Yearly Archives: 2012

Source: “Liberty Star’s (LBSR) Potential Play on Rare Earth Elements”


Liberty Star’s (LBSR) Potential Play on Rare Earth Elements

By Ryan Allway · Thursday, December 13th, 2012
Rare earth elements (REEs) are a set of 17 chemical elements that are typically dispersed and not often found concentrated in economically viable ore deposits. Despite their limited availability on the global marketplace, the elements are used in a number of high tech industries, ranging from missiles to everyday rechargeable batteries used in electronics.
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REE Supply Concerns Persist
The majority of the world’s rare earth elements are produced in China, mainly because the country priced everyone out of the market in the 1990s. In fact, most of the world’s rare earth elements were produced in India, Brazil, South Africa and the United States until that time. But without government subsidies to match the Chinese, they were not able to keep pace with the greatly reduced prices and were forced out of production.
This was a brilliant move by the Chinese to corner the market for such an important commodity, but unfortunately one that put the U.S. behind the curve when it comes to producing these highly valuable metals.  The resulting concentration of supply in China led to concerns that the world may soon face a shortage of REEs, with demand expected to exceed supply by 40,000 tones annually unless new sources are developed. As a result, REE prices rose for the better part of a decade until the global economic slowdown reversed those trends.
What virtually every commodity expert in the world agrees upon though, is that the demand for rare earths will come back to and exceed previous tonnage levels with the rebounding of the economy. Also widely agreed upon is that if the U.S. cannot start finding more domestically friendly sources of these metals, they will be subject to the whims of foreign governments who may not always play nice when it comes to prices.
Being acutely aware of the situation in China has led the U.S. department of defense (DOD) to recently contract with Ucore Rare Earth Metals (TSX: UCU) to conduct mineralogical and metallurgical studies on the company’s Bokan mountain property in Alaska.
Liberty Star’s Newfound Potential
Liberty Star Uranium & Metals Corp (OTCQB: LBSR), a mineral exploration company engaged in the acquisition and exploration of mineral properties in Arizona and Alaska, could capitalize on these favorable trends after identifying a surprising presence of rare earth elements over a large area on its Hay Mountain project located in Arizona.
In three press releases, the company indicated that assays of soil samples showed the presence strong anomalies of  4 REEs  including  scandium, yttrium, lanthanum and cerium within a nine square mile anomaly. The main reason that the DOD was interested in the Bokan property of Ucore is that it contains 3 of the much less commonly found ‘heavy’ rare earths; Dysprosium, Terbium, and Yttrium.  Liberty Star’s Hay Mountain property contains one of these 3 elements, Yttrium, and with plans to assay the samples for the 13 additional REEs. The firm’s land could prove to be even more valuable than once thought given the promising initial results.
Interestingly, a recent issue of Elements Magazine ( devoted an entire issue to Rare Earth Elements, with articles on 1) “Rare Earth Elements: Minerals, Mines, Magnets (and More); 2) Dynamics in the Global Market for Rare Earths; 3) Rare Earth Mineralization in Igneous Rocks: Sources and Processes; 4) Hydrothermal Mobilization of the Rare Earth Element: A Tale of “Ceria” and Yttria; 5) Diversity of Rare Earth Deposits: The Key Example of China and 6. Rare Earth Mining and Exploration in North America.
A thorough analysis of this issue of Elements (a UK published scientific journal) allows the following observations:
  1. Hydrothermal (hot water associated with igneous rocks) are the source of several REE deposits including the world’s largest, Bayan Obo in China with about 164 million tons of mostly Lite REEresource.  Also the Gallinas Mountains, New Mexico, where LREE’s from bastnasite are found associated with carbonatites.
  2. The Rare Earth Elements at Hay Mountain have just been discovered.  By their proximity and association with hydrothermal mineralization of gold, copper, molybdenum lead and zinc anomalies it is quite apparent they are associated with those hydrothermal fluids.  At least one heavy rare earth is present and the other 13 have yet to be analyzed for. Little is yet known about their geology and in what rocks they occur as all samples are of soil covering the source of those anomalies.
  3. Because it is anticipated that the production of base metals will result in a large mine or a combination of large and small mines, it may be possible to mine the associated rare earths as a co or by product. Or the simple availability of mining infrastructure at low cost because of the proximity of the larger gold-copper-moly-lead-zinc mining operations, be they open pit or underground may result in unusually low cost of production.  If this synergy lowers overall cost then the REE’s might be produced at a lower cost in relation to their competitors elsewhere, and thus be profitable.
Rare Earth Deposits
The Hay Mountain project is part of the company’s larger Tombstone Super Project that encompasses Hay Mountain, Tombstone South and Walnut Creek and is focused primarily on copper production. The firm plans to complete ZTEM surveys over the claim area in the spring of 2013, when geophysical conditions are right in the northern hemisphere.  The permitting process will begin shortly after the first of the New Year, with five planned targets.
Potential Investment Opportunity
Liberty Star represents a strong potential investment opportunity given that the four rare earth elements that it identified are among the worlds most valuable. Lanthanum is commonly used in automobiles, with each Prius hybrid car using some 10 pounds of the substance, while yttrium is instrumental in the production of phosphors, which are used in LEDs.
In addition to these REEs, the company also offers investors upside in the form of its large copper and uranium potential. The Tombstone property is located in southeast Arizona near some of the most prolific porphyry copper mineral centers in the world, with companies like Freeport-MacMoRan Copper & Gold Inc. (NYSE: FCX) operating in the vicinity.
With Liberty Star working their way through a number of near-term catalysts, the company’s investors could see the stock price appreciate over time, assuming the results come in as positive. These near-term catalysts could also provide investors with near-term price movement and attract additional shareholders.
More Information
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