Fads come and fads go, whether they’re bell-bottomed jeans or the market’s taste for the commodity of the moment.
Uranium had its pre-GFC day in the sun and, more recently, it was rare earths’ time to shine, with prices for the not-actually-so-rare metals soaring on the back of moves by China to restrict supply.
Prices for the handful of Australian-listed rare earths players rocketed in response and investors were suddenly talking about the likes of scandium and yttrium.
Fast forward to mid-2012 and the heat has decidedly come out of rare earths stocks.
There’s no one reason for the fall, most likely a combination of the dramas encountered by Australia’s sole rare earths miner, Lynas Corp, at its Malaysian processing plant, global macroeconomic conditions and a realisation that the surge in prices is unsustainable.
Globe Metals and Mining knows something about how quickly investor sentiment can turn when it comes to commodity bubbles, having lived a past life as Globe Uranium.
Nevertheless the Mark Sumich-headed Globe is preparing to test the waters with a spin-off for its rare earths project, the Mount Muambe project in Mozambique, leaving it to focus on its flagship Kanyika niobium project in Malawi.
Mount Muambe started life as a fluorite project before drilling suggested the main game could be rare earths and fluorite, an industrial mineral, more of a by-product.
It’s early days for Mount Muambe, where Globe doesn’t expect to have a maiden resource until early next year. Results to date, including the latest batch out last week, suggest the most obvious comparison, particularly in terms of grade, is Arafura Resources’ Nolans Bore deposit in the Northern Territory where it has a 46 million-tonne deposit at about 2.5 per cent.
Arafura has encountered its share of obstacles and, as with Lynas, they have been largely associated with the processing side of the business.
Globe hopes to sidestep that potential pitfall by establishing Mount Muambe as a mining-only operation, shipping the product to China for processing.
The company has a Chinese backer in the form of controlling shareholder East China Mineral Exploration and Development Bureau (also an investor in Arafura), which is expected to emerge with a similar stake in the rare earths spin-off subject to Foreign Investment Review Board approval.
Still that’s all so much pie in the sky for now.
In the nearer term Globe needs to get the spin-out done and dusted —a feat it hopes to complete before the end of the year, in spite of global headwinds.