Prospech (ASX: PRS) shares have fallen 22% today on their confirmation of the rare earths content of their tailings pile and ores in Finland. Given that we're all terribly excited about rare earths - they're rare you know - this does seem an odd price reaction to the announcement. But there might be good reason here. Despite the Korsnas Project being logical and sensible it is still possible for there to be a problem or two with it.
The actual announcement is: “Recent assays of drill core from six historic holes confirm expanded zones of Korsnäs Rare Earth Element (‘REE') mineralisation” and ”Strong Neodymium/Praseodymium (NdPr) enrichment averaging 26% in sampled holes.” So we've the first two things that we need. One is the presence of rare earth minerals - check. The other is that lanthanum and cerium currently lose money, neodymium and praseodymium make money. We need to have an Nd/Pr ratio of over 20% (usually) in order for the basket to make money. OK, that's the second thing on the list checked off.
It's also true that there's a large tailings pile so some goodly portion of the mining has already been done. It should be possible to re-mine the tailings and concentrate out the rare earths. That's even better.
Prospech share price from ASX
Well, there's more to rare earths than just that. One problem is that we're getting endless reports - well, not quite endless, but 10 by our count on the ASX alone in the past few months - of new ionic clay finds. Which are a better place to get rare earths from. This makes these other, apatite related, rare earths less valuable. Apart from anything else, finding out that rare earths aren't so rare devalues any deposit of rare earths.
However, there's more to it than just this. More attention being paid to the Korsnas project means that, well, more attention is being paid. And something we noted was that Prospech isn't detailing the thorium level in their rare earths. Which, given the geology here, they should be. So we looked it up and we see levels of 600 ppm Th and the like. That's a problem. It's not wholly obvious that that could even be shipped offsite these days. At least someone, somewhere, is going to have to process that thorium out and then store it. And that's a significant cost.
We do not say this following is true with this specific mine and find. But it is possible to have quite lovely rare earth ores which are valueless - because they have too much thorium in them. The very fact that Prospech isn't discussing this makes us nervous - perhaps that's also true of others?
