jack lifton's rare earth primer

Jack Lifton's Rare Earth Primer

To fellow investors and traders - I have posted this on several key sites.

This is essential reading for anyone who wants to understand the rare earth industry, the difference between HREEs and LREEs (or HANRES and LANRES, where the AN stands for atomic number), the importance of idenifying the unique markets for the REEs in a company's REE profile (REEs are not substitutable) and also of forgetting about misleading "market share" concepts or of "average baskets".

http://www.techmetalsresearch.com/2012/03/rare-earth-bull/

He identifies 2 REE cultures - among the denizens of one of those two cultures, it is the share price of a company that measures its success. However, share prices can be affected by the timing of entry into a REE market and the presence or absence of competitors. Suppliers may want to deal with more than one source to insure security of supply.

In the other culture, the question asked is: ‘how much money will it take to bring this venture into (profitable) production?’. The probability of achieving profitable production is this second group’s measurement of success. This is independent of share price and takes a longer term view of supply and demand, production costs, that competition is inevitable and initial share prices may not be able to be maintained.

He believes that many want-to-be REE companies will not survive. The survivors will be those ventures which can sell their product at a profit, at a place in the supply chain which their management and marketing skills can maintain.

That place in the supply chain may be at a basic ore level, a concentrate level or as a supplier of processed rare earth metals which fit particular client needs.

REE companies may need to enter into JVs, not just with end customers, but also with trading houses and among themselves. At the end of the day, a customer may require a basket of different and unique rare earth metals in line with their industrial applications, whether that be in aerospace, magnets or television sets.

I strongly recommend you read Jack's paper.