Jeb Handwerger mentions Molycorp. The "undiscovered junior miner" is Pele Mountain, GEM.V - I hold that one its a long wait :)
Attention should be paid to the rare earth sector. We may be seeing a turnaround as many of the well known rare earth stocks breakout on the highest volume seen since this downturn began in early 2011.
Earlier this week, I wrote about a coming turn in the rare earth sector for my premium subscribers in a piece entitled, "Is Soros Selling His Gold To Buy Rare Earths?" In the piece, I highlight one heavy rare earth developer which I recommended in my newsletter for many years, that has Soros now as a major shareholder now.
I wrote that we may see the end of the two year downtrend as investors return to the beaten down sector. Rare earths are used not only in wind turbines, smartphones, iPads and guided missiles, but they are increasingly used in automobiles to improve fuel efficiency. Newer more fuel efficient cars use almost double the amount than older gas guzzlers. Global auto sales are rebounding as GM, Toyota and Ford hit new 52 Week highs. This should support rare earth demand.
The rare earth etf has made a significant breakout above the 50 day moving average on record volume. Some of the NYSE listed rare earth companies were up double digit percentage points today. This must be monitored as a potential breakout move as investors begin to realize the global demand for rare earth oxides is increasing. Stay tuned to my premium service to get timely updates on the rare earth sector.
Recently, Lynas received good news that the National Front coalition was voted to assume power in Malaysia where their separation facility is located. Lynas has been dealing with a vocal opposition but the election was a major support for the facility which is the largest separation plant outside China.
Molycorp Inc. (NYSE:MCP) the owner of Mountain Pass, the largest rare earth deposit outside of China, is making a powerful breakout above the 50 day moving average. This is the largest high volume gain since it went public back in the summer of 2010. The company showed sales are increasing and demand is picking up. This may prove to be a turning point for the sector.
Remember China controls the rare earth sector and at anytime could disrupt the supply of these metals. The Chinese cut off exports back in 2010. This led to a major stockpiling and speculative buying from end users.
Many of the industrial end users may be running out of those rare earth metals especially as global demand for fuel efficient vehicles has been increasing significantly. They may now look to secure supply from advanced heavy rare earth miners.
This undiscovered junior miner has rare earths, uranium and scandium and is making excellent progress. The company has completed a successful drill program at the end of 2012 and is updating its resource estimate on the project. The mine is located in a proven mining camp which produced uranium and rare earths in the past. Having the uranium, scandium and the rare earths together in the same deposit is quite unique and has economic advantages. The uranium can pay for most of the operating costs and it provides diversification to the investor.
On another significant note, recently the state of Wyoming approved a non-dilutive $20 million loan with excellent terms for one of our long term recommendations. The state of Wyoming has been producing Wyoming since 1958 and is extremely committed to the uranium mining industry. Wyoming supports and encourages mining through low cost, non-dilutive loans and the market really responded nicely to the wonderful financing news.
Stay tuned to my premium newsletter as I interviewed Rick Rule, Chairman of Sprott Global to discuss the current market environment and where there are some interesting opportunities in the resource space.
Have a great weekend and thanks for your support,
Jeb Handwerger
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