ARU - Arafura Rare Earths

[Southern X]

Being a long way from production is relative. The Australian REEs are light years ahead of the Canadian ones, including: AVL, GWG (which should vault forward for their South African mine alone, but does not), QRM (look for metallurgical news in August, it has HREEs), RES, UCU...

Only MCP, IPO'ing tommorrow, can be in production any time soon. Therefore, I believe LYC will be first past the post, MCP, then a close call between ARU and ALK. That said, I'm on the prowl for REEs with HREE deposits: QRM, UCU (drilling in Alaska), and; REEs on US soil, eg. UCU and RES (which has gold).

Disclosure: ALK, ARU, LYC, QRM, RES, UCU.

SX

 

[johenmo]

Was pleased with the jump today (due to/coincides with the announcement of rare earth price increases?). Helps my meagre little holding along a bit.

 

[Sdajii]

Was pleased with the jump today (due to/coincides with the announcement of rare earth price increases?). Helps my meagre little holding along a bit.

I'm only holding a meager amount too (under $5k) but I'm hanging on to amuse myself, and ARU is doing the job I hoped it would! I'm more than amused! Originally bought in at 55c, went up to around a dollar, crashed back down to well under 55c, and now we're looking good again Weeee!

 

[BraceFace]

Another Rare earths success story for investors.
Big profits recently for ARU, LYC and ALK

Look out now for PEK (see my post on that thread)
Maybe the next stock on the radar for investors interested in the rare earths story

 

[NanoDuke]

I'm only holding a meager amount too (under $5k) but I'm hanging on to amuse myself, and ARU is doing the job I hoped it would! I'm more than amused! Originally bought in at 55c, went up to around a dollar, crashed back down to well under 55c, and now we're looking good again Weeee!

Back up to a dollar today after some promising news:
----

or more officially:
----


*Whoops* Can't post links yet. Meh, a quick search of the Google's News will fill you in if you haven't already heard.
Testing done at ANSTO's mini-plant operations has resulted in the successful production of commercial quality MREE and HREE products.

 

[Sdajii]

Back up to a dollar today after some promising news:
----

or more officially:
----


*Whoops* Can't post links yet. Meh, a quick search of the Google's News will fill you in if you haven't already heard.
Testing done at ANSTO's mini-plant operations has resulted in the successful production of commercial quality MREE and HREE products.

Fancy meeting you here! Today's announcement made me think of you, I was intending to have a chat about it I'm enjoying this roller coaster (much more now than not so long ago : )

 

[enigmatic]

Well it looks like this project of Arafura Resources is starting to look like a real beauty, with Nolans Rare Earth prices breaking the US$50/kg level which now equates to over $1billion dollars of revenue per year from just Rare earth.

Just doing a few numbers and when the Rare earth price was between $10-$15 they were going to make profit.
so adding the $35 extra as all profit.. thats another 700million a year in profit for a currently $350million company.
Plus all the profit originally and from there other 3 byproducts should be worth a bit.

only two major things holding this back from a massive explosion in price.
a) coin to get the project up and running, which should mean another capital raising down the track..
b) time, the project should be in production in 2013 which is still 3 years away. not soon for the speculators to be throwing money at it..

interested in watching LYC to see how it goes being a similar size and project.

 

[oldblue]

interested in watching LYC to see how it goes being a similar size and project.

Is it really?

ARU has a M/Cap of $351m, LYC's is $2,195m!

Seems a huge difference if the major variables are timing and resource mix. How do they really compare?

 

[jonojpsg]

Is it really?

ARU has a M/Cap of $351m, LYC's is $2,195m!

Seems a huge difference if the major variables are timing and resource mix. How do they really compare?

Hey I was looking at exactly this yesterday! LYC has 17m tonnes @ 8% REO for 1.4m tonnes of REO ; ARU has 30m tonnes @ 2.8% REO for 800k tonnes REO.

So I thought factors of about half for overall tonnage difference and another half for grade difference making ARU = 1/4 LYC in terms of market cap. That would still put ARU about 50% higher than currently though, which maybe the market is starting to price in?

 

[enigmatic]

The interesting thing between the two projects is that ARU has by products which raise there value per Kg higher then LYC.

I'm still waiting for a new presentation which shows the comparison between the two projects from ARU.

 

[jonojpsg]

Thought I'd bump this after an interesting presentation of their business case released today which showed a NPV of $4b and that was at the mid range REO price target (around $38/kg compared to current spot price of $51).

I think their EBITDA was going to be greater than their current MC (around $460m) which means they are way undervalued even with 2.5 years to production.

SP jumped today, up 15% at the open but settled around 10% up now. Even at $1.50 though the MC is only $450m. Potential for a 10 bagger over the next three years

 

[laurie]

Market cap means nothing LYC has over 2 Billion shares on issue and is not a low cost operation don't forget shipping cost to Malaysia looking back a few months if this was the Melbourne Cup Race LYC was a runaway winner but at the last bend ARU comes storming home to win and may stay in front the next BIG news for ARU is its BFS..... this will tell the good or bad news

laurie

 

[jonojpsg]

Market cap means nothing LYC has over 2 Billion shares on issue and is not a low cost operation don't forget shipping cost to Malaysia looking back a few months if this was the Melbourne Cup Race LYC was a runaway winner but at the last bend ARU comes storming home to win and may stay in front the next BIG news for ARU is its BFS..... this will tell the good or bad news

laurie

Why exactly does market cap mean nothing?? MC is directly related to number of shares on issue, so ??

Obviously MC has everything to do with how a company is either under, over or fairly valued when considering their potential income.

 

[laurie]

The investment community uses market cap to determining a company's size, as opposed to sales or total asset figures or how well a company is preforming. It also makes a difference when dividends are distributed and from my experience those companies with large shareholdings further down the track have buybacks

laurie

 

[UBIQUITOUS]

I think their EBITDA was going to be greater than their current MC (around $460m) which means they are way undervalued even with 2.5 years to production.

Even those REEs is a $1b global market? I'm not so sure

See the bottom of page one of this report

http://www.ucoreraremetals.com/docs/69555705.pdf

 

[enigmatic]

This one has been flying over the last month and a half.
looks like people are starting to see the real value in this near term producer.

 

[exgeo]

May also be this news as well. Not sure if this is new news, or just an update of an older article though. The article is from today's newsfeed from NAB Online Trading:

* China plans rare earths export cut by 30 pct in 2011-media

* Rare earth reserves may run dry within 15-20 years

* China seen paving way to stop rare earths exports-analysts

By Fayen Wong and Tom Miles

SHANGHAI/BEIJING, Oct 19 (Reuters) - China plans to further
cut export quotas for rare earth metals next year, local media
reported on Tuesday, putting further pressure on importing
nations to swiftly find new sources of supply.

China, which accounts for more than 90 percent of the world's
production of rare earths, plans to cut export quotas by up to 30
percent in 2011, the China Daily reported on Tuesday, citing an
unnamed official with the Ministry of Commerce.

The Ministry of Commerce could not be reached for comment.

Analysts say China has huge amounts of economically viable
reserves that are unlikely to be depleted soon, but reckon
Beijing's recent protectionist stance on rare earths exports is a
sign that it could soon cut exports to a negligible amount in a
bid to reserve supplies for domestic consumption.

"It does look like they are genuinely worried about supplies
and don't care what the international price is. The message they
are sending is that they want to see other sources of supply
being developed," said Trent Allen, a metals analyst in Resource
Capital Research in Sydney.

"Chinese officials have also talked about building a rare
earths reserve and all the recent comments suggest that they may
be planning to stop exports in the future."

Premier Wen Jiabao said earlier this month that China's
measures to control rare earths exports were geared to
"sustainable" exploitation of the minerals and pledged not to
impose a complete ban on exports.

"We may not see a complete ban because that could bring a new
set of trade problems, but they could cut shipments to a very
small number," said a second analyst who declined to be
identified.

China's reserves of rare earth have dropped by 37 percent
between 1996-2003 and might run dry within 15 to 20 years if the
current rate of production is maintained, the Ministry of
Commerce said on Oct. 16.

Any substantial cuts to heavy rare earths exports, which are
scarce and needed for a number of sophisticated electronics
manufacturing processes, would hit high-tech firms and
automakers.

Analysts said a move by China to further cut its rare earth
supplies could also prompt an international backlash from key
importing nations, such as the United States, Japan and Korea,
who could complain to the World Trade Organisation.

China's recent move to halt shipments of rare earths to Japan
amid a political dispute has also raised the spectre that Beijing
could use its monopoly over those resources as a political tool,
prompting Japan to scramble for alternative supplies and set up a
reserve.

FALLING EXPORTS

China has been steadily reducing export quotas since 2005 for
rare earth elements, which consist of 17 metals that are the life
blood of green technologies such as hybrid cars and wind turbines
as well as mobile phones and missile guidance systems.

Just three months ago, Beijing said it was slashing its rare
earths export quotas by 72 percent for the second half of 2010 to
7,976 tonnes, compared to 28,417 tonnes a year ago.

The dramatic squeeze in supply has prompted an average 300
percent spike in rare earths prices between January and August
this year, with price increases for each individual metal ranging
from 22 percent to as much as 720 percent, Nomura Securities'
chief strategist Sean Darby said in a recent report.

Companies that have latched on to the opportunity presented
by a looming supply shortage in some of the rare earths metals,
such as Australia's Lynas Corp <LYC.AX> and Molycorp Inc in the
United States, have seen their shares surge in recent months.

Shares in Lynas, which have surged 215 percent from a year
ago, were up 5.5 percent by midday trade, outperforming a 0.26
percent gain in the broader market <.AXJO>.

Currently, only a few facilities process rare earth oxides
outside China, accounting for less than 10 percent of the market.

The volume of China's exports fell for three months running
to 2,364 tonnes in August, the last month for which data is
available. That month saw a 6.2 percent decline in volumes from
August 2009, the first such year-on-year decline in 2010.

But thanks to soaring prices, the value of August's exports
continued to rise, up almost threefold year-on-year and 17
percent up from July 2010, despite a 30 percent fall in volumes.

 

[laurie]

So I beg the question if REE is being squeezed by the chinese why then has there been no attempt to take over ARU or LYC we have seen CSM being taken over e.g. AOE,QGC,PES it makes me wonder why this is so in the sense the price was attractive not that long ago at .80cents for ARU

laurie

 

[fgarius]

Hi Laurie

The Chinese can not take over companys in australian.Sie need the approval of the " Foreign Investment Review Board (FIRB) "

fgarius

 

[shanti]

Last price $1.70
22c up today on the back of the announcement. Hurray It's back into green teritory in my portfolio, was stuck with big losses fo awhile. With production forcasted soon 2011 could be a good year for ARU.