality, the Bloomberg article sent a broad message that by "manipulating" rare earth prices to the moon, the Chinese have shot themselves in the foot, as a consequence of which the clever western end users will figure out a way to do without rare earths going forward. This is the threat that TDK's Ron Stravlo broadcast at the June Cambridge Critical Materials conference when he mistook the audience of rare earth junior investors and company executives as the cause of high rare earth prices and supply shortages. In effect he declared that end-users will use old-fashioned ferrite magnet based motors, or induction motors in the parlance of the Bloomberg article, to avoid unacceptably high rare earth oxide prices. And that is perfectly understandable, because rare earth oxide prices across the board even in domestic terms are far too high.

If the Bloomberg article's editor Casey Simon were not a pawn of the rare earth bears, he would have broadened the article's scope to deal with the fact that the shortage is an artifact of the western world's exploitation of China as the dumping ground for the real costs of rare earth production, that China is fully in its right to reverse its historical industrial policies of environmental and human degradation in the service of dominant raw material production, and that it is just plain good business sense to exploit an historical anomaly to benefit domestic agenda of employment growth and expansion of downstream manufacturing sophistication. He would have encouraged Sonja Elmquist to find quotable sources willing to admit that in the short term, namely the next five years, end users have no choice but to deal with structural supply shortages by maximizing recycling, stretching the usage of rare earths through capital means such as Hykawy's extra polishing stations that polish longer with less cerium, adopting heavier, less efficient non rare earth magnet based applications while lobbying the government for lower fuel efficiency standards due to extenuating circumstances, and simply ceding to China applications that require rare earths. He would have steered the article to point out that there are a number of major rare earth projects in the development cycle whose published numbers suggest the ability to produce substantial rare earth oxides across the elemental spectrum at a breakeven price far below even domestic China spot basket prices, and that all it will take to put end-users back on track to full utilization of rare earths at reasonable prices is ongoing entrepreneurial activity by these juniors, capital investment by investors seeking high risk returns or by end users seeking long term strategic advantages, and a willingness by the permitting bodies not to accommodate histrionic opposition to mine development (are you sure the development of Bear Lodge will not affect dolphin populations?) while making sure costs are not dumped onto helpless victims the way China allowed for several decades until recently.

Instead, Simon Casey chose to adopt the spin that high rare earth prices will cause permanent demand destruction, which will lead to total rare earth price collapse, which will make these non-Chinese rare earth supply contenders economically worthless, leaving the supply field to a handful of Chinese mines which will supply producers of "archaic" applications that still rely on rare earth inputs, a situation that is totally acceptable because it is inconsequential in the grand scheme of things. There will still be niche applications which for strategic reasons must avoid reliance on Chinese supply, but for which a handful of small scale operations such as Great Western's Steenkampskraal, Ucore's Bokan, and Matamec's Kipawa will be more than adequate (I would include Stans' Kutessay II, but none of the pixies of inconsequentiality seem to like this project, which I suppose Byron King and his Agora handlers could interpret as a definite though misguided sign of consequentiality).

According to Bloomberg everybody wins, except shareholders of rare earth juniors trying to deliver the next generation of rare earth supply. It is in effect a denial that rare earths do not easily substitute, and that the world will be worse off if new supply does not emerge to accommodate new demand. And if you want to be really cynical, then why not speculate that Simon Casey is in cahoots not just with the shorts who need to cover rare earth company positions at cheap prices, but with value investors who missed the boat because they were too busy bottom-fishing in the wake of the uranium and molybdenum bubbles to notice a hot new sector even Dudley Kingsnorth now admits is worth $4-$6 billion annually (Rick Rule was correct in 2009 with his EBITDA song and dance, just lacking in visionary foresight, a deficit he readily admits he has an uncanny ability to acknowledge and rectify when the time is right, though he has not yet done so in the case of the rare earth sector, wait, wait, wait...), and possibly even the end-users who I can attest fully understand that they would rather use rare earth inputs in their applications than "engineer" crappy substitutes (like drinking chicory brew in the aftermath of World War II rather than real coffee), but are loathe to pay the ownership premium associated with the rare earth juniors.

They all want the major rare earth juniors trading as cheaply as possible, but therein lies the problem, because not only do the major plays have large uncovered short positions that are hoping for a washout, anybody who still owns a rare earth junior such as Avalon, Quest, Rare Element or Tasman has a pretty good understanding of both the economic and strategic value of these potential major supply contenders and thus an increasing reluctance to sell the cheaper the stock gets, on top of which the value investors and end-users both represent capital pools on the sidelines which could abruptly deploy themselves according to the dictates of greed or strategic need. This makes the market situation very volatile, and difficult to trade wisely. If you are an owner of an open rare earth based KRO recommendation, accept the fact that you have been tossed off a rather high bridge, but try to imagine yourself as a Bungee Jumper who feels very much like he or she is going to splat onto a very hard surface from which the vultures will scrape your guts, but who trusts that the cord's stretch will stop you short of that splat and yank you back up substantially. And for now let's not dwell on the fact that a Bungee Jumper eventually ends up hanging at a level substantially below the bridge, not dead, but considerably lower than from where he or she started.

To avoid that outcome we need a golden eagle to swoop from the heavens and pluck us skywards, in effect a takeover bid at a premium which pulls in other eagles battling for the other Bungee Jumpers. That has not happened yet in this sector, which remains a major unfulfilled milestone. Molycorp could have been that eagle, but today it is a tarnished crow whose handlers clawed more than $1 billion from the market while their CEO and IR man cawed lies about full spectrum rare earth supply capacity. General Electric could also have been that eagle, but the Bloomberg article quotes the chief scientist and manager of material sustainability, Steve Duclos, "everybody is going back to the drawing board and trying to redesign their generators to minimize the usage of permanent magnets...in all of our businesses we're looking to reduce our usage". That sounds scary for the rare earth sector, but it is nothing more than the language of "intent", like the intent of the shorts who blast out on a down tick stock they have not borrowed but have an "intent" to borrow. Much more meaningful is the silence of GE's European counterparts, Siemens and BASF, who probably do not share the American willingness to look stupid if it serves an ulterior agenda. My recommendation is that unless a rare earth junior with a major advanced project delivers bad news questioning the economic or even physical viability of development, stay put and perhaps close your eyes when traders torpedo the bids.

Above Bottom-Fish Range Within Bottom-Fish Range Below Bottom-Fish Range Recently Closed Out
Updated this Week New 2 Year High New 2 Year Low New Bottom-Fish High New Bottom-Fish Low

Bottom-Fish Recommendations made from August 28 to September 24, 2011
Company Date
Price Recommendation Action Net
Gain New Status
Peregrine Diamonds Ltd 9/19/2011 $1.46 Fair Relative Spec Value Hold
$0 2,941 329% Fair Relative Spec Value Hold @ $1.46
Peregrine Diamonds Ltd 9/19/2011 $1.46 BF Spec Cycle Sell 100% Hold 0% Sell 2,041 @ $1.46 $2,980 0 198% Closeout Hold 0%

New Comments
Volume High Low Close Chg Status
Molycorp Inc (MCP-N) 109,908,000 $58.740 $33.180 $35.930 ($17.050)
Rare Element Resources Ltd (RES-T)
1,782,500 $9.200 $5.940 $6.040 ($2.130) Good Relative Spec Value Buy

Bottom-Fish Action Report for August 28 to September 24, 2011
Rare Element Resources Ltd (RES-T: $8.60)

Spec Value Hunter Comment - September 1, 2011: Theoretical supply implications of Rare Element's East Taylor Zone

In Spec Value Hunter Comment - August 4, 2011 I pointed out that the new East Taylor zone on the Bear Lodge project of Rare Element Resources Ltd had a substantially higher proportion of heavy rare earth oxides than the Bull Hill zone for which Rare Element has already published a 43-101 resource estimate, a preliminary economic assessment for a mining scenario of 907 tpd that would yield 10,300 tonnes of rare earth oxides at projected recoveries, and which is currently the focus of advanced metallurgical studies. Two other new zones, Carbon and Whitetail Ridge, also exhibited higher heavy rare earth percentages, suggesting that a new dimension is emerging for the Bear Lodge project that could change its perceived status as a second rate future supplier of rare earths behind Molycorp's higher grade Mountain Pass operation. The problem at Mountain Pass is that the higher grade ore is overwhelmingly dominated by light rare earths, and exploration efforts aimed at identifying other zones with a style of mineralization that hosts a higher proportion of heavy rare earths has failed to deliver grades above 2%. Molycorp cannot afford to exploit such lower grade zones in order to generate the heavy rare earths missing from its bastnaesite zone because its mining permit is limited to 2,300 tpd. It makes more economic sense for Molycorp to stick with mining the 8%-9% TREO ore for the next 8 years. The East Taylor zone, however, gives Rare Element the option to shift its mining plan to high grade ore that has a meaningful proportion of heavy rare earths, which would make Bear Lodge of substantial interest to end-users seeking heavy rare earths, as well as Molycorp itself. I was unable to fully quantify the implications in my Spec Value Hunter Comment because Rare Element's August 4 news release included individual grades for only some of the rare earths. The company has now made available the full set of assay intervals for the 3 holes, which has enabled me to extract weighted average individual rare earth oxide grades for the key interval in hole #90 from 45 ft to 160 ft. This interval averages 5.94% TREO of which 12.4% is represented by the heavy rare earth oxides. By contrast the Bull Hill zone heavy percentage is only 3.2%, and for the main zone at Mountain Pass it is a paltry 0.5%. Examination of the 5 ft intervals within the overall 115 ft interval reveals that the grades range from 1.65% to 13.11% TREO, with most of the intervals clustered between 2.5% and 6.5%. If subsequent drilling can establish several million tonnes of similar material, and the rare earth host mineral lends itself to a cost effective recovery process, Rare Element will have to focus additional effort on developing the East Taylor zone. The graphics below are intended to help KRO members understand the potential implications of the East Taylor zone, keeping in mind that the East Taylor zone at this stage is purely theoretical.

The Bull Hill chart above reflects the distribution of rare earth oxides Rare Elements expects from the 10,300 tonnes it would produce annually mining 4.45% TREO ore at 907 tpd (tonnes converted from 1,000 short tons) at an 80% uniform recovery. The theoretical East Taylor chart below shows what the distribution of these 10,300 tonnes of output would look like coming from the East Taylor mineralization. Note the significantly higher proportion of yttrium, which suggests that the mineralization includes the phosphates monazite and xenotime.

The Bull Hill annual production chart below provides the breakdown in annual tonnage terms for each rare earth oxide as envisioned by the current mining plan. Note that 9,967 tonnes are the light rare earths and only 333 tonnes are heavy rare earths. Note that this projection assumes that the final recovery process will uniformly recover all rare earth oxides in their assayed relative distribution.

The theoretical East Taylor annual production chart below shows that only 87.6% of the output, 9,019 tonnes are light rare earths, while 12.4% or 1,281 tonnes are heavy rare earths. Using the FOB and domestic rare earth oxide prices published by Metal-Pages as of September 1, 2011 (and the prices used by Avalon for the more obscure unpublished heavies), the value of Bull Hill's annual output would be $2 billion at FOB and $800 million at domestic. The value of East Taylor would be $2.7 billion at FOB and $1.2 billion at domestic. The important difference between Bull Hill and East Taylor to note is that 29.9% of the domestic value of Bull Hill derives from heavy rare earths, while 56.7% of East Taylor derives from heavies. This is important because by 2016 the world will have plenty of light rare earth supply, but unless major deposits such as Strange Lake and Nechalacho come on stream, or new ion adsorption clay deposits are found that can be exploited in an environmentally acceptable manner, the world, including China, will still be looking for heavy rare earth supply. The market so far has not taken notice of this new development for Rare Element, and understandably so because all we have so far is a 35 metre intersection of near 6% TREO with 12.5% heavy rare earths. But the geological context suggests that additional exploration will flesh out the East Taylor zone, and when this is confirmed, Bear Lodge will become a top development priority for all interested parties.

East Taylor hole #90 was drilled by Newmont while testing a gold target. The interesting 115 ft rare earth mineralized interval also runs 1.68 g/t gold. The entire 630 ft interval has a weighted average of 0.59 g/t gold. Depending on additional drill results, it is conceivable that Rare Element could develop an open pit mine at East Taylor that selectively extracts and separately processes high grade rare earth mineralization, and processes the "waste rock" for gold. How Newmont and Rare Element under their former deal would have sorted this out is beyond comprehension, but that is now moot because Newmont dropped the option earlier this year. The intermingling of high grade rare earth mineralization with broad low grade, potentially open-pittable gold mineralization all represents a new dimension for Bear Lodge and probably argues against the idea of splitting Bear Lodge into separate rare earth and gold properties. Spec Value Hunters should continue to hold Rare Element on the basis of the Bull Hill rare earth development story, but they should keep a close eye on future drill results from East Taylor to see if indeed heavy rare earths are becoming a major part of the development equation.

Molycorp Inc (MCP-N: $41.45)


Index Member Comment - September 20, 2011: Molycorp takes market hit after JP Morgan analyst notices lower REO prices

Molycorp Inc lost 20% of its market capitalization and traded more than $1 billion worth on the NYSE on September 20, 2011 after JP Morgran reduced its target price from $105 to $66. JP Morgan analyst Michael Gambardella appears to have recognized the folly behind using FOB spot based basket prices in his valuation of Molycorp's Mountain Pass operation. On June 20, 2011 JP published a report setting a price target of $105 for Molycorp based on a medium term basket price of $85/kg REO from Mountain Pass. The FOB spot basket price at the time was $175/kg while the domestic spot basket price was $62/kg compared to $7/kg amd $4/kg respectively in 2009. Given the sharp runup in FOB spot prices since July 2010 when China first slashed the export quota, and the sharp runup in domestic spot prices since March 2011 when China's crackdown on illegal and polluting operations started to gain traction, one could regard the choice of an $85/kg basket price as aggressive and naively optimistic, even if it reflected a 50% discount from FOB spot prices. Mountain Pass FOB spot basket prices have retreated 43% from their subsequent $194/kg peak to the current $111/kg level, while domestic spot basket prices have retreated 27% from their $64/kg to the current level of $47/kg. (Keep in mind that the basket price refers to the mix of individual rare earth oxides in each recovered kg of TREO, and as such will vary for each project.) The exponential price increase during Q2 of 2011 was helped along by speculative Chinese hoarding which is now reversing itself, though how far is uncertain in light of recent comments that Baotou Steel plans to purchase rare earth oxides at a premium to market prices to stabilize the pullback.

The recent pullback reflects dis-hoarding in the face of evidence of a global economic slowdown, capitulation by non-Chinese end-users in moving their rare earth dependent production to China, and demand destruction as end-users either abandon rare earth dependent technologies or engineer low or zero rare earth usage solutions. During a recent Metal-Pages conference in Beijing IMCOA's Dudley Kingsnorth poured further water on the party by reducing his 2011 rest-of-world demand projection from 60,000 tonnes to 40,000 tonnes, though I suspect this reflects the reality that only 30,000 tonnes are available for export markets via quotas, China's domestic demand is approaching 90,000 tonnes, and this time around the authorities appear to be having much better success in enforcing their 90,000 production quota. While Dudley relishes being a sourpuss about the rare earth sector, his pronouncement is not quite the pooh-poohing of rare earth demand that the rare earth bears would like to spin it as, and is more a reflection of the consequence of strategic blindness by end users. On September 21 Molycorp's CEO Mark Smith testified to Congress that "China has no intention of remaining the world's major supplier of rare earths and gradually shift focus to domestic demand...and that tight supplies of rare earths represent an irreversible trend". This implies, as we have already argued, that China is headed towards a zero export quota unless there is a miraculous expansion of Chinese rare earth supply, and that, WTO rules not withstanding, demand from end-users outside of China has nowhere to go except away unless non-Chinese rare earth supply is developed. The ensuing evaporation of demand will have a negative impact on spot prices, which is actually a good thing for the rare earth juniors because a retreat to more reasonable sustainable levels will restore demand from end-users who ultimately are better off using rare earth inputs instead of inferior or complex workarounds. But this is not good news for analysts who use anything higher than the Chinese domestic spot prices for their cash flow models. All of this seems to have been a rude awakening for Gambardella, who has now decided to use a lower basket price of $48/kg in his valuation model, which results in a $66 price target and neutral rating for Molycorp. The shorts rejoiced by hammering Molycorp afresh, with predictable collateral damage in other advanced rare earth juniors.

JP Morgan's new basket price of $48/kg is very close to the domestic spot based basket price of $47/kg for the Mountain Pass output which is dominated by the light rare earths. Interestingly, the FOB 3 year average basket price is now $45/kg, though the domestic 3 year average basket price is still lagging at $14/kg. Thanks to the exponential price rises during the past year these three year averages will be rising higher for some time, leaving the miserable $7/kg FOB and $4/kg domestic basket prices that prevailed in 2009 while the world was still struggling to recover from the 2008 Crash as relics of a distant past. Given that Lynas and Molycorp are both scheduled to add 60,000 tonnes of largely light REO supply during the next couple years, one could argue that JP Morgan is still being too optimistic in its revenue assumptions and will have to publish further downward revisions as the domestic price for the Mountain Pass basket drifts lower.

The chart below shows what the rare earth supply profile will look like in 2016 if all the major advanced projects come on stream as expected. The numbers to focus on is the $39 billion value of the 232,573 tonnes of production at FOB spot prices, and the $19.5 billion value at domestic spot prices. Compare that to the estimated $1.5 billion value of the 125,000 tonnes produced in 2009. This price escalation is what the end users are balking at, and you don't need to be a rocket scientist to realize that these levels are not sustainable, even at domestic prices. A further 50% fall, skewed toward the more abundant lanthanum and cerium, bringing the annual production value down to $10 billion by 2016 (Kingsnorth estimates 2010 production at $4-$6 billion), should be factored into pricing assumptions.

The graphic below depicts the after-tax sensitivity of the Mountain Pass operation at full capacity to various basket prices ranging from the domestic 3 year average of $14/kg which points toward an $18 price target for Molycorp, to the hopelessly unsustainable FOB spot basket price of $111/kg which implies a price target of $232 for Molycorp. This model is a simplification of Molycorp's mining and processing plan, and is less conservative than JP Morgan's model whose details are not published. At the $45/kg three year FOB average basket price the Molycorp price target using a 10% discount rate (rather than 12.5% as used by JP Morgan) is $86, bumping up to $91 using the $47/kg domestic spot basket price. Using JP Morgan's new $48/kg basket price forecast the stock price target would be about $93 per share. I am not proposing a debate about whose discounted cash flow model is better constructed; in offering this comparison I am only trying to point out that if I use the $85/kg basket price JP Morgan used to support its $105 price target for Molycorp last June, my model generates a price target of $175 per share.

JP Morgan's downgrade of Molycorp from Buy to Neutral with a price target lowered from $105 to $66 was just what the bears needed to flush out the longs so that they can start covering their shorts. Not surprisingly, other advanced rare earth juniors such as Avalon, Rare Element and Quest were also hit by selling, even though their market prices had not been puffed up by foolish analyst REO price assumptions.

The basket price chart below for the Strange Lake project of Quest Rare Minerals Ltd shows that the FOB spot basket price for the BZone peaked at $347/kg on July 28, 2011 while the domestic spot price peaked at $190/kg on July 21. Both the FOB and spot domestic basket prices are significantly higher than the Mountain Pass basket prices because the Strange Lake output mix has a substantially higher proportion of the less abundant and more expensive so-called heavy rare earth oxides. China's output of heavy rare earths comes primarily from the ion adsorption clay deposits in southern China which are viewed as headed for depletion within 15 years and are currently the target of rationalization and consolidation by Chinese authorities. At current domestic spot prices for light rare earths there are plenty of deposits around the world which on paper are economic, which implies that in the long run spot prices for light rare earth oxides will end up lower than current domestic levels unless their is phenomenal new application driven demand growth. But deposits with a significant proportion of heavy rare earths are less abundant, typically have lower overall TREO grades, often have complex mineralogy, and have a penchant for being located in remote, infrastructure challenged regions. Assuming engineering is not successful in securing the functionality offered by the heavy rare earths through cheap, non-rare earth means, prices for the heavy rare earths will not suffer quite as bad as the light rare earths in the long run. At $265/kg the FOB spot basket price for Strange Lake is down 24% from the peak, while the domestic spot basket price is down 26% and showing signs of bottoming.

Although the basket price for Strange Lake has also retreated from the July peak, the market has never used basket prices in its valuation of Quest anywhere near peak FOB and domestic levels. The chart below presents the after tax net present value per share sensitivity of the proposed Strange Lake operating plan to various basket prices. Quest published a preliminary economic assessment (PEA) in late 2010 which did not include a separation stage. I have modified the PEA by adding a speculative capital and operating cost for this extra separation stage which need not be located at Strange Lake, so view this model less as an absolute depiction of economic value and more as an illustration of relative value. The junior is working on a pilot plant scale metallurgical study which Peter Cashin believes will allow him to publish a prefeasibility study (PFS) calibre flowsheet in Q4 of 2011. In fact, he has even threatened to be in a position to declare that the study has generated several hundred kilograms of mixed oxide concentrates. If he actually delivers this, it will be a huge milestone that pushes Strange Lake well ahead of other heavy rare earth supply contenders, including Avalon's Nechalacho project. Of course, if Hazen spent a fortune generating this concentrate, it will prove to be merely a scientific rather than an economic success. We will discover which it is when Quest publishes its PFS which will document the costs associated with the recoveries achieved by the metallurgical flowsheet. While it would be nice to see the PFS published before the end of 2011, Quest's history of delivering key milestones just as market windows are closing suggests we not hold our breath. At this stage the DCF model on which my NPV sensitivity analysis is based has huge uncertainties, but it is useful to illustrate how uncharitable the market has been towards Strange Lake, and why it is ridiculous that Quest should be punished because a Wall Street analyst screwed up with his basket price assumptions for a company which at one time boasted a market capitalization in excess of $6 billion.

For example, this DCF model generates a $253 price target for Quest using the FOB spot basket price of $265/kg, a far cry from the current trading price of $3.40 per share. The model generates a $128 price target using the domestic spot basket price of $141/kg. Keep in mind that JP Morgan is now using a forecast basket price that is very close to the domestic spot basket price for Mountain Pass. Where Strange Lake really starts getting interesting is when we apply three year average FOB and domestic basket prices to the model. The 3 year FOB basket price is $72/kg, more than three times the $22/kg FOB spot basket price that prevailed in 2009, which generates a price target of $59 for Quest. The 3 year domestic basket price of $38/kg, which is 171% higher than the $14/kg domestic spot basket price in 2009, generates a price target of $24 for Quest. These numbers are not quite comparable to the Molycorp numbers because Strange Lake will not be in production before 2016, while Molycorp should be in commercial production by 2013. So we should apply a further 50% discount to these price targets under the various basket price scenarios, which still leaves far more room on the upside for Quest than to the downside from the current price. What this sensitivity chart is telling us is that the market thinks Strange Lake has zero chance of becoming a commercial rare earth mine. And that is exactly what JP Morgan's Michael Gambardella implied when he declared "most announced rare earth supply projects beyond Molycorp and Lynas will not enter the market on schedule or if ever due to financing and permitting hurdles". The fact that he did not use the word "all" suggests that the purpose of the downgrade is less to correct an error than to shaft the rest of the rare earth sector so that Molycorp will be better positioned to embark on a lucrative mergers and acquisitions program.

Quest has been silent since its last news release in May amidst a flurry of insider sales which didn't exactly make any of the insiders rich, but which did portray them as a bunch of tone-deaf amateurs oblivious to the impact their petty actions have on the confidence of a shareholder base constantly buffeted by a chorus of naysayers. Quest has started to attract research recommendations from Bay Street analysts whose understanding of the rare earth sector has become quite sophisticated, which suggests that my work is nearly done. We are at a transition stage where the bottom-fishers and spec value hunters are feeling the urge to move on to other stories with a livelier news flow, while the mergers and acquisitions players are sniffing around, doing what they can do trigger a flash crash to flush out the earlybirds at cheap prices. We are 3-4 months away from seeing a prefeasibility study that will allow us to better quantify the economic potential of Strange Lake, and whose content will reveal that Strange Lake is a very real and serious endeavour. By then we should also have a better picture of where China is taking its rare earth policy (for those to whom it is not already painfully obvious), and maybe Peter's timing will finally coincide with a new rest-of-world panic characterized by an extreme urgency to guarantee real solutions. I keep hearing that major end-users are engaging in secretive discussions with the advanced juniors, and I suspect they will act when the juniors demonstrate that they have a plausible flowsheet nailed down and a decent handle on the processing costs. I initially planned to close out the entire 2009 Bottom-Fish Edition at the end of 2010, but the dearth of good candidates for a 2011 Edition persuaded me to extent the 2009 Edition to the end of 2011. Some 2009 bottom-fish I will close out explicitly between now and the end of the year, such as I did with Peregrine Diamonds whose timeline for major developments is no longer suitable for bottom-fishers. The rest will be automatically closed out on December 30, 2011 at the closing price for the year. Quest stands to benefit from at least one more milestone, the pilot plant study by Hazen Research, and possibly the PFS before the end of the year, so I am keeping the Spec Cycle Hold 100% recommendation intact for the bottom-fishers, and reiterating that Quest remains a Good Relative Spec Value Buy at current prices. An upgrade to Good Absolute Value hinges on the outcome of the PFS and where the market has pushed the stock price when the PFS has been delivered. If these milestones do not disappoint, they will provide the foundation for a stock price at $5 and heading higher as Wall Street analysts tired of monkeying with the Mt Weld and Mountain Pass basket prices seek out large scale supply contenders for 2016 and beyond such as our dysprosium champion Quest.

In his Congressional testimony Mark Smith declared "that there may always be some rare earths that the US will need to import from other nations", and that "we expect to share some of our rare earths with other nations - particularly our allies in Japan and the EU". He then went on to declare that Molycorp "will produce all of the 10 rare earth elements - lights, medium and heavies - that have commercial applications", but as the production profile chart above for Mountain Pass demonstrates, which assumes uniform recovery of the natural REO distribution within the bastnaesite ore targeted for production, even at full capacity Mountain Pass will produce a piddling amount of heavy rare earths, europium excluded. Molycorp will be trying to unload its surplus of light rare earths on Japan and Europe, not its non-europium heavy output. I should point out that the production profile chart above is theoretical, meaning that this is the output possible based on the natural REO distribution. The actual recovery of heavy rare earths from Mountain Pass will be zero because it simply does not make economic sense to build a facility which can separate a mere 162 tonnes of heavies ranging from gadolinium through ytrrium from 40,000 tonnes of mixed oxide concentrates, especially given that the heavies are more difficult to separate than the lights. The significance of Smith's comments is that based on Molycorp's assessment of Mountain Pass and other American based deposits, of which Ucore's Bokan is the only one with heavy rare earth content undergoing meaningful development, the United States cannot achieve self-sufficiency in certain rare earths, which by deductive reasoning are the heavy rare earths. Naturally this would cause one to think that Molycorp would use its generous market valuation to make takeover bids for advanced projects outside the United States which have a significant heavy rare earth component, such as Avalon's Nechalacho or Quest's Strange Lake, but management is still actively denying the wisdom of such strategy and does its best to discourage the market from bidding up such heavy rare earth supply contenders. This is evident in its recent decision to invest in the equity of Boulder Wind Power which has developed a new type of direct drive rare earth magnet based wind turbine that does not require dysprosium. The designs for competing large direct drive wind turbine motors do require dysprosium, and the owners of these designs are not going to shelve their technologies and cede the field to Boulder Wind Power. The demand for dysprosium, assuming it can be delivered by parties which most certainly exclude Molycorp, will not disappear as Mark Smith appears to suggest.

New Bottom-Fish Highs
Volume High Low Close Chg Status
No Records

Top 10 Bottom-Fish Volume Traders
Volume High Low Close Chg Status
IBC Advanced Alloys Corp (IB-V) 47,644,300 $0.260 $0.155 $0.190 ($0.020) New BF LP Buy $0.10-$0.19
Grayd Resource Corp (GYD-V) 35,895,400 $2.850 $1.600 $2.610 $0.960 Confirm BF Spec Cycle Hold 100%
B2Gold Corp (BTO-T) 23,178,500 $4.450 $3.410 $3.600 ($0.140) BF TP Buy $0.30-$0.49
Torex Gold Resources Inc (TXG-T) 22,749,700 $1.750 $1.160 $1.290 ($0.420) BF Spec Cycle Hold 100%
Inca Pacific Resources Inc (IPR-V) 20,155,700 $0.600 $0.305 $0.580 $0.240 New BF LP Buy $0.10-$0.19
Realm Energy Intl Corp (RLM-V) 15,679,900 $1.020 $0.810 $0.830 ($0.060) BF MP Buy $0.30-$0.49
Nevsun Resources Ltd (NSU-T) 11,795,500 $7.220 $5.450 $5.650 ($0.740) BF Spec Cycle Hold 100%
Lydian International Ltd (LYD-T) 11,475,300 $3.210 $2.340 $2.560 $0.210 BF MP Buy $0.20-$0.29
Champion Minerals Inc (CHM-T) 11,245,300 $1.390 $0.890 $0.890 ($0.310) BF MP Buy $0.30-$0.49
Prima Colombia Hardwood Inc (PCT-V) 10,907,400 $0.120 $0.060 $0.065 ($0.015) BF XP Buy below $0.10

Top 10 Bottom-Fish Value Traders
Value High Low Close Chg Status
Grayd Resource Corp (GYD-V) $95,768,198 $2.850 $1.600 $2.610 $0.960 Confirm BF Spec Cycle Hold 100%
B2Gold Corp (BTO-T) $92,698,247 $4.450 $3.410 $3.600 ($0.140) BF TP Buy $0.30-$0.49
Nevsun Resources Ltd (NSU-T) $78,150,284 $7.220 $5.450 $5.650 ($0.740) BF Spec Cycle Hold 100%
Sabina Gold & Silver Corp (SBB-T) $40,823,068 $5.290 $3.720 $3.830 ($1.040) BF TP Buy $0.30-$0.49
Avalon Rare Metals Inc (AVL-T)
$39,257,264 $4.640 $2.810 $2.830 ($1.230) Good Absolute Spec Value Buy
Torex Gold Resources Inc (TXG-T) $34,486,692 $1.750 $1.160 $1.290 ($0.420) BF Spec Cycle Hold 100%
Lydian International Ltd (LYD-T) $31,443,067 $3.210 $2.340 $2.560 $0.210 BF MP Buy $0.20-$0.29
Quest Rare Minerals Ltd (QRM-V)
$15,930,233 $5.000 $2.550 $2.580 ($1.590) Good Relative Spec Value Buy
Realm Energy Intl Corp (RLM-V) $14,951,841 $1.020 $0.810 $0.830 ($0.060) BF MP Buy $0.30-$0.49
Champion Minerals Inc (CHM-T) $13,756,829 $1.390 $0.890 $0.890 ($0.310) BF MP Buy $0.30-$0.49

Top 10 Bottom-Fish Price Gainers
Volume High Low Close Chg Status
Grayd Resource Corp (GYD-V) 35,895,400 $2.850 $1.600 $2.610 $0.960 Confirm BF Spec Cycle Hold 100%
Verde Potash PLC (NPK-V)
1,045,100 $9.370 $6.490 $7.140 $0.640 Good Absolute Spec Value Buy
Golden Queen Mining Co Ltd (GQM-T) 3,273,600 $3.950 $2.680 $3.370 $0.450 BF MP Buy $0.30-$0.49
Inca Pacific Resources Inc (IPR-V) 20,155,700 $0.600 $0.305 $0.580 $0.240 New BF LP Buy $0.10-$0.19
Lydian International Ltd (LYD-T) 11,475,300 $3.210 $2.340 $2.560 $0.210 BF MP Buy $0.20-$0.29
Polar Star Mining Corp (PSR-T) 3,281,600 $0.730 $0.490 $0.670 $0.200 BF MP Buy $0.20-$0.29
Wesdome Gold Mines Ltd (WDO-T)
1,377,500 $3.100 $2.520 $2.720 $0.140 Good Relative Spec Value Buy
NMC Resource Corp (NRC-V) 387,200 $0.600 $0.400 $0.580 $0.130 New BF MP Buy $1.01-$1.25
Gunpoint Exploration Ltd (GUN-V) 169,600 $1.030 $0.900 $1.000 $0.090 New BF TP Buy $0.76-$1.00
Estrella Gold Corp (EST-V) 1,073,400 $0.860 $0.660 $0.750 $0.070 New BF TP Buy $0.76-$1.00

Top 10 Bottom-Fish Price Percentage Gainers
Volume High Low Close Chg Status
Inca Pacific Resources Inc (IPR-V) 20,155,700 $0.600 $0.305 $0.580 71% New BF LP Buy $0.10-$0.19
Grayd Resource Corp (GYD-V) 35,895,400 $2.850 $1.600 $2.610 58% Confirm BF Spec Cycle Hold 100%
Polar Star Mining Corp (PSR-T) 3,281,600 $0.730 $0.490 $0.670 43% BF MP Buy $0.20-$0.29
Boss Power Corp (BPU-V) 14,000 $0.160 $0.095 $0.160 39% BF XP Buy below $0.10
NMC Resource Corp (NRC-V) 387,200 $0.600 $0.400 $0.580 29% New BF MP Buy $1.01-$1.25
Benton Resources Corp (BTC-V) 3,208,200 $0.480 $0.310 $0.360 20% BF MP Buy $0.10-$0.19
Amarc Resources Ltd (AHR-V) 2,059,600 $0.380 $0.290 $0.355 18% BF MP Buy $0.10-$0.19
Vulcan Minerals Inc (VUL-V)
476,600 $0.275 $0.210 $0.235 18% Good Absolute Spec Value Buy
Laurentian Goldfields Ltd (LGF-V) 1,112,600 $0.180 $0.105 $0.145 16% New BF MP Buy $0.10-$0.19
Golden Queen Mining Co Ltd (GQM-T) 3,273,600 $3.950 $2.680 $3.370 15% BF MP Buy $0.30-$0.49

Top 10 Bottom-Fish Price Losers
Volume High Low Close Chg Status
Rare Element Resources Ltd (RES-T)
1,782,500 $9.200 $5.940 $6.040 ($2.130) Good Relative Spec Value Buy
Quest Rare Minerals Ltd (QRM-V)
4,312,300 $5.000 $2.550 $2.580 ($1.590) Good Relative Spec Value Buy
Avalon Rare Metals Inc (AVL-T)
10,185,400 $4.640 $2.810 $2.830 ($1.230) Good Absolute Spec Value Buy
Sabina Gold & Silver Corp (SBB-T) 8,481,200 $5.290 $3.720 $3.830 ($1.040) BF TP Buy $0.30-$0.49
Strategic Metals Ltd (SMD-V) 6,241,100 $2.700 $1.480 $1.510 ($1.000) BF MP Buy $0.10-$0.19
Nevsun Resources Ltd (NSU-T) 11,795,500 $7.220 $5.450 $5.650 ($0.740) BF Spec Cycle Hold 100%
Uranerz Energy Corp (URZ-T) 766,900 $2.450 $1.510 $1.540 ($0.610) BF MP Buy $0.50-$0.75
Mawson Resources Ltd (MAW-T) 870,100 $1.790 $1.130 $1.200 ($0.550) BF MP Buy $0.10-$0.19
Orko Silver Corp (OK-V) 4,168,400 $2.800 $1.950 $1.950 ($0.520) BF TP Buy $0.30-$0.49
Ethos Capital Corp (ECC-V) 3,212,100 $1.120 $0.500 $0.550 ($0.500) New BF MP Buy $0.30-$0.49

Top 10 Bottom-Fish Price Percentage Losers
Volume High Low Close Chg Status
Ethos Capital Corp (ECC-V) 3,212,100 $1.120 $0.500 $0.550 -48% New BF MP Buy $0.30-$0.49
Tarsis Resources Ltd (TCC-V) 1,072,900 $0.480 $0.250 $0.250 -44% BF XP Buy below $0.10
Tawsho Mining Inc (TAW-V) 1,106,500 $0.630 $0.260 $0.290 -41% New BF LP Buy $0.10-$0.19
Argus Metals Corp (AML-V) 1,822,100 $0.185 $0.095 $0.095 -41% New BF MP Buy $0.10-$0.19
Strategic Metals Ltd (SMD-V) 6,241,100 $2.700 $1.480 $1.510 -40% BF MP Buy $0.10-$0.19
Lithic Resources Ltd (LTH-V) 1,805,900 $0.145 $0.070 $0.080 -38% New BF XP Buy below $0.10
Quest Rare Minerals Ltd (QRM-V)
4,312,300 $5.000 $2.550 $2.580 -38% Good Relative Spec Value Buy
Geodex Minerals Ltd (GXM-V) 3,891,800 $0.200 $0.110 $0.125 -38% BF MP Buy $0.10-$0.19
Moss Lake Gold Mines Ltd (MOK-V) 80,900 $0.320 $0.200 $0.200 -38% BF TP Buy $0.10-$0.19
Ucore Rare Metals Inc (UCU-V)
8,942,400 $0.730 $0.420 $0.450 -37% BF Spec Cycle Sell 25% Hold 75%

New Bottom-Fish Lows
Volume High Low Close Chg Status
Cedar Mountain Exploration Inc (CED-V) 1,139,200 $0.235 $0.130 $0.140 ($0.060) New BF MP Buy $0.10-$0.19
EMC Metals Corp (EMC-T) 2,658,500 $0.170 $0.100 $0.105 ($0.020) New BF TP Buy $0.10-$0.19
Escape Gold Inc (EGT-V) 793,600 $0.240 $0.135 $0.150 ($0.040) New BF LP Buy $0.10-$0.19
Estrella Gold Corp (EST-V) 1,073,400 $0.860 $0.660 $0.750 $0.070 New BF TP Buy $0.76-$1.00
Kobex Minerals Inc (KXM-V) 558,400 $0.730 $0.660 $0.660 ($0.060) New BF TP Buy $0.76-$1.00
MDN Inc (MDN-T) 672,500 $0.325 $0.250 $0.250 ($0.020) BF TP Buy $0.50-$0.75
Phoscan Chemical Corp (FOS-T) 2,192,200 $0.430 $0.385 $0.390 ($0.020) New BF MP Buy $0.50-$0.75


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