The Post-COP26 World Looks ToAustralia For Future Non-Chinese Rare EarthsProductionTo achieve U.N. climate change management goals the worldneeds to shift rapidly to clean energy, and that means we needto build or secure, reliable sources of rare earths. While theUSA and Canada have made some progress in this direction,Australia will also be needed to play a key role.

When looking at a chart of rare earths reserves by country,China shows the largest reserves followed by Vietnam, Brazil,Russia, India, and Australia, in that order. The USA is ranked8th and Canada is outside of the top ten. Given Australia’sstellar track record as a reliable supplier of raw materials,it should not be surprising to know that the West is lookingtowards Australia to step up production of rare earths,especially those needed to support the surging cleantechsectors of electric vehicles, wind energy, and solar energy.

ClearWorld.us says it well, stating:

“Renewable energy development relies upon sufficientquantities of rare earth minerals, specifically neodymium,terbium, indium, dysprosium, and praseodymium. These are usedin the production of solar panels and wind turbines. If theworld is to meet the greenhouse gas emissions targets soughtin the Paris Climate Agreement the availability of theseminerals must increase by 12 times by 2050.”

(Emphasis by the author.)

Rare earths are key elements in the cleantech revolution

Australian listed rare earths companies:

Producers

Lynas Rare Earths Limited (ASX: LYC) (“Lynas”)

Lynas is the second largest neodymium and praseodymium(“NdPr”) producer in the world. Lynas owns the Mt Weld rareearth mine, which is one of the world’s highest grade rareearths’ mines, and the Mt Weld ORE Concentration Plant, bothlocated in Western Australia. Lynas also owns the LynasAdvanced Materials Plant (LAMP), which is an integratedmanufacturing facility, separating and processing rare earths’materials in Malaysia. The Lynas 2025 growth strategyencompasses plans to build the Kalgoorlie Rare Earths

Processing Facility (cracking and leaching) in Australia andan LRE/HRE separation and specialty materials facility in theUSA. Lynas trades on a market cap of A$7.3 billion.

Iluka Resources Ltd. (ASX: ILU) (“Iluka”)

Iluka is a relatively new (April 2020) producer of rare earthsat their Eneabba Project in Western Australia. Iluka intendsto ramp to selling 50,000 tpa of a 20% monazite-zircon oreconcentrate for further processing offshore. Iluka has anofftake agreement for 50,000 tpa. Iluka is working ondeveloping a Phase 2 of the Eneabba Project which involvesinvestigating techniques to beneficiate and purify themonazite to an 80% concentrate for sale further down the valuechain. Iluka is mostly known for being an Australian heavymineral sands, zirconium and titanium, producer. Iluka tradeson a market cap of A$3.5 billion.

Vital Metals Limited (ASX: VML) (“Vital”)

Vital recently began mining ore at its Nechalacho’ Mine inCanada’s Northwest Territories (NWT), with commencement of oreprocessing at Vital’s, under construction, Saskatoon crackingand leaching facility expected to begin in 2022. TheNechalacho Mine is a high grade, light rare earth(bastnaesite) project with a world-class resource of 94.7Mt at1.46% REO (measured, indicated and inferred). Nechalacho’sNorth T Zone, which is being mined by Vital, hosts a high-grade resource of 101,000 tonnes at 9.01% LREO (2.2% NdPr).Vital has a non-binding MOU with Ucore Rare Metals Inc. forthe supply to it of a mixed rare rare earth carbonate,beginning H1 2024. Vital Metals trades on a market cap ofA$250 million.

Explorer/Developers (in alphabetical order):

Arafura Resources Limited (ASX: ARU) (“Arafura”)

Arafura 100% own the Nolan’s Bore rare earth project 135kms

from Alice Springs in the Northern Territory, Australia.Arafura states: “The Project is underpinned by low-riskMineral Resources that have the potential to supply asignificant proportion of the world’s NdPr demand. It is aglobally significant and strategic NdPr project which, oncedeveloped, will become a major supplier of these criticalminerals to the high-performance NdFeB permanent magnetmarket.”

The deposit contains a JORC 2012-compliant Mineral Resourcesof 56 million tonnes at an average grade of 2.6% total rareearth oxides (TREO). 26.4% of the total rare earths containedare NdPr. The Project is supported by Export FinanceAustralia (EFA), and the Northern Australia InfrastructureFacility (NAIF), via non-binding letters of support for aproposed senior debt facility of up to A$200 million and A$100million respectively. Arafura is looking to raise furtherfunds to get the project started. Arafura recently stated:“The momentum with offtake discussion has enabled engagementto expand to include the options for strategic investment aspart of the Nolan’s project funding.” Market cap is A$379million.

Australian Rare Earths Limited (ASX: AR3) (“AREL”)

AREL is progressing in the exploration of a significantdeposit of valuable ‘clay-hosted’ rare earth elements, locatedat their Koppamurra Project spread over ~4,000km² oftenements in South Australia and Victoria. Past exploration ofthe Koppamurra region has shown it contains mineralizationcontaining the rare earth elements neodymium, praseodymium,dysprosium and terbium. The Koppamurra Project is an ‘ionicclay’ rare earth opportunity with a 2021 JORC Inferred MineralResource of 39.9Mt @ 725ppm TREO. AREL trades on a market capof A$98 million.

Australian Strategic Materials Ltd. (ASX: ASM) (“ASM”)

ASM owns the Dubbo Rare Earths Project in NSW, Australia. TheDubbo Project is a 100% owned ‘construction ready’ poly-metallic and rare earths project with potential to become akey global supplier of specialty metals and rare earths. ASM’sgoal is a “mine to metal” strategy to extract, refine andmanufacture high-purity metals and alloys, supplying directlyto global technology manufacturers. Market cap is A$1.92billion.

Northern Minerals Limited (ASX: NTU)

Northern Minerals own the Browns Range heavy rare earthminerals project in Western Australia. Northern Minerals hasbuilt a pilot plant to test a number of deposits and prospectsthat contain high-value dysprosium and other Heavy Rare Earths(HREs) such as yttrium, hosted in xenotime mineralization.

The Company states: “Northern Minerals is positioned to becomethe world’s first significant producer of dysprosium outsideof China. Accounting for 60% of the Browns Range Project’s(the Project) revenue, dysprosium is the key value driver ofthe Project and is at the core of Northern Minerals’ marketingstrategy. With a high value, high purity, dysprosium richproduct, the Company is set to become a long term and reliablesupplier of dysprosium and other critical heavy rare earths toworld markets.” Market cap is A$339 million.

Peak Resources Limited (ASX: PEK)

Peak Resources 75% owns the Ngualla Tanzania rare earthproject, which the Company states is one of the world’s,largest and highest grade, undeveloped rare earth projects.The Ngualla Project has ore reserves of 18.5 million tonnes at4.8% REO; 22% of the total mineral resource is NdPr, with anexpected 26 year life of mine. The Project is currently at thefunding stage having completed a BFS in 2017. The BFS summarydetails are here. About 90% of the Project’s revenues will becoming from NdPr. Peak Resources state: “Operating cost of US$

34.20/kg NdPr* Oxide, demonstrating potential to be theworld’s lowest-cost fully integrated rare earth developmentproject.” Market cap is A$135 million.

Closing remarks

With rare earths demand set to grow strongly this decade asthe world moves towards cleaner energy and technology,investors would be wise to take a second look at the rareearths sector.

Australian critical minerals projects were recently in thenews after the Government announced that they would receive anA$2 billion boost (via a loan facility), to support thesector. This bodes well for the Australian rare earths juniorminers to join Lynas as producers. Stay tuned as this sectorlooks set to shine this decade.

InvestorIntel’s Top 10Trending List for November2021In this InvestorIntel video, Tracy Weslosky listsInvestorIntel’s Top 10 Trending articles and videos onInvestorIntel.com for the last 30 days. You may find thisquite interesting as this Top 10 list provides an indicator ofwhat market trends our audience is finding interesting.

Presently trending #1 on InvestorIntel.com is FrederickKozak’s take on the top 5 rare earths companies for 2021. OurAustralian Editor Matthew Bohlsen’s coverage on the AustralianGovernment’s extension of a $2 Billion loan facility for the

critical materials industry is trending #2 followed by anupdate on Lynas Rare Earths Limited (ASX: LYC) trending #3.Appia Rare Earths & Uranium Corp. (CSE: API | OTCQB: APAAF) ispresently trending #4 with their article written by DeanBristow titled – Biden, the Chinese raw material hunt and the‘massive’ monazite results of Appia Rare Earths & Uranium.Trending #5 is Tracy Weslosky’s update on Neo Lithium Corp.‘s(TSXV: NLC | OTCQX: NTTHF) acquisition by China’s Zijin MiningGroup.

Here is the complete list of InvestorIntel’s Top 10 TrendingArticles and Videos on InvestorIntel.com for November 2021.

The Top 5 Rare Earths Companies for 20211.https://bit.ly/3shB8X4Australian Government extends a $2 Billion loan facility2.for the critical materials industryhttps://bit.ly/3AX4gqvLynas Rare Earths, making record profits and growing to3.meet the EV demand https://bit.ly/3m65cSWBiden, the Chinese raw material hunt and the ‘massive’4.monazite results of Appia Rare Earths & Uraniumhttps://bit.ly/3lKR82mChina pays full value for Neo Lithium, the bull market5.has arrived. https://bit.ly/3Fxco3wByron King’s Top 5 “Outstanding” Yukon Gold (and Silver)6.Mining Names https://bit.ly/2WFj9yLNorth American Rare Earth Juniors Consolidate7.Capabilities to Advance Towards a Total Domestic SupplyChain https://bit.ly/3bai3iaCesium, A Critical Metal and an Opportunity for Avalon8.Advanced Materials https://bit.ly/3ByGhOuU.S. nuclear power generation at historical heights as9.investors buy uranium https://bit.ly/2XlRrY0Canada’s Voyageur Pharmaceuticals Breaking a Chinese10.Monopoly https://bit.ly/3usOgdb

To watch the full video, click here

Lynas Rare Earths, makingrecord profits and growing tomeet the EV demandWhile the lithium-ion battery boom for EVs is getting most ofthe headlines, investors should not forget about the rareearths. The most valuable rare earths, neodymium (Nd),praseodymium (Pr), and dysprosium (Dy) are those used in thepermanent magnets used in electric motors, key components inelectric vehicles, EVs.

As shown on the graph below, China neodymium (Nd) prices areup 73% the past year as demand for the rare earth permanentmagnet material continues to grow. Praseodymium (Pr) pricesand dysprosium (Dy) prices are also on the rise.

Neodymium 5 year price chart

Source: Trading Economics

Lynas Rare Earths Limited (ASX: LYC) (“Lynas”) is the secondlargest NdPr [The trade term for the neodymium-praseodymiumblend, which is the standard item of trade in the rare earthmagnet raw material production industry], producer in theworld. Lynas owns the Mt Weld rare earth mine, which is one ofthe world’s highest grade rare earths mines, and it operatesthere also the Mt Weld Ore Concentration Plant, both locatedin Western Australia.

Lynas has recently drilled up to 1 kilometer deep at Mt Welddiscovering addititonal carbonatite below the current rareearth open pit mine. Lynas stated: “The current explorationdrillhole has ended in visible coarse grained REEmineralisation. First pass geochemical assay results,microscopic petrology, and mineralogical study reports areexpected by November 2021 and the drilling report is expectedto be completed in December 2021.”

Lynas also owns the Lynas Advanced Materials Plant (LAMP),which is an integrated manufacturing facility, preparing and

separating the mixed rare earths from Mt. Weld into individualrare earth materials, located in Malaysia. In recent legalnews, Lynas announced that: “….on 28 July 2021 the High Courtof Malaysia at Kuala Lumpur dismissed the judicial reviewproceedings commenced by the anti-Lynas activists seekingreview of the processes followed by the Government of Malaysiain reaching the August 2019 decision to renew Lynas Malaysia’sfourth operating licence. Lynas has received a notice ofappeal by the anti-Lynas activists. Lynas intends to defendthe appeal.”

In company news, Lynas recently announced a record net profitafter tax of A$157 million for the 2021 financial year (July1, 2020 to June 30, 2021). The profit was partly as a resultof higher rare earths production, but mostly due to strongerrare earths pricing. Lynas stated: “Despite the globalshortage of semi-conductors which affects all industries andin particular, the automotive industry, the NdFeB market isexperiencing very strong growth, supporting the demand forNdPr and the Heavy Rare Earths’ blend produced by Lynas”

Lynas’ rare earth products (notably NdPr) are seeing strongdemand and rising prices

Source: Lynas Rare Earths FY 21 results presentation

Latest progress at Lynas as part of their 2025 growth strategy

Kalgoorlie Rare Earths Processing Facility (Australia) –Lynas is currently progressing their new Kalgoorlie RareEarths Processing Facility, where site works havecommenced and orders have been placed for all long leadtime items. Fabrication of the five kiln shell sectionsis now complete. The final Environmental Review Document(ERD) has been submitted to the Australian EPA for theKalgoorlie Project.LRE/HRE separation & specialty materials facility (USA)– Lynas has completed the Phase 1 detailed engineeringand design work for a Heavy Rare Earths (HRE) separationfacility in the USA, and it has been submitted to the USGovernment. The U.S, DoD is now conducting a meritevaluation of the submission. Lynas is progressing withsite studies and planning for the American integratedRare Earths Separation Facility.

Lynas current facilities and 2025 growth strategy

Source: Lynas Rare Earths FY 21 results presentation

Closing remarks

Lynas Rare Earths is performing very well, buoyed by strongrare earth prices. Most analysts are forecasting a strongdecade ahead for rare earths based on growing demand for thepowerful rare earth permanent magnets used in electric motorsin the automotive, aerospace, and appliance industries.

Lynas is steadily working towards achieving its 2025 growthstrategy of developing new facilities to enlarge itscapacities for rare earths processing and separation inAustralia and the USA.

Investor interest in Lynas remains strong, because it is thelargest non-Chinese based rare earth permanent magnet rawmaterials’ producer. Lynas trades on a market cap of A$6.4billion. It is certainly one to follow as it makes steadyprogress towards achieving its 2025 growth target.

As Market Focus on RareEarths Intensifies, SearchMinerals Proceeds on Path toProductionRare earth’s producing miners in the West are very rare asChina dominates most of the rare earths production. Twoexceptions are both trading with US billion-dollar market caps– They are MP Materials Corp. (NYSE: MP) (US$6.24 billion) andLynas Rare Earths Limited (ASX: LYC) (US$3.92 billion), with Today’s company trades on a market cap of just US$55 million.

[Note from the Publisher: The breaking news yesterday EnergyFuels and Neo Performance Materials Announce Contract Signingand Launch of Commercial Shipments of Rare Earth Product toEurope in Emerging U.S.-Based Rare Earth Supply Chain confirmsthese 2 companies as players in the rare earths supply chain.And Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) marketcap is roughly CAD$1B and Neo Performance Materials Inc.(TSX: NEO) is CAD$615M according to Yahoo Finance at 945 AMEST.)

The Company has a plan to be ready to build their full-scalerare earths processing plant by the end of 2023 and oncecomplete become a North American rare earths producer(potentially by about 2025 provided all goes well). Prior toreaching full scale production, the Company plans to operate ademonstration plant in 2022.

The Company is Search Minerals Inc. (TSXV: SMY | OTCQB: SHCMF)(“Search”). Search controls properties with rare earths inthree areas of Labrador, Canada. These are:

The Port Hope Simpson (PHS) property (flagship)The Henley Harbour Area in Southern LabradorThe Red Wine Complex located in Central Labrador, plussome recently agreed acquisitions

Search Minerals flagship Port Hope Simpson (PHS) propertyincludes Foxtrot, Deep Fox, Silver Fox, Awesome Fox, and FoxMeadow

Next steps (2021) at Port Hope Simpson – Foxtrot/Deep Foxupdated PEA by Dec. 2021

The Preliminary Economic Assessment (PEA) of the FoxtrotResource showed an estimated after-tax NPV10% of C$48 millionand an after-tax IRR of 16.7% over a 14-year mine life. Start-up CapEx was estimated at C$152 million representing an after-tax payback of 4.4 years.

Search plans to do an updated PEA by December 2021 to includeboth Foxtrot and Deep Fox. Deep Fox will add to the existingPEA due to increasing the resource size and it has up to 15%higher grades than Foxtrot. The updated Foxtrot/Deep Fox PEAwill double the past PEA production rate (increase productionrate to 2,000 tonnes per day), increase recoveries from theoptimized pilot plant process, increase revenue from highergrades at Deep Fox, extend mine life with material from DeepFox and Foxtrot to a central processing facility, and decreasecosts with reduced re–agents. The impact of all of this isexpected to potentially improve the PHS (Foxtrot/Deep Fox)Project economics significantly.

Beyond this, there is plenty of potential to further grow theResource estimate and economics in the Feasibility Study, asSearch also has 3 more advanced prospects (Silver Fox, AwesomeFox, and Fox Meadow) and 20+ potential prospects at PHS.Silver Fox has had some exciting “very high occurrence ofzirconium and hafnium“. Project CapEx and OpEx should also beattractive as there is existing infrastructure, a scalableprocessing plan, technical simplicity, and open pit mining. Alocal workforce and Search’s patented mining process (lowersenvironmental and reagents costs) should also help reducecosts.

Search has already achieved a dedicated pilot plant, provingan ability to generate high purity, refinement-ready productat a low scale. Added to this there are MOUs signed withSaskatchewan Research Council and USA Rare Earth for furtherrefining collaboration.

Next steps (2022, 2023) – Demonstration plant in 2022 andfull-scale production plant construction ready to begin inlate 2023

Search’s master plan includes building a demonstration plantin St Lewis in 2022 as well as an Environmental ImpactStatement (EIS) for Foxtrot/Deep Fox.

In 2023 Search intends to complete their permitting, a BFS,and commence raising capital to build a full-scale processingplant commencing by the end of 2023. All going very well thatcan potentially lead to Search commencing rare earthproduction in 2025 or shortly thereafter.

It should be noted that in the mining industry, unlessgovernments act to support and speed up the process,permitting and funding can drag on for some years. The goodnews here is the Canadian and US governments finally appearmotivated to support (perhaps via faster permitting and lowrate loans) a local rare earths supply chain.

In news announced on June 24, 2021, Search was selected toparticipate in the Government of Canada Accelerated GrowthService Initiative. This provides Search with “coordinatedaccess to Government of Canada resources” as Search continuesto move quickly to production.

Search Minerals Strategic Plan – 2021 to 2023

Source: Company presentation

Closing remarks

Search Minerals has big plans in the rare earths sector. Theroad to production for junior miners carries plenty of risksand usually involves stock dilution increasing the market cap,especially when raising initial project CapEx. One plus forSearch Minerals is their Canadian location, as US and Canadiangovernments are showing increasing interest to help supportrare earth projects.

If successful Search Minerals (US$55 million market cap) canbegin to follow in the giant footsteps of Western rare earthmajors MP Materials (US$6.24 billion) and Lynas Rare Earths(US$3.92 billion). As you can see successful Western rareearths miners command very significant size market caps.

Investors will need to ‘search’ for their patience cap and beprepared for a long ride, but the potential rewards forsuccess can be excellent. Stay tuned.

With the largest single rareearths processing plant inthe world, Lynas stock pricehas risen 224% in the pastyearWith the recent doubling of NdPr prices, global leading rareearths miner Lynas Rare Earths Limited (ASX: LYC (“Lynas”)stock price has risen 224% (3.4x) over the past year. Thequestion for investors right now is, can Lynas keep movinghigher from here.

And the answer?

Well, that depends on your view of NdPr prices going forwardand on Lynas’ expansion plans.

Lynas Rare Earths Limited 1 year stock price

Source

NdPr demand & supply and pricing forecast

A March 2021 Adamas Intelligence report forecast:

“Annual NdPr oxide shortages of 16,000 tonnes expectedby 2030: Constrained by a lack of new primary andsecondary supply sources from 2022 onward, AdamasIntelligence forecasts that global shortages ofneodymium, praseodymium and didymium oxide (or oxideequivalent) will collectively rise to 16,000 tonnes in2030, an amount equal to roughly three-times LynasCorporation’s annual output, or three-times MPMaterials’ annual output, of neodymium and praseodymiumoxide (or oxide equivalents).“Market for magnet rare earth oxides to increase five-

fold by 2030: With total magnet rare earth oxide demandforecasted to increase at a CAGR of 9.7% and pricesprojected to increase at CAGR of 5.6% to 9.9% over thesame period, Adamas Intelligence forecasts that thevalue of global magnet rare earth oxide consumption willrise five-fold by 2030, from US $2.98 billion this yearto US $15.65 billion at the end of the decade.”

A five-fold demand increase this decade with constrainedsupply suggests we will most probably see strong long termprices for magnet rare earth oxides (includes NdPr oxide).Given the massive startup CapEx and environmental issues withrare earths mining that should also prove to be a strongbarrier for entry for new start-ups.

Lynas’ current operation and an update on their expansionplans

Lynas currently extracts their rare earth ores from their MtWeld Mine in Western Australia, does initial processing at theMt Weld concentration plant, then sends the concentrate toMalaysia for final processing into high quality rare earthmaterials. Lynas’ rare earths deposit in Mt Weld isacknowledged as one of the highest grade rare earths mines inthe world. The Malaysia rare earths processing plant is theworld’s largest single rare earths processing plant.

Lynas Rare Earths Limited has a strong track record ofproducing rare earths with a falling cost of production

Source: Lynas Rare Earths corporate presentation

Lynas’ 2025 projects

Lynas has a 2025 plan to grow their processing capabilities.This includes two key parts:

A planned rare earths processing facility in Kalgoorlie,Western Australia.A commercial light rare earths separation plant in theU.S. This may also include processing of heavy rareearths and specialty materials.

The proposed Kalgoorlie facility has commenced sitepreliminary works and is fully funded and progressing toschedule. It is targeted to begin operations by July 2023. Youcan read more details here.

The proposed U.S light rare earths separation plant hasrecently achieved a signed agreement with the U.S. Governmentwith initial contracts for financial support signed with U.S.DoD. Lynas stated:

“This project is scheduled to be completed in accordance withthe Department of Defense timetable and as part of our Lynas

2025 plan. Detailed costings are still being finalized; weexpect Department of Defense funding to be capped atapproximately US$30 million. Lynas will also be expected tocontribute approximately US$30 million under the agreement.The plant is expected to be located in Texas. Onceoperational, the plant is expected to produce approximately5,000 tonnes per annum of Rare Earths products, includingapproximately 1,250 tonnes per annum of NdPr. The plant willbe able to receive material directly from the cracking &leaching plant that Lynas is developing in Kalgoorlie, WesternAustralia.”

By 2025 Lynas plans to have a production capacity of at least10,500 tonnes pa of NdPr (last quarter production was 1,359tonnes) and their Kalgoorlie facility to be able to feed todownstream operations in the U.S. and Malaysia.

Lynas’ current and planned global rare earths operations

Source: Lynas Rare Earths corporate presentation

After a loss in 2020, Lynas is forecast to have a net income

of A$137 million in 2021, A$266 million in 2022, and A$349million in 2023. This equates to Lynas having forecast PEratios of 37 in 2021, to 21 in 2022, and 15 in 2023. Thiscompares favorably with MP Materials as I discussed recentlyhere.

As of March 31, 2021, Lynas had a closing cash balance ofA$568.5 million.

Closing remarks

Lynas Rare Earths Limited has had a great past year helped bystrongly rising rare earths prices. Looking ahead Lynas hasthe 2025 growth plan that has the potential to raise Lynas tothe next level. Lynas looks to be in great shape and is wellworth consideration for investors that are bullish on theoutlook for rare earths, notably NdPr.

Disclosure: The author is long Lynas Rare Earths Limited (ASX:LYC) and MP Materials (NYSE: MP).

Surging demand for magneticmaterials (NdPr) catalyst forstellar Q1 2021 results forMP MaterialsDecember 2020 and March 2021 were the two highest months everfor electric car sales. In March 2021, global electric carsales were up 173% YoY reaching 8.2% market share. Europesales rose 169% YoY reaching 16% share, China sales rose 244%YoY reaching 11% share.

Given EV sales are forecast to reach 30-50% this decade itlooks like the Neodymium (Nd) and Praseodymium (Pr) or “NdPr”,“magnetic materials” demand is only going to increase fromhere. It is forecast that EVs consume ~5% of annual NdPrproduction today, but may consume ~100% of current annualproduction by 2035.

Neodymium (Nd) & Praseodymium (Pr) prices surged higher thepast 6 months

Source: Kitco

The top two western NdPr producers are MP Materials Corp.(NYSE: MP) and Lynas Rare Earths Limited (ASX: LYC). Today I

take a look at MP Materials who state that they are thelargest producer of rare earth materials in the WesternHemisphere.

MP Materials was listed in 2020 as a result of the SPAC mergerwith Fortress Value Acquisition Corp. (FVAC) at US10.00 ashare. The merger completed on November 18, 2020. The timingfor investors was exquisite with NdPr prices beginning their~100% price rise from early November 2020.

MP Materials owns and operates the open pit Mountain Pass Minein California USA, the only integrated rare earth mining andprocessing site in North America. This gives MP Materials avery high strategic value to the United States. Mountain Passplans to have an output of 5,000 metric tons pa of NdPr,starting in 2022.

MP Materials state: “Mountain Pass is a world-class asset,consisting of fully integrated and co-located mining andprocessing capabilities. The self-contained nature of ouroperations – with mining, milling, separations, and finishingall on one site – affords us significant cost advantages andmitigates operational risks. The Mountain Pass mine containsmore than 800k tons of recoverable rare earth oxides with anaverage 8% ore grade, one of the highest quality knowndeposits in the world.”

MP Materials Mountain Pass mine and processing plants inCalifornia USA

Source: MP Materials website

With Stage 1 of the mine completed MP Materials now producesapproximately 15% of the global supply of rare earths,currently in the form of an intermediate product—rare earthconcentrate—that requires further processing in Asia.Following completion of the second stage of recommissioning,expected by 2022, MP Materials will relaunch its onsiteprocessing facilities thereby resulting in the USA having aself-sufficient U.S. rare earth industry.

MP Materials has recently completed design improvements thatde-risk Stage II. The design improvements are expected toimprove recoveries, provide flexibility and enhance theenvironmental footprint.

The results of a March 2021 announcement of a privateinstitutional offering of $600 million principal amount of MPMaterials 0.25% Green Convertible Senior Notes due 2026 hasnot yet been updated to the market. In any case, MP Materialshas sufficient cash to complete their Stage II project.

MP Materials achieved a record Q4 2020 on the back of risingNdPr prices

As we saw in Q4, 2020, Q1 2021 should also bring stellarresults on the back of high NdPr prices during the Q1 quarter.MP Materials is due to announce Q1, 2021 results tomorrow, May6, 2021, after the close. The consensus earning per share isUS$0.09. In MP Materials March 18 2021 presentation theCompany stated: “Current REO (rare earth oxides) pricingenvironment implies strong YoY and QoQ profitability growth inQ1.”

MP Materials turnaround is forecast to continue in 2022 and2023

From a net loss in 2020, MP Materials is forecast to have anet income of $68 million in 2021, $101 million in 2022, and$238 million in 2023. Now that’s an impressive net incomeramp! This equates to MP materials forecast PE ratios of 83 in2021, to 56 in 2022, and 23 in 2023.

Finally, in April 2021 it was announced that Morgan Stanleyadjusted their MP Materials’ Price Target to $41 from $57,keeping their overweight rating.

Closing remarks

Demand for key magnet rare earths (NdPr) looks set to soar thenext decade boosted especially from demand from electricmotors used in EVs, some wind turbines, drones, consumerelectronics, defense systems and many other high-growth,advanced technologies.

MP Materials’ Mountain Pass Mine is already a prized US mineand one of U.S strategic importance. Forecast net incomegrowth assumes they can execute their Stage II planssuccessfully and become a fully integrated US rare earth endproducts (especially NdPr) producer in 2022, without anyreliance on Asia. Perhaps MP Materials is priced forperfection or perhaps they are priced for their strategicimportance. Only time will tell. Feel free to add yourcomments in the section below.

Disclosure: The author is long MP Materials (NYSE: MP) andLynas Rare Earths Limited (ASX: LYC).

Jack Lifton on Rare EarthSupply Chains and ValueChainsRare earth sector analysts have finally recognized that aproject’s place in a total supply chain is very important toits economic viability. Before a junior mining deposit goesinto (usually expensive and time consuming) development into aproducing mine there must first be an evaluation of whatpossible product(s) of that mine are demanded by the next stepin the supply chain and what price(s) they may bring when themine begins production. Most such evaluations are at bestextrapolation and at worst pure speculation due tounpredictable commodity price cycles. Even for producing mineslike MP Materials Corp. (NYSE: MP) and Lynas Rare EarthsLimited (ASX: LYC) their places in the total supply chaindifferentiates them from each other because of the differentvalue of their current respective delivered products.

The sale of rare earth permanent magnets brings a majority ofthe revenue in the total rare earth products supply chain. Butno non-Chinese company has ever been vertically integratedfrom a mine to a magnet maker. The closest that a Westernowned company (Canadian) has come to being a total rare earthpermanent magnet supplier is Neo Performance Materials Inc.(TSX: NEO), which has everything (in the total rare earthpermanent magnet supply chain) but a mine. Neo Performancesells rare earth products (oxides and chemicals) as well as

rare earth enabled products (e.g., magnets) and has beenconsistently profitable with revenues exceeding $500,000,000per year. This year, 2021, Neo will shortly begin takingdelivery from America’s Energy Fuels Inc. (NYSE American: UUUU| TSX: EFR) of 70 tons per month of clean mixed rare earthcarbonates (MREC) extracted from domestic American monazite.Energy Fuels is the first American company to produce rareearth concentrates free of radioactive elements andinterfering ions in at least 25 years. The MREC can be putinto solution directly at Neo’s European rare earth separationplant and fed into the system as a pregnant leach solution(PLS). Thus, Neo Performance can deliver to its customersdownstream products, such as separated oxides, metals andmagnet alloy powders and bonded magnets (made at its Thailandoperations) that are produced by a total rare earth supplychain with no Chinese involvement.

Energy Fuels reports that its monazite extraction/purificationsystem to produce clean MRECs is profitable. MP says that itsbastnaesite ore concentrates now sold exclusively to China’sShenghe Resources are profitable. Lynas says that its in-houseseparated rare earth oxides are sold at a profit. For rareearth juniors, the successful (I.e., profitable) sale of oreor clean mixed rare earth carbonates is the key metric and fewof them succeed.

The total rare earths’ (enabled products) supply chain has thefollowing composition:

Mining,1.Extraction of the rare earths from the mining2.concentrates and the preparation of a clean, pre-PLS,mixed rare earths product,Separation of the mixed rare earths into individual3.oxides and blends,Manufacturing of chemical products, such as phosphors4.and catalysts, and of individual metals and alloysforms, and

Manufacturing of rare earth permanent magnets from rare5.earth alloys.

Historically mining companies have done steps 1,2, andsometimes 3, while specialized smaller companies have donesteps 4 and 5 as separate ventures.

The rare earths’ value chain is not the same as the supplychain. It is very difficult to make money mining, extracting,or even separating mixed rare earths into individual rareearths and blends. Lynas, for example, has become profitableby reducing the costs of separation to where they arecomparable to those of the Chinese. Lynas’ monazite ore bodyis much richer than, for example, MP’s bastnaesite or eventhat of China’s Bayan Obo. Lynas is now profitable sellingindividual rare earth salts and blends, but it has taken adecade and $2 billion to reach this point, and the company’ssurvival was actually due to long term low interest loans froma Japanese government agency designed solely to give Japan abackup to Chinese sourcing.

MP Materials is today only an ore concentrate producer, andits original capital needs were only to re-open a relativelyrecently closed large-scale well-run mining and oreconcentrating operation. MP basically acquired some $2 billionof sunk costs for about 1% of that. The real challenge now isfor MP to (attempt to) match the Lynas model, and deliverseparated rare earths and blends just as the original Molycorpdid until 20 years ago. I am told that Molycorp II’s ProjectPhoenix ran first just before the bankruptcy, but I only getsilence when I ask if it was running economically andefficiently. I am very skeptical about MP’s announcements thatthey will be separating rare earths at Mountain Pass in 2022if by that they mean economically and efficiently.

Lynas has never advanced beyond separation in the supplychain, and I have never heard it said that they plan to dothat or want to do it. The Lynas 22,500 tpa operation in

Kuantan, Malaysia, took seven years and $1.3 billion to begincommercial operation, and it is limited to processing monaziteto extract and separate light rare earths only. If Lynaschooses to build a light rare earths separation plant in theUSA as has been announced I suspect it will take 2 to 3 yearsto build and burn-in and that if it is to be a 5000 tpa systemas announced, and that it will cost far more than $60 millionon a greenfield site in Texas.

Project Phoenix was to be a 20,000 tpa system. It never rancommercially even though well over a billion dollars wasexpended on it over a four-year period. It is extremelyunlikely that Project Phoenix can be resuscitated and broughtinto profitable operation in just one year, if ever.

Molycorp II, in its attempt to vertically integrate bought therare earth permanent magnet alloy making operations ofSantoku, America, in suburban Phoenix, Az. In 2011 for $17million. Within two years the operations were shut down as thenecessity to buy Chinese metal as feedstock made profitabilityimpossible.

Energy Fuels is buying monazite concentrates and removing theuranium and thorium as well as non rare earth elements in itsexisting White Mesa uranium mill in Utah. Less than $2 millionwas needed in additional equipment to give the mill thecapacity to process 2500 tpa of monazite to recover thecontained 55% of total rare earths.

Neo Performance can distribute costs across its almost totalin-house supply chain. It can thus maximize profits in itshighest margin end-use products. MP is literally a start-upbeyond the mine, and the jury is out on its potential forsuccess. Lynas’ operations were designed by former Solvaychemical engineering managers with the longest continuousexperience in rare earth separation in the world. Thechemistry chosen for Kuantan was that proven by experience anduse by Solvay, China. Neo Performance Materials is the

successor in interest to Neo Materials, which was founded inthe 1990s and is helmed today by one of its original founders.Neo Materials perfected the bonded rare earth permanent magnetand is today the supplier of 80% of the world’s supply ofthem.

Energy Fuels has been in business since the late 1980s, and isAmerica’s sole licensed uranium mill and thorium storage site.From the inception of the plan to process monazite untilcommercial operations took just one year. Uranium is purifiedby solvent extraction, and Energy Fuels has more than 500 man-years of experience with solvent extraction. The company isdoing a scoping study on a dedicated rare earths solventextraction system and has been awarded a contract by the USDept of Energy to study the separation of rare earths derivedfrom coal and phosphate-acid residues.

MP and Lynas are the largest, rare earth miners outside ofChina. Lynas and Neo Performance are the largest processors ofrare earths to separate them by solvent extraction outside ofChina, and Energy Fuels is the sole producer of clean mixedrare earth carbonates in the Americas.

I am watching the following juniors: USA Rare Earths, RareElement Resources Ltd. (OTCQB: REEMF), Vital Metals Limited(ASX: VML), and Appia Energy Corp. (CSE: API | OTCQB: APAAF).

The next five years will be the critical time for thedevelopment of a domestic American or European total rareearth enabled products supply chain. Canada is at acrossroads; it may build a domestic supply chain anchored onmines and going downstream with licensed European separation,metal and alloy making, and magnet making, or it may build atrans-Atlantic one with the EU.

The game’s afoot.