Metal Hawk (ASX: MHK) is up 153% this morning on the announcement of yet another rare earths find. There are so many of these now - we count 10 on the Australian exchange in just this past two months alone - that we really are going to have to put serious thought to changing the name from rare earths to not-rare earths. There just seems to be so much and so many of them around that the original name cannot be supported. We also need to think more than a bit about whether ascribing a significant valuation to a find of them makes sense any more. If they're not rare, if concentrations of them are not rare, then ascribing a rarity value to deposits of them also seems a bit strange.
The Metal Hawk find is, at this very early stage though it is, something that under the usual valuations of a year back would be described as valuable: “The results from this initial program show a high degree of REE mineral enrichment in the clay and saprolite zones formed from weathering of the REE-bearing granites in the region.” That's interesting, as is: “High grades of up to 4120ppm Total Rare Earth Element Oxides (TREO)1 from 4m
composite sampling confirms regional prospectivity”. As we say, by any even recent valuation yardstick that's a decent enough find. Except there are so many of these now - OD6, Australian Rare Earths come to mind - that we might not want to ascribe too much value to any one find. If deposits aren't rare then applying a rarity value to a deposit seems a bit odd.
Metal Hawk share price from ASX
There's one other thing we should check with a rare earths find: “Mineralised intervals have an average of 20.5% Magnetic Rare Earth Oxides (MREO)” and that's well, it's sorta marginal. The common components, cerium and lanthanum, currently lose about $20 per kg on extraction and processing. The magnet rare earths (ND and Pr, in volume) make $80 to $100. So, if Ce and La are 50% (a usual bottom limit) it's easy enough for the basket to be unprofitable. Something that's 10% magnet rare earths is probably, at current prices, not economic, something that's 30% is definitely viable. 20%, well, you know, maybe. This is all a function of how many other people are mining and what their ores look like, it's the influence of the rest of the marketplace upon this deposit.
By any conventional measure this Metal Hawk rare earths find is economic and valuable. What worries us is that there are so many of these that perhaps we should be changing our conventional yardsticks of what is value. If - as appears to be true - rare earths aren't rare then perhaps we shouldn't be applying a rarity value to deposits of them.
