QUEST RARE MINERALS LTD V.QRM

MCP & QRM

[pulverizer]

John Kaiser has written an email yesterday regarding both Molycorp and Quest. In a nutshell, he believes the analyst made his valuations on Molycorp inaccurately and he discusses why. He also makes the accusation that the wording of the downgrade was such to make the rest of the rare earth markets diminish so that potential mergers will become easier for Molycorp at these prices. I might ad that a separate firm, Dahlman Rose yesterday put a "Buy" rating on Molycorp. So.....?? Anyways, then he discusses Quest. Here's the basics of Quest:
1) In 3 to 4 months a study, "economical pre-feasibility study EPS" will be finalized and released for the public. It will outline it's ability to be profitable, how to build the infrastructure and so on.
2) It will identify that at current "basket pricing" of TREO ("Total Rare Earth Oxides") it is worth:
- $5 at "support" (meaning stock shouldn't be less than)
- $12 at current FOB domestic prices and factoring in the mine won't be in operation until 2016
- $24 at current FOB domestic prices in 2016 once actually producing product
- $59+ in 2016 because determining estimated FOB domestic prices currently is based on the average of the past 3 years, for now being 2008, 2009, 2010! 2009 & 2010 are recession years with $30 a barrel oil and lower than normal FOB domestic prices, with 2010 and 2011 current domestic prices being at all time new highs. Therefore those above valuations would be considered cheap so long as current prices stabalize or continue to rise between now and 2016.
3) That by December to January we should see a return to the $5 to $8 so long as we don't actually go back into recession and that Europe doesn't take us down the 2008/2009 path,,,,,, :P
In a nutshell, he was not impressed the the analyst downgrade on Molycorp because where he got the $66 price target was from poor domestic pricing on the basket pricing....
I am tired, getting my a-s-s handed to me and cannot quote him exactly due to copy write infringement so... he also said nothing about AVL. But he was explaining that eventually the market will understand the difference between LREE and HREE and when it does QRM (AVL) will dislocate themselves from copying what MCP does....