Toronto, Ontario--(Newsfile Corp. - March 13, 2014) - James Kenny, CEO of Frontier Rare Earths (TSX:
FRO) ('Frontier'), a rare earth play in South Africa, spoke to Tracy Weslosky about the
Zandkops drift rare earth element project in the Northern Cape Province of South
Africa in the context of some of the big debates surrounding the rare earths
industry. These include the market difference between light and heavy rare
earths (LREE vs. HREE), the US Energy department's 'critical elements list',
Chinese rare earths overcapacity and potential massive rare earth resources in
North Korea and elsewhere that might reduce overall prices.
In addressing the confusion concerning the market difference
between heavy and light rare earths (HREE vs. LREE), Kenny suggests that this is
an "overly simplistic and, in fact, misleading way of describing the elements,
because the underlying suggestion is that light REE are bad and heavy are good".
Rather, Kenny suggests that "what is required is to identify those elements that
are going to be in greatest demand and those with the biggest supply gap". The
problem is that the US department of Energy has identified five critical
elements that are going to be at the centrepiece of a high tech economy". Those
elements are Neodymium, europium, terbium, dysprosium and yttrium. In this
respect, Kenny advises investors to always look for the presence of the critical
rare earth oxides, which offers "a more useful evaluation of the economic
prospects for various deposits".
Is there an oversupply of REE from the Chinese? Kenny frames
the issue in the perspective of the time horizon being held as a reference:
"There is no shortage: What is relevant to Frontier is what is the position of
supply and demand in the medium term and the latter part of the decade when
production begins - anticipated in 2017 - and that is when I see a significant
shortage of rare earths if companies like Frontier and its peers don't start
producing". So, you could argue that there is no issue in supply and demand
today, but that is only if a number of new mines come on stream in the next few
years, otherwise, the prices for rare earths will be significantly higher than
any analyst is forecasting.
Kenny also commented on the much publicized claims that North
Korea intends to start producing rare earths. He suggests the claims are just
that and that they lack factual evidence: When the media talks about massive
amounts of rare earths in special deposits found in Russia, Afghanistan, at the
bottom of the ocean and even the moon - not to mention asteroids - "we may have
at best an occurrence of rare earths....When I see a code compliant resource
report published by a credible source I would look at that information
differently". Therefore, Kenny urges investors to make a difference between an
occurrence of rare earths and a commercially attractive and feasible deposit
that someone is actively involved in leading to production.
While Kenny has no reason to doubt the presence of rare earths
in North Korea - or, in fact in many other parts of the world - it is more
important to determine if such discoveries are being developed, what is the host
mineral, who owns them, what are the radioactive signatures. Ultimately, Kenny
does not consider the possible supply of rare earths in North Korea being in any
way relevant to the anticipated shortfall in western demand in the medium and
long term".
If you cannot view the video above, please visit:
http://investorintel.com/rare-earth-intel/frontiers-james-kenny-debunks-major-rare-earth-industry-debates/
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