top share holders rab capital, page-4

The 'microcap' company is Lynas Corp (LYC) for those who are interested. Sounds pretty good -



A JUNIOR mining company on the cusp of securing up to 20% of the world's supply in a burgeoning commodity class courtesy of the lowest cash-cost, highest grade mine of its kind anywhere in the world. So what's the catch? By Paul Garvey � RESOURCESTOCKS*

Nick Curtis

In the case of Lynas, which is preparing to push its advanced Mt Weld into development, the catch comes from the fact the company is involved in the "rare earths" business � a relatively unknown and mysterious branch of the resources tree.

That puts Lynas on the back foot from the get go when it comes to preaching its virtues to investors, despite the fact the supply-demand fundamentals for rare earths are just as impressive as they are for any of the other more conventional commodities currently enjoying this boom.

The rare earths industry is indeed small on a global scale � around 90,000 tonnes of rare earths are produced each year, and the industry is worth around $A1 billion per annum � but it is one that looks set to grow substantially in the future.

Rare earths are a key ingredient in the essential components of hybrid vehicles, the new generation of motor vehicles designed with energy efficiency in mind. According to a study by global technology consulting firm Booz Allen Hamilton, by 2010 the hybrid market should make up around 20% of all new car sales, which represents 4 million new hybrid cars in North America alone.

Not that all such uses for rare earths are all that exotic; they have applications in every autocatalyst to reduce vehicle emissions and are used to polish silicon chips and glass for televisions and flat screens.

"People are as addicted to rare earths as they are to hydrocarbons," Lynas executive chairman Nick Curtis said.

"You couldn't operate as a journalist as you operate today if it wasn't for rare earths. Every computer display screen in the world uses rare earths to get their colour glow, and permanent magnets drive every spinning disc in every computer in the world."

With rare earths so integral to so many emerging technologies, it makes the outlook for the industry particularly promising.

Adding to that picture is the fact that production from China � which supplies a monopolistic 95% of the global rare earths market � is at best stagnating as Chinese authorities clamp down on environmentally damaging mining and production procedures.

It all adds up to make the outlook for rare earths arguably the best it has been since Mt Weld was first stumbled upon in outback Western Australia by uranium-seeking geologists more than 30 years ago.

The Mt Weld project will be a familiar name to many long-time observers of the Australian resources scene, with the project having been touted as a potential production play more than once before.

According to Curtis, there are several techniques being applied to Mt Weld this time around that differentiate this offensive from previous attempts.

Firstly, Curtis and his team have dramatically shifted the strategy away from trying to directly compete with the dominant Chinese industry, and have instead set about involving the Chinese directly in the project's processing chain.

Lynas is proposing to build a processing plant for the Mt Weld ore in the Chinese province of Shandong, and has received the bulk of the requisite approvals � including the all-important Sino-Foreign Joint Venture licence.

The Shandong processing plant is a logical extension for Lynas for another reason altogether � it puts the company on the doorstep of a huge amount of technical experience in rare earths processing.

Chinese technical experience has already proved a boon for Mt Weld, with technology from China unlocking the previous hindrance of low floatation recoveries, which troubled the project in the past.

"We used Chinese technology to significantly increase floatation results in the concentration circuit, which changed the economics of the project," Curtis said.

Surprisingly, given the labour cost advantages enjoyed by China, Mt Weld will have some of the cheapest operating costs enjoyed by any rare earths mine.

That stems from the fact the Mt Weld deposit is the highest-grade rare earths ore body in the world, with its 7.7 million tonnes of ore grading 12% rare earths and first eight years of planned production at an ore grade of above 16% rare earths. Most other commercial rare earths projects grade around 5-8%.

Rare earth is currently going for about $22 a pound ( I think), so do the maths.... and they've got 386,773,841 shares...

Interesting...