Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

It's Game On for Rare Earth Metals in Greenland

Commodities / Rare Earths Aug 29, 2012 - 03:00 AM GMT

By: Critical_Metals_Repo

Commodities

Best Financial Markets Analysis ArticleFar from icebound, Greenland is wealthy in rare earth elements, precious metals and oil. Already, says Aheadoftheherd.com owner Rick Mills, companies are beginning to outline major discoveries at just pennies a share. And that's just the tip of the iceberg. Read more in this exclusive interview with The Critical Metals Report.

The Critical Metals Report: Let's start by talking about growth in developing nations, where populations are starting to demand the good things in life that we in the developed world have long enjoyed. That means continued growth in the commodity markets, specifically in mining. What are the implications of that?


Rick Mills: Easy and cheap access to basic materials like food, fiber, energy and minerals has driven recent growth in global prosperity. Throughout history, supply shortages in these materials have led to prices high enough to support further increases in production. We have always counted on supply eventually exceeding demand and forcing prices to drop.

 

Now, we are seeing a paradigm shift. Scarcity, jurisdictional risk and energy costs may result in declining production. Remember, margins, not price, motivate investment. As the cost of production increases, margins might not be sustainable.

 

TCMR: Is this specific to metals or other materials?

 

RM: I am talking about everything: food, fiber, energy and minerals. As far as metals are concerned, we have already picked most of the low-hanging fruit; now we have to go to more remote locations. We have to go to countries that are a little bit sketchy: the Democratic Republic of the Congo, Zambia or South Africa, which seems to be imploding.

 

For 10 years now, supply has struggled to keep pace with demand. The supply of metals is finite and subject to compounding demand from developing nations. Discovery and development are increasingly challenging and expensive. Average ore grades for most minerals are in decline, yet their production has increased dramatically.

 

The most important metals, copper for example, are suffering from declining ore quality and rising extraction costs. Eventually, the quantity of resources used in the extraction process will be 100% of what is produced. At existing mines, costs are increasing while production rates are stagnant or in decline. And the rate of discovery is not keeping pace with the rate of depletion; we are not replacing the reserves we are using.

 

TCMR: That would seem to increase the value of some of the near-term production stories that have defined ounces. Do you see a general increase in mergers and acquisitions (M&A) activity in the metals industry?

 

RM: I think that will have to happen. When was the last time you heard of a major making a discovery? The majors' business is to produce, whereas the juniors' place on the food chain is to explore, find and develop to a given point.

 

As reserves get more difficult to replace, juniors with deposits will become more valuable. The only way for a major mining company to replace its reserves and grow its resources is M&A. And, because there are very few mid-tier companies left, the majors will have to dip into the junior pool.

 

TCMR: You pay close attention to areas of the world now being explored. Do you have any ideas for investors, particularly in terms of lesser-known jurisdictions?

 

RM: Greenland is one place that will be increasingly on investors' radar screens. It is vastly underexplored and yet, it has some of the best potential for mineral discoveries that I have ever seen. Greenland is the largest island in the world; it has 5,800 square kilometers (sq km) of coastline. And yes, about 84% of Greenland is icecap up to 3 km thick. But the ice-free area surrounding the icecap is up to 300 km wide; roughly 400,010 sq km. Compare that to the size of Germany, which is slightly less at 357,000 sq km. That is where the prospective mineral discovery areas are. Most companies are working on the southwest coast.

 

Travel by sea is possible throughout the year from Nanortalik, in the south, to Sisimiut in the northwest, where the ports have a year-round shipping season.

 

The Earth's "cryosphere"—its frozen places—are melting. And there's no place on Earth that's changing faster than Greenland. The World Meteorological Organization reported that December 2011 was much warmer than usual, with rainfall instead of snow recorded for the first time in Kuujjuaq. NASA recently reported that ice all across the vast glacial interior of the world's largest island was melting.

 

Greenland is no more rugged than Canada's north. When you consider that the southwest coast is ice-free year round, shipping by sea would be cheaper than roads or exporting out of Canada's north.

 

TCMR: Why is it so prospective from a mineral exploration standpoint?

 

RM: Because Greenland is geologically part of North America, its geology is continuous with that of Canada and Northern Europe. It has cratons, which gives you the potential for diamonds, gold and rare earths. There's a Paleoproterozoic mobile belt, which gives you the potential for base metals, platinum group metals (PGMs), gold and tantalum. The Skaergaard intrusion, a lower territory intrusive complex, is tremendously important in terms of gold and PGM potential. Greenland also has lower Paleozoic sediments, which have the potential for other base metals. Carboniferous cretaceous settlements have the potential for coal.

 

Its offshore geology is highly prospective for petroleum. In 2007, the U.S. Geological Survey estimated that the East Greenland Rift Basins Province could hold more than 31 billion barrels oil, gas and natural gas liquids. It also estimated that the waters off Greenland's west coast could contain the equivalent of 42% of Saudi Arabia's oil reserves.

 

TCMR: What about permitting and ease of development? Do the Greenlanders welcome this type of activity?

 

RM: Greenland has had self-rule since June 2009, including control over its minerals and petroleum. It is a politically stable democracy, open to foreign investments and mining. Right now, fishing and grants from Denmark are its major sources of revenue. Greenland wants to cement its financial independence from Denmark and sees mineral mining and oil and gas production as good sectors to achieve this. The permitting process takes a very commonsense approach. Greenlanders want to get mines going, to have people working and to get the revenue generated by operating mines.

 

Greenland's Bureau of Minerals and Petroleum (BMP) is the nation's authoritative body for all administration related to mineral resources. It is a one-stop shop for anyone who wants a license. The BMP has the regulatory authority to review, evaluate and approve all licenses and to facilitate the public hearing process.

 

TCMR: So there are no hoops to jump through for local, provincial or national governments?

 

RM: That's right, and the BMP is aggressive when it comes to marketing Greenland's geologic potential. For example, the BMP designed and executed its own resource awareness marketing strategy focused on Australia and Canada, the two biggest mining countries in the world.

 

TCMR: What companies are operating there?

 

RM: Hudson Resources Inc. (HUD:TSX.V) controls 100% of the Sarfartoq carbonatite complex in west Greenland. This is one of the world's largest carbonatite complexes, approximately 13 by 8 km. The minerals of economic interest include pyrochlore, a niobium and tantalum oxide. In the core of the complex there are high uranium levels corresponding with exceptionally high concentrations of niobium and tantalum. The Sarfartoq project has produced some of the highest-known niobium intercepts. Uranium is directly associated with the niobium in the pyrochlore and is an effective prospecting tool used to identify other pyrochlore occurrences on the project.

 

Greenland currently has a moratorium on uranium mining. Hudson is sitting back and letting Greenlanders decide whether they want uranium mining or not. Instead, it is concentrating on the rare earth elements (REEs). There seem to be an awful lot of them with extremely high grades.

 

TCMR: Right now, it seems that the heavy rare earth elements (HREEs) are the most sought after. Does Hudson have a deposit with any of the HREEs?

 

RM: It has a deposit of what is arguably the most important REE, neodymium. Neodymium is the key to making REE magnets, those superior, high-strength permanent magnets used for energy-related applications. For example, wind turbines require 1,000 kilograms of neodymium for each megawatt of electricity they generate. The shift away from electromagnetic systems toward a permanent magnetic-based, direct-drive system in hybrid cars is increasing demand for neodymium. It always seems to be in short supply in the global marketplace, so prices have held up fairly well.

 

Hudson collected a five-ton, bulk metallurgical sample from its main zone, the ST1. It graded 2.5% total rare earth oxides (REOs). The neodymium oxide averaged 20% of total REO. That is a phenomenal number, and it bodes well for the extraction of neodymium.

 

TCMR: Neodymium is on the U.S. Department of Energy's (DOE) list of most critical rare earth metals.

 

RM: Five REEs—dysprosium, neodymium, terbium, europium and ytterbium—are considered to be the most critical of the elements in the DOE's Critical Metals Strategy report issued in December 2011.

 

In a REE deposit, the distribution of the individual REOs as a percentage of the total REOs is very important. You want to be sure that you can pull the metal that is the most in demand and extract it at the most advantageous cost.

 

The high-grade rare earth oxides on the Sarfartoq project are associated with low levels of thorium. As a result, the thorium radiometric signature is an effective prospecting tool for identifying additional REE occurrences.

 

Hudson is still defining the deposit, doing infill drilling and working on the metallurgy side, but also continues exploring in and around the project area.

 

TCMR: Does it have a preliminary economic assessment (PEA)?

 

RM: Its PEA shows a net present value of $616 million (M) and an internal rate of return of 31.2% with a 2.7-year payback period. The study was based solely on the company's NI 43-101, Inferred resource of 14.1 million tons (Mt) at 1.5% total rare earth oxides (TREOs).

 

It put another 8,000 meters (m) of drilling into it so far this year. It is going to enter 2013 with $7M in the treasury.

 

There is a lot of news coming from Hudson. It has potential not just in its neodymium project, but all of its claims in the whole project area are highly prospective. There is blue-sky discovery potential with Hudson.

 

TCMR: Since Greenland shares some of its geology with northern Canada, what other minerals does it host?

 

RM: North American Nickel Inc. (NAN:TSX.V) is working on what could be a whole nickel camp up in Greenland. Its Maniitsoq property is a district-scale project 4,800 sq km in size. Its mineral exploration license covers numerous high-grade nickel-copper-sulphide occurrences associated with norite and other mafic-ultramafic intrusions. It is part of a belt more than 70km long near Greenland's southwest coast. We know there is nickel there because we have historical results. However, I look at it as a new discovery, one that could actually put Greenland on the map.

 

If investors buy North American Nickel at $0.20, they are getting what is a shot at a district-size play, owned 100% by North American Nickel. For sheer size, plays like this do not come along often. I see this as a pure discovery story. It does not matter whether it is nickel or another metal. A discovery of this size and potential richness, in a politically stable, mining-friendly country, will be rewarded enormously. Discovery plays get rewarded, no matter what the market is.

 

TCMR: Any final thoughts, Rick?

 

RM: Sally, all of the juniors we have talked about in this and previous interviews have a deposit and are working their way down the development path. Sooner or later, one of the majors will have to look at these juniors as opportunities to replace their reserves and grow their resources. That will happen not because the majors want to, but because they need to.

 

Since my last interview with The Gold Report, a couple of the companies mentioned have done very well for their investors. I fully expect both companies mentioned here to do as well.

 

TCMR: Rick, thank you for your time and insights.

 

Richard (Rick) Mills is the founder, owner and president of Northern Venture Group, which owns Aheadoftheherd.com, as well as publisher, editor and host of the website. Focusing on the junior resource sector, Mills has had articles appearing on more than 400 different publications, including The Wall Street Journal, Safe Haven, The Market Oracle, USA Today, National Post, Stockhouse, LewRockwell, Pinnacle Digest, Uranium Miner, Beforeitsnews.com, Seeking Alpha, Montreal Gazette, Casey Research, 24hgold, Vancouver Sun, CBS News, Silver Bear Cafe, Infomine, Huffington Post, Mineweb, 321Gold, Kitco, Gold-Eagle, The Gold/Energy Reports, Calgary Herald, Resource Investor, Mining.com, Forbes, FN Arena, UraniumSeek, Financial Sense, GoldSeek, Dallas News, VantageWire and Resource Clips

 

Want to read more exclusive Critical Metals Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Exclusive Interviews page.

 

Disclosures:
1) Sally Lowder of The Critical Metals Report conducted this interview. She personally and/or her family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Critical Metals Report: None. Streetwise Reports does not accept stock in exchange for services. Interviews are edited for clarity.
3) Rick Mills: I personally and/or my family own shares of the following companies mentioned in this interview: North American Nickel. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview.

 

Streetwise - The Gold Report  is Copyright © 2012 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

 

The Gold Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.

 

From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

 

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

 

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

 

Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

 

101 Second St., Suite 110
Petaluma, CA 94952

 

Tel.: (707) 981-8999
Fax: (707) 981-8998

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in