In this episode of the Rare Earth Exchanges podcast, the hosts discuss the development of a project directory aimed at investors in the rare earth sector. They delve into the complexities of ranking various mining projects based on factors such as location, project stage, mineralogy, and ESG considerations. The conversation highlights the importance of understanding geopolitical risks and the need for a diversified supply chain in the rare earth market. The hosts also emphasize the significance of mineralogy and project stage in determining investment viability, while addressing the challenges and opportunities within the industry.
Chapters
00:00 Introduction to Rare Earth Exchanges Podcast
00:46 Motivation Behind the Project Directory
01:45 Backgrounds of the Hosts
03:29 Overview of the Project Directory
09:01 Ranking Methodology Explained
12:12 Importance of Project Stage
15:03 Key Milestones for Investors
18:44 Understanding Mineralogy
22:33 The Role of ESG in Mining
28:31 The Importance of ESG in Investment Decisions
29:07 Geopolitical Risks in Mining Investments
31:59 Downstream Differentiation and Vertical Integration
39:15 Metallurgical Testing and Reporting Standards
42:49 Investor Strategies and Project Evaluation
51:17 Challenges in Greenland Mining Projects
53:26 Engaging with the Mining Community
Listen to the REEx Podcast
(opens in a new tab)Transcript
Dustin Olsen (00:01.741)
Hi everyone, welcome to the Rare Earth Exchanges podcast. We’re in here for a special tree. We got a special episode. We’re talking about something we’ve been working on, feels like forever, for months. We got a project directory, a database of things that we’ve been working on. And that’s been spearheaded by our co-host John. And Daniel’s been our famous supporter of all the work we’ve been doing. Before we get in, I just have to give a quick disclaimer.
This is targeted towards investors, but you absolutely must do your own due diligence in researching what we’re going to show you, what you’ll find here, and even talk to your own financial advisor if you should continue forward with any investments with the companies that we’re going to display here today. John, kick us off here. Tell us the thought, the motivation behind this project directory.
John Parkinson (00:56.888)
So yeah, we wanted to build a project directory, but we then thought, how can we make it better? So we then started sifting through all the information, going out sourcing more, and we realized we could probably rank from what we think is the best NDPR deposit, rarer deposit, through to what is probably the last. And wow, that was a journey we’ve just been on, and it’s going to be a journey we’re going to continue. And we thought we’re about to release it, and we thought…
a great way to explain why we’re doing it, how we’re doing it, would be great to do it in a podcast. So we’re here today to talk about that.
Dustin Olsen (01:37.401)
Absolutely. So real quick, just some people are going to ask, who are you guys to come in and rank these different mining projects? Well.
John Parkinson (01:49.614)
Well, I might jump in. So I’m a civil engineer by background. I’ve worked in project finance and I’ve been investing in rare earths and I’ve sort of pulled all that together and yeah, I just, love the sector. it’s, I’ve been sort of relying on Daniel as well. He’s got a very interesting background as well. So over to you, Daniel.
Daniel O’Connor (02:12.6)
Yes, thanks, John. Yeah, I mean…
I was interested in helping along with you gentlemen getting rare earth exchanges started because first and foremost I’ve been a mineralogy and geology fanatic my whole life. Since I was a little kid my mom remembered I already understood a lot of the table of elements and different minerals and we go camping, would collect minerals and so I even studied geology but wanted more options as far as
work and economy. eventually got a law degree. did investment banking for almost five years.
involved with fixed income, municipal bond, origination and structuring and doing some of legal stuff around that. So I spent a lot of years in finance and then moved into corporate and startups, tech startups and FDA and healthcare. But I’ve always had a love of geology and I’ve tracked and made some investments over the years in various companies. So that’s some of the genesis for me.
behind rare earth exchanges. It’s a fascinating area and especially with our goal of chronicling the genesis of a market outside of China or ex-China. So it’s a pretty incredible time to be involved with this.
Dustin Olsen (03:41.877)
Absolutely. So a passion for the industry combined with the career of investing, we bring you the Rare Earth Exchanges Project Directory. So I’m going to, without further ado, I’m going to share my screen. I’m going to pull up our website with a table that shows our top 20 projects that are going on. Okay. And we’ll scroll through this and we’ll try to be as descriptive as possible of what’s here.
But John, why don’t you walk us through this table and why we have these different columns here.
John Parkinson (04:19.277)
Yeah, well, we might even go back a step and say, so why do we do these rankings? having invested in rare earths for a while now, it’s a really challenging sector. The more you dive in, the more you realize the complexity with it. But there’s been quite a few characteristics that really can define how well and profitable
a rare earth mine can be. So when we started to distill it and look at all the information, we came up with a bunch of categories that you sort of can use to score and then rank. across the top, know, we basically looked at what is the location of the deposit? What stage are they up to? What’s the mineralogy?
What’s the ESG? What’s the total size of the deposit? What’s the production that they will do? We found that those categories really gave you a good insight into what’s going on and how well the deposit would perform. And so I guess just something to start with in terms of
how as an investor you should look at things and the lens that we put over this whole set of analysis is the concept of net present value. So that means that cash flows upfront are worth more than cash flows later on due to discounting it back. And that’s because there’s more certainty around upfront cash flows. So when you put that into a mining perspective, you can look at where they are in the production life cycle. So if they’ve just been upfront,
sorry, they’ve just discovered a deposit. They’re probably a long time till they’ll get those cash flows. It might be 15 years away. Whereas someone that’s producing now, they’re getting cash flows in. So again, there’s less risk involved with that and therefore it’s probably a better investment. yeah, so we looked at that with the lens for the whole sort of analysis.
John Parkinson (06:36.301)
The other thing to remember with this project ranking is that each project might have several deposits. And what we have done is just taken the deposit that is most likely to come up first or is currently being produced. So I’ll give you an example. There’s a great company in Australia called Northern Minerals, Investor Code NTU on the ASX. They’ve got, I forget how many, maybe like eight deposits, but we’ve analyzed the Wolverine.
deposit in the Brown’s ranges. So, you know, we’re only looking at that because some of their other deposits, you know, are very early stage. We don’t even really understand the mineralogy of it. And so those cash flows are likely, you know, 10, 15 years away. The other point to make is that even with some of these deposits, there’ll be different phases. And we have only taken into account the current phase that we sort of are working to. So
A great example of that is Arafura, Investor Code ARU on the ASX. So they’ve got the Nolens deposit. And right now, if you look across to the right, we’ve got under production 4,400 tonnes per annum. That’s phase one. So we’ve only taken into account phase one, but they’ve already flagged that phase two is coming, and that would take it up to 11,000 tonnes per annum. I should probably disclose
my current investments. So I’m an investor in Arafura and MP materials. But there’s a lot of others that having done this work that I’m considering investing in now as well. But that’s just a disclosure. So yeah, so basically, this is a ranking of deposits. And obviously, they have a project name. We were able to locate about 159 deposits.
So, you know, this first page is just the top 20, but the last page goes all the way down to 159. I guess as a caveat here, we’re focused a lot more energy and time on probably the top 40 or 50. As time goes on and more information becomes available with some of the lower projects, we’ll obviously update that. But the accuracy is a lot better for the top projects here.
John Parkinson (09:02.733)
So that’s sort of what generally this is. It’s a ranking of all the deposits, including the Chinese deposits, which as you can see in the top 20, there’s I think seven, which, you know, that does make sense. They’re obviously a major monopoly that they control. But perhaps, you know, what we wanted to do here today was to take you through how and sort of more of the nuances around
each of the categories that we ranked for each project. So shall we jump in?
Daniel O’Connor (09:40.599)
Yeah, I think that’s a great idea. And this is really fabulous, John. I mean, what a valuable service this is. And especially as we drill in more more and more into these various companies and the whole space and the other macro and micro factors, this is going to just get more and more rich and robust. So very, very great work.
John Parkinson (10:06.433)
Yeah, thank you. Yeah, so all right, let’s break it down. Let’s get into the categories. So, yeah, let’s jump into the country, jurisdiction. So obviously where your deposit is located has a huge impact on so many aspects of mining.
So what we did was we looked at the country and we assigned it a score out of 10. So obviously places and so the other thing just to remember with this whole rankings is we’re coming about this from a Western investor perspective. you know, and this comes to obviously the jurisdiction risk. So if as an investor, we were going to put money, say into a Chinese company to China Rare Earth Group. I can’t remember the
exactly. China Northern Railroad, So you can invest in them. However, there are complications obviously with that jurisdiction. They’re a state controlled entity, they do have their own board and a structure to stuff and make decisions. But ultimately, we feel as an investor myself that they may make decisions that are in the better interest of China rather than the company.
and their legal framework and all those sorts of things that sit within the country sort of reflect that lower score. Whereas if you look at somewhere like Australia, Brazil, the United States, the legal system there gives recourse to investors. is set up to like Australia is a tier one mining country. We’ve got the expertise. There’s all the finance here is,
finance companies here love to finance mines here. There’s a lot of know-how. So that’s how we sort of ranked that. And it’s very important that when you’re making your investments, that you want to test that out. So, I mean, it’s pretty self-explanatory there. The mines that tend to be more at the top, obviously are in the Western countries, but…
John Parkinson (12:31.159)
there are, when you go further down the list, obviously you’ll see that there’s countries that are okay, know, mining in Africa is quite an interesting one. It depends where you are in Africa. You know, there’s been a lot of great mining done in Africa. But again, if there is, we’ve probably been a bit conservative and rank those down. It’s more of a, you might see a great mine. It’s great in every other respect, but it ranks down because it’s maybe say in Africa.
Well, it’s worth doing a bit more due diligence to see what the agreements are with the country, their history on sovereign risk, all those sorts of things. The other thing is the reason we score it up or down is getting finance makes it lot easier. If it’s in a tier one jurisdiction, if you’re mining in Africa or Russia, obtaining finance might be a lot harder. And then for might take a lot longer to get, you know, into construction and production.
so yeah, I might move on to project stage. So there’s a lot. Yeah.
Dustin Olsen (13:35.011)
So John, real quick. So the category, the columns here, the different categories that we’ve got here, we want to say first, these are weighted in terms of importance, right? So first is where is the mine located, the project?
John Parkinson (13:49.974)
Well, basically we do a waiting at the end and we wait different things. I’ll talk about that later because there are a few key ones that we do wait, but I’ll come to that sort of later. But yes, so project stage is the next one that’s very important because there’s, think, you we’ve got 159, I think, at this stage deposits. And I would say that
only roughly 20 % of them or less are at a stage that you would actually want to invest where the risk level is at a, you know, some people love a high risk investment and the return might be really high, but for your average rational investor, it’s probably too risky. And so this was a great way to kind of cut through that. obviously projects that are into production, you know, they’re
very low risk. They’re really, you know, they’re more dependent on the prices that they’re getting and operational risks. Projects that are obviously at the start, they’ve just, I think we classify them as explorers. They’ve only just discovered the mineral. And as we know in rare earths, the mineralogy, just to get that right, can take sort of 10, 15 years. If you look at Arifura, they’ve been
I it’s 19 years in the making since the initial discovery. And a lot of that has been trying to work out the chemistry to make it work at an economic level. So, yeah.
Daniel O’Connor (15:29.636)
Could I ask a question, Question on that note, because again, most of the projects on the list are Explorer pre-production, it’s early stage.
And something to think about is, as you mentioned, there are many factors that go into determining where they’re at within that cat stage or category. And so what are some milestones?
or factors that investors can look at for discovery or explorer companies. In other words, how validated is the mineralogy? How close are we to understanding the economics of pulling something out, even though they haven’t necessarily done it yet? These kinds of things.
John Parkinson (16:28.301)
Yeah, for sure. Yeah, there’s a couple of key words or key stages that if you see in your research, can take, you can think there’s a lot more de-risking in terms of the project stage. Doing a definitive feasibility study, they call it a DFS, that’s great. That means there’s been a lot of homework done, a lot of chemistry done, a lot of looking at the economics.
It’s not just the mineralogy, they look at how close is power, water, can we mine there? So for instance, in Greenland, that’s gonna be pretty hard to mine because there’s not much infrastructure there. They take into account those sorts of things. So that’s something at a minimum I like to see. Others might be prepared because they can probably, they might understand the project better, wanna invest in that. For myself, if you look at the other extreme,
a that’s done a feed or a front end engineering design. They have really, they’ve not just done their DFS. They’ve done, they’ve basically done a whole lot of engineering work, looking at the processing costs. It’s not final engineering. It’s not just out for construction engineering, but it is very close to what the final cost will be. And they’ll be able to work out operational costs very well to a lot more precise level.
in the DFS. So if you see a project that’s undertaking a feed or done a feed, you know, they’re very serious because they these things cost money to you know, know our Führer has spent a lot of money getting to the stage that they have. And they’re just about to get to finance. Obviously, a mine that’s just into construction is great as well. Because that means that, you know, all the banks have looked at all this and said,
You are economic. We think you’re going to make money. So we’re prepared to lend you money. And I guess the risks to do with that then is about construction. Can they execute? And there’s a history, you know, in rare earths of companies not being able to execute on construction as well. Linus, a great example, had huge cost blowouts. And the same with Sarah Verde.
John Parkinson (18:54.669)
They had huge cost loads. They’re privately owned. It’s a little bit harder to know exactly the size of those, but I’m sure there’s people out there that know exactly how much that cost. yeah, so all those different categories really give you a good idea where the project’s at. But just so you understand, also, that’s where the project is overall. We also include the project stage in the mineralogy, which we’ll come to next, because that’s probably
one of the highest weighted categories that we looked at. As you can see, or for the people listening, that’s actually blanked out. That’s a lot of proprietary information. There’s been a lot of hard work that’s gone into getting all those values to create the ranking. yeah, that’s where they are at in terms of understanding the chemistry is very, very important. So that’s why it sort of double, it sounds like it’s doubled up, but it’s not actually.
So yeah, obviously as we update this, so say Arafura goes from in development, know, they’re getting scored a three out of 10 and they go into construction. And I think construction’s a nine out of 10. I can’t quite remember, but obviously that will make them jump up the rankings because that level of risk has come down another notch. that’s what we’re going to continue to do. So perhaps we move on to
the mineralogy. So just by way of background, I did this without the mineralogy just to see what would happen. And it gave some pretty weird results. And the more we dug into why we were getting weird results and we tested it out with a whole bunch of experts, we realized that the mineralogy is where it’s at. And you don’t have to be an expert though to understand it. And that’s what our ranking system here does.
We were able to, at a more coarse level, look at, for each project, all their results, what they’re getting, and use some of our sort of knowledge to kind of do like a medium low high and look at across a number of different factors to give this overall mineralogy score. So one of the key things is, as we say, not all rare earth deposits are created equal.
John Parkinson (21:24.397)
So there’s lots of different types of ore out there in these deposits. And again, this is not my area of expertise, but you can break it down and think very simply about this. If you’re in a rock, if the NDPR or your other rare earths are in a rock, it’s gonna be harder to break that down to get it out. If the same stuff is in a clay, it’s a lot easier. You can work clay with your hands. So therefore it’s gonna be a lot easier. That means less energy costs going in.
So we went through and looked at all the different types of wars out there and was able to, is it, you know, an easy, moderate or very difficult process to break it down? So that was really interesting. And then the next thing you’ve got to look at is impurities. So as we know, there’s lots of, there can be radioactive impurities, there can be different levels of that. Obviously the more impurities you have in there, the more processing, the more
Hoss with Hermithing, all sorts of things. So we looked at that again as a low, medium and high, and that gave some great, great insights. And then, you know, I was reflecting on it before about where they are at in terms of the stage of this. So what happens is when you discover a deposit and you see you’ve got some NDPR in there,
you still haven’t done the chemistry to really understand, you know, what are the levels of impurities? And it’s all about levels, parts per million, those sorts of things. As they do more and more work and they move along the processing, understanding, those numbers will change. And quite often that could change by quite a bit. So that’s super important. So if they’ve been like, say, Arafura have been working on it for 19 years, they’ve got a pretty good idea what’s in there.
and how to deal with it in an economic way. Whereas someone who’s just discovered it, I would rank that right down because you just don’t know. And then you can basically take those three and kind of work out from those, is it going to be a high level operational cost to actually extract the NDPR or is it going to be a low cost? And so that was a really great way. And we then thought,
John Parkinson (23:52.524)
It’s not just, we thought if we combine all those scores, you actually got a better picture of what’s going on with the mineralogy. And it was able to really, when we tested it against some of these other deposits that are hardly known versus the ones that they know back to front, it really then pulled out the difference in the scoring. So Daniel’s great at understanding this a lot more. And we tested this out quite a bit.
But yeah, it’s one of the key areas of the ranking here. I’ll put that as number one in the weightings.
Daniel O’Connor (24:30.948)
Could I ask a brief question?
Dustin Olsen (24:34.219)
Always.
Daniel O’Connor (24:35.908)
John, just a general question. I understand that the Chinese backed, the Chinese owned mines, they are available on markets. I believe you have to be able to trade out of Hong Kong, maybe Singapore, Hong Kong, what have you.
A question for you is, from the Western investor perspective, we know that the ex-China market has to happen. We know that President Donald Trump is taking this very seriously. We’re seeing accelerated activity, which is very promising. A question for you, you know, it’s a paradox. On the one hand, the China mines, like for example, Northern China,
They’re part of Baogang Group and there’s a couple others. They’re near the top on the list, yet from a Western investor perspective.
probably not a great place to put your money, especially given the geopolitical dynamics. We know, we’ve seen enough in our research that these companies, these state-backed do not have investor interests first and foremost. They do not. They have the state’s interests. And we document the representatives of the Communist Party directly having meetings with them and telling them what they’re gonna do.
So why do we have the Chinese mind so high? Why aren’t they like at the bottom?
John Parkinson (26:13.005)
Well, it goes back to that point before where they got ranked down on where they’re located, deposit country. But they have great mineralogy. They do produce high volumes of it. But you’ve got to weigh all that up with the risk. And I guess that’s why they’re not
quite at the top. The Western ones have nudged out, Linus, Sarah Verde and MP. But they produce a lot. So we wanted to weigh that up. And so the investors can see that. And some investors might have an appetite for that. They might have a different perspective on how they see geopolitics playing out. But that’s why they’re ranked down up the front there.
So that for me is you want to do your due diligence on, know, can you get your money out? It might be locked in there for a long time or might disappear. You want to look at those legal recourses for those sorts of investments. But we wanted to show that, you know, that these companies do do they have been creating for 20, 30 years, huge amounts of NDPR at great quality. And I think we have to respect that.
Daniel O’Connor (27:20.814)
Yeah.
John Parkinson (27:38.272)
And it’s up to the West to try and meet that challenge. And there’s a lot of great companies that are poised to maybe do that. There’s a lot of ifs, a lot of buts, but we’re seeing the green shoots of this ex-China rare earth market start to develop. And you can see these companies all around, these Chinese companies are starting to maybe be able to compete if they can just get to that next stage. So yeah, it’s an interesting question. And we thought it was worth
showing where China ranks from a Western perspective.
Daniel O’Connor (28:13.06)
It’s very, very interesting. I have a few more questions, but I don’t want to interrupt your flow. Let me know if you want to keep going or if we…
John Parkinson (28:21.593)
Well, yeah, so look, just to reiterate though, before we move on, mineralogy is, and there’s a lot of experts out there that know so much about this. What we have tried to do is break that down to a more coarse level to kind of then allow it to be ranked. And obviously, these projects will be giving updates on the mineralogy and we will be updating this.
So as I said, there can be big, big changes. So if we see a big change in the rankings, we’ll be letting everyone know. But yeah, always it’s worth it. If you’re to do your due diligence, it’s a mineralogy is a great place to start. But just going back to Daniel’s point, one of the other places where China has fallen down in the rankings is ESG. So this is the environmental, social and governance aspects of the project.
So, you know, a of people say, well, why does ESG matter? And it really, it does matter. It’s not just a feel good kind of thing for consumers at the end. lot of businesses, a lot of banks are really taking this seriously. so if, and governments as well, if you’re trying to get a permit, you’ve got to obviously meet all the environmental considerations and social and governance. So that’s just to get your permit. So if you’ve got low
ESG project might take longer to get up and also accessing finance. There’s a lot of finance companies out there that want their ethically, their ethical funds or those sorts of things, or they at least get judged on ESG. They’re very careful about what they invest in now as well. So if you want to attract investment, you’ve got to be doing the right thing. So yeah, we’ve gone through these mines and ranked them.
And again, there’s a lot of work in that. And so that’s for the people listening that’s blanked out the detail, but we’ve given an overall all ranking there. And, you know, I think there’s still long way to go with all all rare earth businesses. It is a very environmentally disruptive and toxic product, but there are ways to mitigate that and reduce that. And as you can see in the West,
John Parkinson (30:48.717)
They go to great lengths to actually make that work. yeah, ESG rankings were very important, but probably from an investor perspective, it’s more of a hurdle requirement. So we haven’t ranked it too high in these rankings. We’re focused on the mineralogy is number one, but it is an important factor. And there will be other people out there that, you know, in terms of their investments, they want to
put their money where the ESG is higher so they can have a good look in here and weigh that up.
Daniel O’Connor (31:27.3)
John, I have a couple more questions. Is it an appropriate time or should I hold off? Another one’s a big picture issue that can happen quick. There’s a lot of change going on in the world. On my mind here is geopolitical vulnerabilities and…
John Parkinson (31:32.439)
Yeah, no, let’s jump in.
Daniel O’Connor (31:46.137)
Factoring in sudden shifts, let’s say in country risk from coups to export bans as we’ve just kind of been through to political hostility to Western investment and with that in mind out of the 20 projects, you know up there And let’s exclude the Chinese. Okay, which one is most exposed to
unforeseen geopolitical risk. If you had to pick one to say, you know, this is the most exposed to unseen geopolitical risk, what would you pick? Just out of curiosity.
John Parkinson (32:28.557)
of China? That’s a tricky question. I think a different way to put it might be that
John Parkinson (32:41.901)
We’ll come to this later, but basically where you produce, sorry, what you produce and where it gets processed is very, so for instance, MP at the moment, I actually, I’d say MP, they’re geopolitically highly at risk at the moment because they, at the moment, they produce a concentrate and they send it to China. They’re diversifying, they’ve built a plant, they’re processing some of that on site now in America to oxide.
Daniel O’Connor (32:58.894)
Mm-hmm.
John Parkinson (33:11.531)
But just recently with those tariffs that were put in, it made it uneconomic for them to send it to China to process, which is a huge hiccup. not even sure since the tariffs have been reduced, if they’ve started to send it back to China. Let’s see what happens. I mean, that’s why at the end, and we’ll come to it under production, is it China?
or ex China where you actually produce the oxide because that brings out the vulnerability that you have if in your supply chain you have to put part of it through China. And so just China, you don’t want to be beholden to any one country. if everything that America got for one product came, say, from Australia, well, that is a risk. There is a risk there.
So I think it’s, what we’re gonna see is lots of supply chains diversified all over the world, which then diversifies that risk as well. And I think that’s a good thing.
Daniel O’Connor (34:20.034)
Well, yeah, and you did a great job of not directly answering my question, but still providing a good answer. we’ll lead, we won’t go into it. Another follow-up question.
John Parkinson (34:34.615)
So it’s all those years at PricewaterhouseCoopers.
Daniel O’Connor (34:37.112)
Yeah, they’re a very sophisticated consultancy and you’ve learned from the best. Now, on that note, a question on my mind is downstream differentiation. And let me try to think about how to phrase this. When we’re scoring, what’s important is also vertical integration. In our writing, we talk a lot or we…
express a lot about the importance of vertical integration and a lot of Americans, for example, think of upstream as the problem, whereas it’s upstream, it’s midstream and downstream as a system. That’s the problem that we face in the United States. To a less extent Australia, but definitely very much so here. So when we look at these companies and we try to score them, you know,
Some companies like USA Rare Earths or NP is bigger than USA Rare Earth, but they’re all going towards more of an integrated strategy versus more just oxide production. how much does having mind to magnet sort of capability, even though it’s not fully realized,
go towards ranking equity versus let’s just say a piece of land that has really rich material that has a trajectory to be mined. I mean, do we look at these things or?
John Parkinson (36:15.383)
So it’s something for the future that we’re actually, that’s something that’s a work in progress is a full supply chain matrix way to invest. We only do it very small. Again, it comes to that last column of where you produce your oxide. That’s probably the only part of the value chain at the moment that’s incorporated in these rankings.
But if we were to do that, then some of these other companies like USA Rare Earths or MP Materials that are trying to create a full value chain would rank more highly as opposed to say just a pure mining play, which is just producing product to send out to someone else to then turn into a metal. As I said, that’s something, this is stage one of our rankings.
And all that gray hair here is there. So maybe after I do the next stage, I’ll look more like you, Daniel, with some more gray hair. But that’s definitely in the works. We’ve been. So, yes, look, just to keep keep moving. So we’ve looked at where where the deposit is, the where they are at in the stage of the projects, the mineralogy, the ESG.
Daniel O’Connor (37:19.332)
Thank you, you, John.
John Parkinson (37:39.682)
You then need to look at the deposit size because there are some huge deposits out there and there’s some projects that rank really highly on everything else, but they’re actually only got a tiny deposit to work with. So, you know, we need to work out a way. the other thing to think about a lot of so there’s a lot of different ways mining speak out there and the way they categorize stuff. You’ve got to remember at the end of the day, you want the again, this is just focused on NDPR.
So there’s other heavy rare earths, all those sorts of things. a of the way these mines talk about is just the ore, the total deposit size like that. We went further and looked at how much of the stuff you really want, which is the NDPR, is in these deposits. And then we ranked it. Now, just so you understand, there are some massive… It’s on page two, I think it’s Greenland.
You know, they’ve got huge, huge deposits there. So we had to use a log scale to make this kind of work with the rankings. You scroll across, there it is down there, number 35. So they’re huge. But again, they ranked poorly because where they’re at in their project stage,
Greenland is a very difficult place to mine. There isn’t the infrastructure there to really make it work, but they rank very highly in terms of deposit size. So if you just go back to the first page, Dustin, again, so you need deposit size. The interesting thing is, again, these could be updated. So I know with Arafura that
you know, the CEO has spoken about that, you know, part of the work once they get finance is to do some more exploration on their own deposit and they think it goes down even more. So these deposits sizes can change and also as they find better mineralogy. So again, you come back to that, there might be more in there. They might find a better way to get it out. So these numbers can change.
John Parkinson (40:01.709)
It’s also a bit of a, we’ve had to make some assumptions in coming up with these numbers. So for the efficiency in pulling it out, we’ve just assumed say 90%. We’ve tried to use numbers where they’re provided, but sometimes they’re not provided. So we’ve had to make assumptions. So this is a best in endeavors. And obviously this is a spot that when you’re doing your due diligence, you wanna…
do a deep dive on this and make your own kind of value judgments on it. But, you know, this is pretty good ballpark stuff. So I’m pretty happy with where we’ve got with that. Yeah, so look, it’s not just about you can have huge deposit there, but you then need to produce it. And this is all about the processing. And obviously it’s in tons per annum. And again,
There, you know, lot of these are aspirational. You know, there’s a lot of ramping up. Sometimes it has to happen. So again, that’s why we kind of we had to take that into account. There’s and again, we we’ve spoken about it a couple of times now. What is the final product that you’re producing? So there’s a lot of companies in the world that
have been producing concentrate, basically every company in the world outside Linus up until recently. and Cerro Verde also does concentrate. But most companies send this concentrate to China to get processed into an oxide. Whereas going forward, lot of these companies are starting to talk about producing to full oxide, but that’s something you got to think about.
Do you want to invest in a company whose business plan is to send it to someone else or to China? You need to look at those factors there. And so that’s why you see quite a diverse scoring on the right there about what the end product actually is and where it’s produced.
John Parkinson (42:22.029)
So, yeah, Daniel, did you have a question?
Daniel O’Connor (42:24.804)
Yeah, I wanted to ask about, you know, metallurgical testing. Where does that come into two things? One, there’s these reports that are produced, for example, Australia’s, believe, is a JORC. And so how those fit in for the investor, you know, maybe more detail and then also metallurgical testing.
John Parkinson (42:44.353)
Yeah.
John Parkinson (42:48.513)
Yep. So this.
Okay, well the first point on the joke, there’s all different jurisdictions have different ways that you’re supposed to report on the mineralogy of your deposits. So it’s different from Australia to Canada to the US and there’s a lot of debate around which is more accurate. Then the day
Having that is better than nothing because you could go to Russia. I don’t believe they have any requirements there. So having something is better than nothing. Then some people might say the Canadians have the most accurate way of reporting it. What we’ve done here is just take it on face value, what they’ve reported. Again, this is not a precise tool. That’s something you need to do in your own due…
due diligence. This is a way to find difference between them all. So yeah, that goes to your first point, Daniel. The second point on the metallurgy, mean, most of these guys that are producing say to an oxide, they need to produce it to a purity that’s, I forget what it is, let’s say 99%, I can’t remember the exact figures, but it’s an amazing,
and that then is put into the metal. Generally in Western countries, there’s a lot of testing and auditing and accountability for those things. I know that recently the Boeing example where the bolts on the planes were found to have titanium that was not up to spec.
John Parkinson (44:47.117)
that was put into the metal. And I found out that had been sourced from, I can’t remember, I believe it’s China, but I’m not 100 % sure on that. But that comes down to the certainty. I guess in our rankings, that’s sort of factored into where the jurisdiction of the deposit is. But in terms of that’s something, Daniel, in the future, when we’re looking at the full supply chain, that’s something we’re going to
to look at in the next phase of this project.
Daniel O’Connor (45:21.996)
And I just want to chime in on that. It’s very important, John, what you’re working on, not only the supply chain, because it really comes down to that upstream, midstream, downstream, but also the…
you know, how these different companies can fit into these holistic value chains. And, you know, that work you’re doing on the ETF, kind of simulated ETF, those are very powerful. You know, midstream processing, Saudi Arabia is trying to move into it. What are the factors? The deeper and more granular we get into this stuff, I think the more really interesting the outputs are going to
be.
John Parkinson (46:07.255)
Yeah, 100%. So yeah, look, they’re all the categories. then, you know, we then did lot of testing. And we found you can’t just, you know, do an average score across all the categories, you actually needed to wait. And that’s because mineralogy is just super key. Where the country is located is just super important. And from an investor perspective,
They’ve got to be fairly progressed along the project timeline to have certainty that they’re going to actually have cash flows at some point soon. So it’s interesting though, from an investor, like, yeah, you can put your money into the top two, three, which, you can’t put it into to Sarah Verde because it’s privately owned, but you can invest in that. But obviously they’re in production, so there’s not much risk.
So your returns are most likely going to be a bit lower to know an entity. People have already put their money in. I guess what I do is I look for those companies that are poised just to jump up with the next announcement. Are they going to get into construction or are they just to announce their feed results, the report that says what their operating cost is going to be? Is it going to be economic? That’s what I try and do is look at what
what the next thing is and try and then invest ahead of that with as much knowledge as I can. A great example of something that might happen is Arafura. They have done everything they can. are just about to, they’ve already secured all their debt. They’re about to secure their equity, we believe. The government’s been putting money in. That would just jump up the rankings.
That’s something I look at. And the same thing, say, Brazilian rare earths. They’re working on their mineralogy. And I can see that bumping up even more. mean, they’ve got some amazing mineralogy there. They’ve got these clays that make it very economic to work on and have a low operating cost.
John Parkinson (48:26.871)
So again, if they progress further along, could look at the scale that they have, I could see them jumping up the ratings. There’s someone I’ve been looking at very carefully. And the next stage that we’ve been talking about, if the supply chain is how you want to invest, then someone like the USA Rare Earths is a great example of, they’re not just focusing on the mine, they’re focusing on producing the magnet at the end as well. So the weightings right now.
just look at what is the best NDPR deposit. And yeah, I mean, if we look at the final scores, you know, lot of them are pretty close at the top there. You know, they’re sort of sitting at sort of in the sevens. And then you go down to the top 20, the bottom of the top 20, and they’re sort of more around the fours and fives. And so that can obviously jump up quite a bit. If you go down to what’s our last project?
Dustin, think it’s page eight. This is a project in the Northern Amiramar. So this is a conflict zone. I think it’s owned by an armed militia group. You know, like they might be nice guys, we don’t know, but they would, would you invest in it? It’s pretty much a sea of red for me. And that’s why they rank down the bottom.
And some of these other ones like, you know, Rainbow Rare Earths, they’re actually listed on the London Stock Exchange. By the way, this is just some of their other deposits that we just don’t know about. We don’t know enough about. So they’re right down the bottom. Whereas I believe up in the 30s, London Rare Earths has a deposit that’s fairly progressed up further. So, yeah, so that’s sort of
The scoring, obviously the winner, so we go to the top again. Our winner was Linus. They’ve been around ex-China for the longest. They’ve got through all their ramping up. They had huge issues, huge cost blowouts, but they’ve got through it all. Again, as an investor, I don’t think the returns are going to be massive. You’re not going to 10 times your money.
John Parkinson (50:54.509)
But in terms of the way we’re ranked it, they’re very low risk. Sarah Verde, by the way, Australian pronunciation of that, it’s just, yeah, I’m probably way off, but I apologize for how you might actually say it. But again, they’re privately held, but they’re really interesting. They’ve got some interesting backers in there. I’m actually surprised that they haven’t listed this.
in the rare earth world at the moment, like if they needed to access capital, I thought it would have been a great way, especially for some of their investors to get some money out as well of their investment. But they’re obviously sitting on a good thing now and pretty happy. An MP, you know, that mind’s gone. It was the biggest rare earth producer in the world. And then as China took over in the 80s, they just sort of kept losing their position. They’ve tried a few different things and now they’re
They’re basically using this crisis, and it is a crisis, to get themselves going again, create a different way of doing it, having a different supply chain, putting themselves across the whole supply chain. I guess, yeah. Yeah.
Daniel O’Connor (52:08.964)
Can I say something real quick? So yeah, it’s a great example. It’s a dynamic situation. NP materials, you know, they had this contract where they’re shipping some of their offtake, what have you, to China. I think it’s Sheng resources. However, during this trade war, they’ve announced that they’re not doing that anymore.
or it’s an MOU, you know, there’s a lot of work to do with the Saudi state-owned mining operation. And, you what we’ve been told, and these are sometimes intangible, you’ve to look at the management. we know from very reputable experts that there’s a couple folks on their management team that are really, really good.
And so, you know, we refer to that company as a treasure trove. I mean, if you just looked at it, there are financials, there’s limitations that could be considered overvalued, what have you. But they’re in a very good position. Just when you factor in everything. Will they solve the entire problem? No. But they’re a piece of the solution. That’s for certain. So, you know, yeah, go ahead, John.
John Parkinson (53:31.79)
I guess one of the things that surprised us, and I think Washington should really take note of this, because this is a great way for government officials to work out who are the more serious players and who, you know, they’ve got a long way to go. If you could just go to the second page, Dustin, these Greenland companies, Greenland, are they? Tens, I can’t even say it, 10, Brazil,
mining, Greenland and energy transition materials. Now they’ve got huge deposits, but you know, they’re just not economic. Unless government throws, I don’t know a number, but I’m going to say $50 billion to build the supporting infrastructure, they’re not economic. And is that really economic? I don’t know. The other thing is, to make that economic, they could supply the entire world’s needs
for NDPR if they threw all that money at it. But then again, you actually want to diversify your supply. You don’t want it all coming from one place out of Greenland. Again, how do you get it back to America and these other places? If a war breaks out, why would you want to risk it going by sea or plane? You want to diversify your supply. So all this talk from Washington about Greenland just makes no sense whatsoever.
That for me, that was one of the things I wanted to always test was, where do those sorts of projects sit in the ranking? Yeah. Was there anything else?
Daniel O’Connor (55:10.188)
And on that note, sorry, John, you’re absolutely right. We write about that a lot that, you know, this search for large potential upstream sources that are sort of decoupled from, you know, ready-made infrastructure, there are real risks and problems and it’s not a panacea. There’s another thing that we will be factoring in as we become more holistic and look at midstream and downstream.
are the value added things that they are doing in China. Let’s not forget that China is investing billions and billions of dollars into R &D, into production of new materials, advanced materials. And that’s where they’re trying to go to get a competitive differentiated position. So again, that’s to be coming in the future, but this is a brilliant start.
with upstream and the core materials that we need and bring some sense to what’s going on. Cuz it’s a free for all right now. It’s a wild, wild west. I have to say, we have some folks we know that are very plugged in to this business, this sector, and even the government. And they tell us that right now, it’s hard to even get into Washington and talk to people. there’s so many vendors pitching that they solve all the world’s problems when it comes to rare earths. So you can imagine.
John Parkinson (56:40.247)
Yeah, 100%. So, you know, I think I don’t want this to go on too long. We’re going to probably talk, have further podcasts where we might drill down into other things. you know, a key for an investor, I think this gives you some really good takeaway points, some categories for you to go in deep dive in. We’ve given you a very good summary of what those categories are and where each project sits. And for the minds out there that hopefully are looking at this, like we may have made some mistakes.
We’ve used all our best endeavours, but we want to open the dialogue with everyone. So if you see a mistake, please let us know. So we’ve set up a forum on rare earth exchanges and we’ve got a topic in there where you can come and discuss it publicly. We’d love to have the chat. We’ve backed everything up with all the evidence that we have. So we’d love to talk about that.
But if you’re a company and you don’t want to publicly talk about it, send us an email. We’ll have an email at the bottom there. You can let us know if we’ve made any mistakes. And we’re going to keep iterating this. And we’re going to iterate further along the full supply chain as well so that people can potentially invest sort of that way as well. But the forum is going to be a great place. I’ll be on there. Everyone, the whole team will be on there.
It’s a growing place. There’s actually some people on there that have some amazing knowledge. They may have some funny names advertised on there, but they, there’s some heavy hitters that are in the forum. So it’s definitely worth taking a close look and looking at a lot of the good content that’s in there. that as when you’re researching, you got to see what’s happening in real time. And a forum is a great way to see what’s happening in, in real time. So,
Yeah.
Dustin Olsen (58:37.219)
That’s great. Thanks, John. Just to emphasize here, if you want to talk about a specific project, just click on the name here. It’ll take you straight to the forum and we’ll fix the links here. So each one will have a link here that works and then general forum discussion. You can go there to start a thread about this project database. And like John said, if you see something, say something, whether it’s something you’re interested in, something that needs to be corrected even information you’d like to add so that we can even increase the ranking of maybe your mind. So come on over to Rare Earth Exchanges, the forum, to learn more and keep the discussion going. So with that, I think we will sign off. Everyone, thank you for joining us in. This was a little longer, but our podcast next week is going to be an interview with Brazilian Rare Earths.
So be sure to tune in next week for that interview. We’ll see you guys later.
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