While not really posting much these days I'm always lurking Rameez
PEK keeps plodding along – steady as she goes. I haven’t sold any of my accumulation and am locked in for a average of around 10c and am happy to sit on those for the moment. Unfortunately PEK is in the same boat as all the other minerals companies on the market and until global markets and retail confidence returns we will just have to sit tight.
The continued support of Appian is a big tick to the company and should hopefully shore up a bit of support from the average retail punter. Put simply the market views PEK as a risky stock because of the technical and marketing difficulties inherent with the rare earth market.
The waters were badly muddied by all the dodgy juniors that jumped on-board the 2011 REE bandwagon. Golly there were so many 'market milkers' that pumped retail investors on the back of a few rock chips or geophysical targets. I remember one particular example claimed they had discovered a bulls-eye magnetic target which represent a direct analogue for Mt Weld - it turned out to be a granite intrusive with some magnetite alteration.
Then there were the more reputable companies that found deposits of reasonable tonnes & grade. However, when you stand back and take a look at both the geological aspects of the deposit and processing difficulties they become far less attractive. A perfect example is Arafura - superficially the deposit numbers look OK, measured resource of 4.9Mt @ 3.2% REE. The measured resource lies within a steeply dipping vein of fluroapatite within a larger swarm with some structural controls. Because of the geometries they are immediately on the back foot with high mining strip ratios to get the stuff out of the ground. To sour things further the deposit contains 0.54 lb/t (270ppm) of uranium. This is insufficient uranium to be economic but enough to make processing a nightmare. Also let’s not forget the REE is locked within unoxidised fluroapatite which will require some nasty to process and result in high cost operational expenses.
Pic of Arafura Deposit in link
http://www.arultd.com/images/NB_Min_Res_Oct15.jpg
Amongst all the chaff only one deposit arose from the REE boom and that is PEK. Why?
- Extremely low strip ratio (it's the cap of a hill!)
- High monetary value attributed to Pr/Nd
- Advanced oxidation of the bastnasite which has effectively 'pre-processed' the rock allowing for use of low cost / low tech acid leaching.
- Low uranium
I'd wager the intricacies of REE processing and production are far beyond the average analyst's expertise. It can't be understated how important the selling of the Ngualla deposit’s unique attributes will be for the company. To the company's credit they have done extremely well so far and it was a masterful stroke getting into bed with Appian and Co.
We and PEK can arm wave all we like, but potential strategic offtake partners won’t sit up and take notice until the DFS is complete and the company can stand by comprehensive evidence provided by the independent consultants.
Market depth has been comical to watch - once someone with a bit of clout decides to take a position the shares will rocket back.
Go PEK hopefully it’s a better year in 2016.
All the best long termers and welcome newbies.
(20min delay)