Cobra Resources (LON: COBR) shares are up 9%. The COBR share price rise is on the back of confirmation about their ionic clay rare earths find. Which is, you know, nice for them. And what they say about that ionic clay looks about right to us too. They are correctly identifying the advantages of ionic clays, they are a good if not great source of the rare earths. They get around two major cost problems in the older mineral sources - actually two and a half.
So, yes, this is all confirmation, not news: “ionic clay REE deposits are a superior source of HREOs and MREOs (neodymium, praseodymium, dysprosium and terbium), owing to their enrichment relative to Light Rare Earth Oxides ("LREOs") and their ability to be desorbed through ion exchange rather than aggressively baked and acid leached which is high cost and increases environmental risk” and “high recoveries of high-value HREOs and lower recoveries of low-value LREOs that enable the cost-effective generation of a superior REE carbonate product” and “Low rates of dissolution of gangue elements (aluminium, calcium, iron, thorium and uranium)” Yep, we agree with all of that. Ionic clays are great sources of rare earths. They’re cheaper to mine, you end up with more of the money making (ie, magnet) metals and less of the money losing (cerium and lanthanum) and the radioactivity problem is smaller. Nope, just great as a source.
Cobra Resources share price from Google Finance
But we should also note that there was a pop before at Cobra Resources: “Cobra Resources (LON: COBR) shares are up 8% on further details of their rare earths drill programme. The results are good enough to be fair to them. But to be possibly unfair it's possible to wonder how much rare earth finds are likely to be in this near future. Because there are an awful lot of people announcing rare earth finds. So the value of any specific one does decline. Further, as the usual industrial logic goes, it'll be only the really good ones that even get developed. It's possible to therefore start to think that middling to good rare earth finds just aren't going to be worth anything at all.” And it’s worth noting that after today’s rise Cobra shares are still below where they were in June at that earlier announcement.
It really is true that so many rare earth finds are being made - OD6, Heavy Rare Earths and so on - that the scarcity value of any one of these finds is declining.
We do indeed think that ionic rare earths are a viable, even good, source of supply. It’s just that given how common they are we don’t think that any of the miners of them are going to be making extraordinary profits.
