Old 09-24-2009, 12:56 PM
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Default China's CNMC bows out of LYC

China firm abandons Aussie miner bid September 24, 2009
Article from: Australian Associated Press

A CHINESE company has abandoned plans to take control of rare earths explorer Lynas Corporation after Australian regulators demanded it reduce the scope of the planned transaction.

Lynas said in a statement today that China Nonferrous Metal Mining (Group) (CNMC) had terminated the proposed $505 million transaction announced in May, whereby it would take a 51.6 per cent stake in the Sydney company.

"As a result of additional undertakings recently sought by the Australian Foreign Investment Review Board (FIRB), CNMC has terminated the CNMC transaction,'' Lynas said.

The additional undertakings recently sought by the FIRB included reducing the proposed percentage ownership to be held by CNMC to below 50 per cent and reducing the number of board director positions to be held by CNMC to less than half of the board.

"These were in addition to already agreed undertakings between Lynas and CNMC aimed at ensuring independent director control of all marketing of rare earths products.''

Market observers say the deal was an example of China's bid to tighten its grip on the rare earths market.
Almost all of the world's rare earths are produced in China.
Lynas' proposed deal with CNMC came under the spotlight earlier this month after a Chinese official recommended banning rare earths exports to prop-up prices. ENDS

IMO This was a fairly predictable response by the FIRB as if they had said yes then they would have upset the US and Japan. There is a world wide fight going on for Rare Earth Dominance and if Australia can keep control of the world's richest deposit at Mt Weld and also keep control of GGG's Greenland deposit Australia could well become an equally dominant player.

Short term this could mean a decline in LYC's share price but my bet is that it will create a massive buying opportunity for those that can see beyond 12/12. I hold LYC and will be accumulating. Visit for an overview of Australia's Rare Earth companies and deposits.

Summary of LYC | Mt Weld

Summary of GGG
| Kvanefjeld

Summary of NAV | Cummins Range

Summary of ARU | Nolans Bore
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Old 09-26-2009, 04:14 AM
Sparty Sparty is offline
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Default Australia's FIRB rejection of China's takeover of Lynas sparks interest in REE's

Lots of articles in the popular press seemed to have been sparked by the Australian Govt.'s FIRB rejection of China's bid to takeover 51% of the world's richest rare Earth deposit at MT Weld. Western Australia.

What isn't widely known is just how much REEs Australian companies have.... and the investment opportunities that arise from that ignorance:

Below is an example written by By Peter Koven, Financial PostSeptember 24, 2009

Rare earth metals explode into the mainstream

The latest commodity craze is taking place in metals that the average investor would have trouble spelling properly.

They go by names like cerium, europeum, dysproseum, and prometheum. Collectively they are the rare earth metals, and they have exploded into the mainstream in recent weeks due to concerns about future supply out of China.
Rare earths are a tiny and illiquid industry, with global demand of about 125,000 tonnes a year. They are used to make high-strength magnets, and have applications in many electronic devices.
Experts said that demand has been growing about 10% a year, but there are expectations that it could accelerate over the next decade because of growing use in green technology sources like hybrid cars and wind turbines.

That is an issue, because more than 90% of global supply of these metals comes from one place: China. And, it’s no surprise, China is looking to keep more for itself.

In the past few weeks, the Chinese government has talked about placing export quotas on some rare earth metals, and outright export bans on others.
China seems especially keen on using its dominance in rare earths to bring more value-added manufacturing into the country.

“There are lots of geopolitical overtones to it and it’s highlighting the vulnerability of the rest of the world to the fact that right now, China as largely the sole source of supply,” said Don Bubar, chief executive of junior mining company Avalon Rare Metals Inc.

China seems keen to control the rest of the rare earth market as well. In recent months, state-controlled companies have sought out investments in two rare earth miners outside its borders: Australian firms Lynas Corp. and Arafura Resources Ltd.

Concerns about creeping Chinese domination of rare earths finally came to the forefront Thursday as Australian regulators blocked a US$220-million investment in Lynas by China Non-Ferrous Metal Mining Group Co. The proposed deal would have given the Chinese company a majority stake in Lynas.

At the same time, a report Thursday said China Investment Corp., the country’s main sovereign wealth fund, may launch its own domestic rare earth company.

The one major North American source of rare earth metals is the Mountain Pass mine in California, which is owned by private company Molycorp Minerals LLC.

In Canada, there are very few ways to play rare earths. The best-known junior is Toronto-based Avalon, which has advanced-stage properties and hopes to be in production in the next four years. Shares of the company are up about 350% since the spring.

Mr. Bubar said the fact that production is a few years away is a good thing, because it will take some time before global supply is stretched.
“Right now, rare earth supply is adequate. The issue is where it will come from in three or four years,” he said.

Smaller Canadian juniors include Rare Element Resources Ltd. and Quest Uranium Corp. Quest was a total unknown until it made a very well-timed foray into the rare earth business in April. Since then it has acquired land in Quebec and made a discovery, and the stock has gone on an astounding run, up more than 5,000%.

Financial Post
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Old 09-27-2009, 12:57 AM
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Default China sets of REE's Investment firestorm

Published: September 25, 2009

HONG KONG — A Chinese threat to halt exports of rare minerals — vital for high-performance electric motors in hybrid cars and missiles — appears to have backfired.

With control of more than 99 percent of the world’s production of these minerals, China could try to use a ban to force other countries to buy the crucial motors for these high-tech end products, instead of just the minerals, directly from China.

But other governments and businesses reacted quickly as word of the proposed ban spread late this summer.

The Chinese threat has touched off a frenzied international effort to develop alternative mines, much as the 1973-74 Arab oil embargo’s repeated increases in oil prices prompted a global hunt for oil reserves.

In Washington, the House and Senate amended their defense budget authorization bills to require the Defense Department to review the military’s almost complete dependence on Chinese supplies of rare-earth minerals. In Australia, the government blocked a Chinese state-owned company on Thursday from acquiring a majority stake in a large mine being developed for these minerals, also called rare earths.

Meanwhile, Wall Street is financing exploration as the share prices of rare-earths mining companies soar — as much as sevenfold since March.

“Because of China’s focus on maximizing the benefits of its rare-earth resources for its own industry, there is now a focus on identifying alternatives elsewhere,” said Dudley J. Kingsnorth, a rare-earths production consultant in Perth, Australia.

Unleashing funding elsewhere has undercut China’s ability to take big stakes easily in new mines.

“You couldn’t borrow 10 cents from anybody in the financial community” to develop a rare-earths mine just three months ago, said James B. Engdahl, the chief executive and president of the Great Western Minerals Group, a rare-earths mining and processing company in Saskatoon, Saskatchewan. “We get inundated with calls offering financing these days.”
International pressure — including the possibility that the plan violated World Trade Organization rules — has forced the Chinese ministry drafting the ban to call for further review.

The developer of the largest rare-earths mine in Australia, the Lynas Corporation, did not have the cash to finish its mine and processing facilities after Western investors deserted its bond offering last winter. So Lynas agreed to sell about 52 percent of the company to the state-owned China Nonferrous Metal Mining Company on May 1.

This month, the Foreign Investment Review Board of Australia demanded that the Chinese company take a smaller stake and accept fewer seats on the board under any deal; Lynas announced on Thursday that China Nonferrous had refused and had instead withdrawn from the transaction, valued at $220 million.

Lynas said in a statement that it was “well advanced in finalizing interim funding.”
Nicholas Curtis, the executive chairman of Lynas, said in an interview on Friday that financing opportunities had improved in recent months, declining to elaborate because of a voluntary five-day suspension in its stock trading as the company reviews its options.

Mr. Curtis would not completely rule out the possibility of a transaction with another Chinese company.

But recent Australian government policies “don’t encourage you to go down that pathway,” he said.

Patrick Colmer, the executive member of the investment review board, said in a speech on Thursday that the government wanted foreign state-owned companies to take stakes of less than 50 percent in small or undeveloped Australian mines and less than 15 percent of large mining operations.

Investors had indicated over the summer that the Chinese offer was too low.

Lynas’s stock closed at 25.7 cents (29.5 Australian cents) on April 28, the last trading day before China Nonferrous made its offer of 31.3 cents (36 Australian cents) for newly issued shares. Before the deal was scuttled, the stock traded much higher than the offer, closing at 78.3 cents (90 Australian cents) on Wednesday.

Mr. Curtis defended the Chinese government’s desire to limit exports of its own minerals, saying that domestic demand was rising so fast that China had a dwindling surplus to meet other countries’ needs.

Beijing officials have been silent on the collapse of the Lynas deal. But the foreign ministry on Thursday criticized the Australian defense department’s decision to block a separate joint venture with a Chinese company for an iron ore mine under the path of missile tests.
Jiang Yu, the foreign ministry spokeswoman, said that China was open to foreign investment and hoped other countries pursued similar policies, the official Xinhua news agency said.
Still, China has not only prevented foreign investment in its mining sector, but also discouraged most private companies in China from doing so.

In April, China’s ministry of industry and information technology began circulating its plan for an export ban on rare-earth minerals, sending it to other Chinese ministries and showing it to a handful of Western industry officials. About three weeks ago, the ministry retreated and said further review was needed.

China is likely to remain the dominant producer of rare earths for years to come because it takes up to 10 years to explore an ore discovery, obtain permits and build a mine.

But Jack Lifton, a Detroit chemist who helped invent some of the early high-tech applications for the minerals in the 1970s, said Great Western might meet some demand by reopening a mine in South Africa. The mine supplied Britain’s nuclear program with thorium, a slightly radioactive metal, until it closed in 1963. The mine has reserves of rare-earth minerals that were of little commercial value when it was in operation.

While some of the 17 rare-earth elements are actually fairly common, the most sought-after elements for high-tech applications are indeed rare, like dysprosium and terbium.
The South African mine may be able to supply some of these until larger mines can be developed in Canada and Australia, Mr. Lifton said
Mr. Engdahl said that with ample financing now available, Great Western hoped to reopen the South African mine in two years. Ends

Australia's Lynas Corp has the world's richest rare earth deposit at MT Weld in Western Australia and with funding could be in production within 12-18 months. Many Australian investors have been heartened by the FIRB's decision and the chat channels are suggesting that when LYC comes out of its trading halt it will be very well supported.

It is little known but Australian companies have almost equal amounts of Rare Earths as China and the sector has exploded over the past few months with most ASX listed companies with JORC deposits market caps increasing markedly. See for an overview of Australia's Rare Earths.
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firb., lyc, lynas corp, rare earths

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