Northern Minerals, the Australian-based explorer, is a sponsor of RareMetalBlog. Let’s get that out there at the beginning: what follows is an independent view, and reported mainly because of the analyst’s views on the heavy rare earth scene rather than his detailed comments about the company.
But David Rijkers at brokers DJ Carmichael in Perth has been following Northern (ASX:NTU) and obviously likes the story. He starts by pointing out that, in his view, to evaluate NTU, investors must realise that this is not a rare earth element development company – no, he sees it as a dysprosium and yttrium development company. His summary: “The next 12 months will see NTU move from a speculative junior into (being) the global leader for HREE production, a change so significant that it almost seems unreal in the context of 12 months”.
He writes that the dysprosium and yttrium markets are experiencing massive imbalances – strong demand coupled with severe supply constraints and a Chinese monopoly, the Chinese being unwilling and/or unable to service rest-of-world demand. With any market imbalance, one of two things will occur: either demand destruction, or a free market response that fills the gap. (His report suggests that NTU could be one of those to fill the gap.)
Rijkers joins those who believe China aims to control not only the REE mining sector, but also the downstream industries who use REE in their supply chains as a means to boost employment and foster economic growth.
The analyst then provides a table of companies he describes as NTU’s peers. What is interesting is the percentage of heavies in each case. Those percentages of HREE are:
Avalon Rare Metals 12.36%
Arafura Resources 2.34%
Alkane Resources 21.11%
Frontier Rare Earths 6.37%
Greenland Minerals & Energy 10.7%
Great Western (non-monazite) 1.93%
Great Western (monazite) 6.11%
Lynas Corp 3.83%
Molycorp 0.25%
Northern Minerals 84.52% (with yttrium being 62%)
Rare Element 2.17%
Stans Corp 39.26%
TUC Resources 84.4%
Tasman Metals 49.35%
Quest Rare Minerals 36.38%
Ucore Rare Metals 34.84%