Cosmos Exploration (ASX: C1X) shares are up 30% after they report finding the one piece of rock. A chip in fact. Sure, the chip contains rare earths and even a decent concentration of scandium. But the one rock chip is a small piece of evidence to base a $7 million change in market capitalisation - even in those bijou Australian dollars. OK, perhaps we’re being a little unfair as of course finding evidence of at least some rare earths is better than finding evidence of nothing at all interesting. But it is true that there’s still a long way to go here.
The announcement itself: “Rock chip sample BY23K360 (1.1% TREYO, 21% NdPr) from the Leatherback prospect confirms the presence of a weathered carbonatite-alkaline intrusion, coincident with multi-kilometre long REE soil geochemistry, magnetic and gravity high anomalies. Ore grade concentrations of scandium with 263ppm Sc203 and 0.7% TREYO (30% NdPr) returned in rock chip sample LRBY21, interpreted to be an iron oxide-rich weathered ferrocarbonatite, pyroxenite-bearing carbonatite or phoscorite” That is a high scandium content for anything but then scandium is also a very minor league metal of little interest to the wider market. 0.7% rare earths is OK, 30% Nd/Pr is very good.
For this stage of the game this isn’t a bad result - despite our cynicism above. But the thing to recall here is that this is a very, very, early stage of the game.
Cosmos Exploration share price from Google Finance
We have a more specific problem than snark at people getting excited over initial findings. Which is that we’re deeply unsure whether rare earth deposits - especially hard rock ones like this - have any value at all. Yes, we know, the EV revolution and all that. But it’s still true that even with that change the global market is in the hundreds of thousands of tonnes a year range. Because of recent price rises everyone and their grandmother is out there looking for them. And the finding is that rare earths are not rare. There are economic - at today’s prices - deposits near everywhere.
More than that, we used to think that ionic clays (which are rich in the magnet metals we really want) were limited to South China. Now, as companies like OD6 and Heavy Rare Earths are showing - and we’ve seen a dozen on the stock exchanges in just the last 6 months - we find that they’re a common occurrence in granites weathered in subtropical climes.
That is, at best we’re deeply uncertain about the scarcity value of hard rock rare earth deposits. So, assigning a value to the very initial signs of yet another one seems to us to have a bit too much of that hope value to it.