For some time Canadians have been emailing me to undertake some research on Canadian specs which are worth investing in. I'm simply too overwhelmed to do so, however Kidela Capital Group approached me, asking if I would take a submission from them. Having looked at their story, I can see potential, so I freely offer a presentation they have prepared.
The following company, Stans Energy (CVE.RUU) is developing a rare earth deposit in the former Soviet Union. The company intends to use drilling and geophysics to identify extensions and satellite deposits to the existing mine, which hosts 5% lead and an association of light and heavy rare earth elements (REEs). These elements vary considerably in their value from cheap to very high value. They have a combination of both. Prior metallurgical recoveries were only 65%, so perhaps there is some scope for reprocessing old dumps.
See Google Finance for the latest stock price. Looking at the company's stock chart, it has broken technical resistance, so its probably going to consolidate on that previous resistance before moving higher. If you are interested in rare earths, you might want to read up on my previous postings about Lynas Corp (ASX.LYC) and rare earths, as these rare metals will eventually be very valuable. Why? Because in case of a shortage, prices will shoot because they are used in minute quantities in a diverse range of specialised high value applications.
I think its an interesting opportunity, however more research is required. One would need to assess how much ore is left. I think they have a 35Mt non-JORC compliant Russian estimate, but they will need to assess the validity of this resource estimate by reconciling with their own sampling. They will also need to perform a lot of metallurgical testwork to improve recoveries as 65% recovery strikes me as low, if the ore is only worth $50/tonne. I have not looked into this, and I will have a dialogue with the company.
50% Heavy Rare Earth Elements at Stans Energy’s Kutessay II from Stans Energy on Vimeo.
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3 comments:
Dear Sheldon,
My name is James and I work IR for Stans Energy, If I may, I'd like to add some clarification to your post...
A 65% recovery of complex rare earth bearing minerals is actually not such a bad rate. REE separation poses difficult challenges over other elements. Soviet chemists took over 10 years with an unlimited budget to achieve a consistent recovery of 65%. That being said, you are correct in that Stans is looking at implementing new technologies to improve the concentration process and recovery rate.
As for the Soviet-identified tonnage and grade, historical documentation varies. A JORC resource estimate should be completed in English within a few weeks. The deposit is dome-shaped and remains open to a depth below where the soviets explored. The historical REO grade is roughly .3%, but the average value of those elements in that .3% is substantial - the ore is not worth 50$ a tonne with today's prices. Using historical estimates, the average REO contained in Kutessay II is currently worth about 79$/kg. Accounting for an average of about 3 kgs in each tonne, with a 65% recovery rate, that equals about 155$/tonne.
Sorry for using back of the napkin math, but i hope that information has helped.
My name is James and I work IR for Stans Energy. I have a few corrections to your post if i may...
1. 65% recovery is actually not bad for a complex REE bearing mineral deposit at scale. REEs are much more difficult to separate than traditional mining elements. They're very similar in nature and it took over 10 years for the soviets with an unlimited budget to attain the consistent 65% recovery. That being said, Stans is looking at implementing chemical ans technological upgrades to the historical process.
2. Historical estimates of tonnage and grade have varied across Soviet reports (we estimate an average of 53,000,000 of REO kgs contained at about .3% grade... other useful metals that were processed were Silver, Tin, Copper, Lead, Moly, Thorium and Bismuth). The grade seems low, but the value of the REOs are high at about $79/kg USD currently. A JORC resource estimate and mine design should be published within weeks to clarify old reports.
3. The value per tonne of mined ore for REOs only, according to historical estimates and today's prices, and using basic math would be:
3kgs of REOs per tonne, $79/REO kg, 65% recovery = $155/tonne.
James, what other info do you have on processing? Are there any established downstream industrial base, so you don't have to duplicate processing infrastructure, otherwise a lengthy development lead time.
This is a concern, because there are some substantial concerns in this industry as well. see http://blue-sky-mining.blogspot.com/2010/09/rare-earth-elements-rees-whats.html.
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