Category Archives: REE

Shares to watch in 2018? #MTR #THR #KCN #MOD #RRR #RGM

Three companies with share prices I predict will more than double in first four months of 2018.

1. Metal Tiger (MTR). Share price end of 2017, 2.32p.

Asset Trading Division – Value generated by the Asset Trading Division not yet recognised by the market. c£18m available in liquid assets with c£9m of this being cash. Stella performance in 2017, funds available to accelerate  further value enhancement.

Chatree mine Thailand – Metal Tiger BOD has acquired 8.13% of Kingsgate business, whose shares this year dropped to an all time low due to the Chatree mine being closed by the Thailand Government.

Metal Tiger have the contacts, personnel and resource to reopen Chatree. MTR are in the process of taking the appropriate action to ensure the value of their 8.13% stake significantly increases.

KEMCO IPO – Metal Tiger in Q1 2018 are spinning out their Thailand assets into a separate business.  Thailand business value isn’t yet reflected in the Metal Tiger share price.

Botswana copper – JV prospect with MOD Resources. Resource continues to grow as prospecting progresses. Copper contained in T3 (one prospect area) with each updated estimate contained copper increases. In 2018, with more news due, it is likely this could become a recognised tier 1 resource. Major copper producers will make the appropriate moves as copper is located in a safe jurisdiction with a government that is pro mining.

All elements of the Metal Tiger offering are coming together at the same time. Positions will be taken early 2018, ready for the significant news and share price upside by the end of 2018.

 

2. Thor Mining (THR). Share price end of 2017, 2.89p.

The following link provides an update on Thor projects (see here).

Thor is fully funded for 2018.

Pilot Mountain is a significant Tungsten prospect in America. Interesting as this would, when in operation be the only Tungsten mine in America. This would reduce the impact of China’s dominance in the market.

News due regarding Kapunda copper project and  Molyhil Tungsten/molybdenum project in Australia. Pilot Mountain news regarding a scoping study is also due.

A broker ringing around high net worth individuals encouraging them to sell their holding. Why would a broker do this when news is imminent and share price is rising and will continue to do so? This could indicate a major short position

Any good news mixed with a broker closing a short position will result in a significant spike in the share price.

 

3. Red Rock Resources (RRR). Share price end of 2017, 0.925p

Red Rock Resources plc is a natural resource exploration and development company managing  a diverse portfolio of mining and oil and gas projects and investments around the world.

Steelmin in Bosnia has an existing smelter complex that RRR has financed with a view to getting back online Q1 2018. Steelmin’s existing projections are €35m revenue in first full year of operation.

Andrew Bell (Chairman) in December 2017 bought a significant tranche of shares on the open market. This is a good indication the Chairman believes significant share price upside is going to happen.

For details of other key projects read the ARA (see here).A3E14EE6-E244-4F9F-85A5-20AAFFA03123

 

Six stocks predicted to multi bag in 2018

1. Kingsgate (KCN.ASX).  Share price end of 2017, AUD$ 0.40

Current BOD are not delivering value for shareholders. Pending changes will result in a refocus on Thailand and the reopening of Chatree mine. Previously when mine operating, Kingsgate paid between 10 cents and 35 cents a year in dividends.

Once the mine is reopened, dividends could again be paid to shareholders.

Once business is back on track the share price could easily reach $5, this being less than half previous highs.

2. MOD Resources (MOD.ASX). Share price end of 2017, AUD $0.051

Botswana copper licence area is significant. Above refers to the MOD JV area. MOD have extensive licence areas 100% owned by MOD (see here).  DD654EC3-8F35-4A41-A569-C523B78923F6

3, 4 and 5. Metal Tiger (including KEMCO IPO upside), Thor, Red Rock Resources

See above.

6. Regency Mines (RGM). Share price end of 2017 0.525p.

Only one of the six areas of operation needs to deliver and significant value enhancement will be achieved.

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Mambare – cobalt price went from $32,500 per tonne, reaching a peak of  $75,000 in 2017. The prediction is because of electric vehicle battery requirements the price of cobalt will continue to increase in 2018 (see here).

Curzon – gas production commences 2018 and is easily scalable.

Coal – operation is for metallurgical coal. Key for steel production. Steel production required for the American economy.

Modzfelt – rare earth elements opportunity.

EsTqeq – electric vehicles and battery subsidiary.

Regency share price is suffering due to sentiment being low due to:

1. YA loan.

2. Being over bullish with announcements regarding progress.

Once resolved and focus is on Curzon, coal opportunities  etc the share price will move North very quickly. Regency could surprise many.

 

2018 is going to be a good year for the resource sector with the potential for significant gains to be made investing in small market cap resource businesses.

The 6 businesses mentioned in this blog I believe highlight some with significant potential.

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#MKA facts rather than waffle.

Some of the positives:

1. Licences in place.
2. 18 months working capital.
3. Warrants will further increase working capital.
4. Malawi very pro mining. 20% of their GDP.
5. MKA have first mover advantage in Malawi.
6. Chinese have 85% of REE market. Will want to retain dominance so will be interested in MKA.
7. Predicted upswing in uranium mirrors likely timing of mine being in production. Key if anybody makes offer for mine.
8. REE prices predicted to significantly rise due to growth in “Internet of things” etc,
9. Free aerial survey data. Financed by French Government as want to support poorest country in Africa. MKA in perfect position to take commercial advantage of this data.
10. Option for licence in new technology for separating out REE. Possible royalty stream if used by other mines. Reduces capx and opex costs.

Lots of positives for longterm holders, hence significant amount of shares in LTH hands and recent TR1.

For more detailed information about Mkango see here.

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Mkango Resources – the case for investment? #MKA

Mkango Resources (MKA) are a rare earth element exploration and development company operating in Malawi.

  • The only rare  earth company listed on the London Stock Exchange.
  • French government funding geological survey of area covered by MKA licence.
  • Demand for the Rare Earth Element (REE) products increasing but supply declining.
  • Chinese control 85% of the market and are shutting down illegal REE mines (see here). In the past China has imposed taxes etc driving up prices. The following chart indicates how quickly China have dominated the REE market.

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  • REE prices predicted to rise. The following graph for example indicates the price predictions for Neodymium (one of the 17 Rare earth elements).

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Imagine what would happen to the share price of companies producing Uranium if China restricted exports again and prices again hit the peak of 2011.

  • Songwe Hill Project (MKA)
    • open pit
    • life of 18 years.
    • High uranium grades
  • Over 31% of MKA shares are not in public hands.
  • Worldwide licence for new processing treatment will reduce opex costs for processing REE. MKA potentially will also benefit from technology if used on other REE prospects.
  • Low capital and operating costs.

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  • BOD invested. Why would they be happy not to take a salary and take stock instead?
  • IRR 37%, high when compared with other operations.image
  • NPV $345m
  • Malawi is one of the poorest countries in the world. Labour very cheap.
  • Rare earth elements are important for the Internet of Things. Demand for REE is going to increase.
  • Airborne survey indicates significant radiometric and magnetic anomalies in the  Thambani licence area (see here). The business now has the data to target drilling activity.
  • Survey identified Uranium anomaly 3km long. This is significant as currently 224  reactors planned or in construction around the world (see here), these will therefore when online significantly increase the demand for uranium.
  • Finance raised by MKA provides 18 months of working capital.

 

The negatives

1. Uranium prices at an 11 year low (Uranium prices).

2. Another nuclear disaster such as the Japanese Fukushima incident would impact Uranium sales.

3. Japan slow bringing reactors online  (slow reactor restarts ).

4. Possible corruption in Malawi mining department (mining scandal).

5. Potential environmental issues associated with uranium mining (see here). Mkango take their social and environmental responsibilities seriously as detailed in their social responsibilities document.

 

Conclusion

The airborne survey has found significant potential mineral prospects where Mkango resources are carrying out their exploration activities ( see here).

This information hasn’t yet been announced by the MKA BOD. This is a significant development.

Malawi has not been properly evaluated by the mining industry and we now have the US$25 million World Bank funded nationwide airborne survey. MKA are in the perfect position to utilise the survey work for their commercial gain as have first mover advantage.

We are at the start of the discovery phase in the life cycle of the business and therefore MKA is a high risk, high reward investment.

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Malawi is also very supportive of the mining industry (see here). The mining industry of Malawi, has contributed 1% of the global production of uranium and this contributed to an increase of Malawi’s Gross Domestic Product (GDP) from 1% to 10%. It is estimated the sector’s contribution to GDP could be 20% by 2023. This highlights why Malawi are supportive of the mining industry.

MKA with licences in place,  working capital, Malawi’s political will, first mover advantage and timing of the predicted upswing in uranium and REE prices are in a position to potentially create significant value for shareholders.

Next step is to drill some of the areas identified, probably with a partner. News of drilling commencing or a JV partner should significantly increase the market capitalisation of the business.

 

 

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Notes:

  1. Rare Earth Elements (REE) used in magnets, industrial motors, hard disc drives, hybrid and electric vehicles, wind turbines, batteries, alloys, catalytic converters, polishing powders, fluorescent tubes, LCD panels, etc.
  2. Mkango CEO talking about MKA.
  3. Mkango Resources website.
  4. REE is a collective name for 17 elements: Cerium, Gadolinium, Europium,  Praseodymium, Terbium, Dysprosium, Neodymium, Promethium, Holmium, Yttrium, Samarium, Erbium, Thulium, Lutetium, Scandium, Ytterbium, Lanthanum
  5. LSEsharetalk article about MKA.
  6. The following elements are important for clean energy and are a potential supply risk and therefore of greater value: Yttrium, Europium, Terbium and Dysprosium.
  7. Malawi one of the 10 poorest counties in the world, others indicated on this map.

 

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