Interview with Greg Andrews, President and CEO of Rare Earths company, Search Minerals (TSXV: SMY).
Search Minerals is a Critical Rare Earth Element (CREE) company, based in SE Labrador, Canada. Search Minerals owns several assets: The FOXTROT Deposit (PEA completed in April 2016), Deep Fox and Fox Meadow. Search Minerals claims it has identified more than 20 other prospects and has developed a 'proprietary, scalable, hydro-metallurgical process to optimise every opportunity to position as a competitive low-cost supplier of CREEs well into the future.'
The share price has been low and in decline for over 10 years. It currently stands at CAD$0.04 (-25% on the year), with a market cap of CAD$8M and a large number of outstanding shares: 230M.
Andrews explains the macro story behind CREEs, especially those outside of China, which dominates the space. According to Dr. Alex King, U.S. Department of Energy, Ames Lab Director, critical refers to “the stuff you need the most but can’t get enough of.” Examples of CREEs are Neodymium (Nd), Praseodymium (Pr), Europium (Eu), Terbium (Tb), Dysprosium (Dy) and Yttrium (Y). They are used as components in high technology devices, including smartphones, digital cameras, computer hard disks, fluorescent/LED lights, flat-screen TVs etc. Search Minerals plans to produce Nd2O3 (Neodymium oxide) and Pr6O11 (Praseodymium oxide) and sell it to a metal maker.
Andrews then talks about Search Minerals' resource. He says the mining infrastructure in place is impressive. The PEA on FOXTROT claims it has a 14-year life-of-mine (8 open-pit, 6 underground), with "decent" NPV values. FOXTROT has a total indicated resource of 7.39Mt and an inferred resource of 1.98Mt, with 4.9Mt of ore grade material at an average grade of 0.98% Total Rare Earth Elements (TREE). However, Andrews claims the Deep Fox property is more "compelling" because of the "surface expression" and higher grades. The scale has been extended.
Search Minerals has raised around CAD$20M during its lifespan. However, Andrews states the company isn't sitting on much cash today. Has this money been spent wisely? Search Minerals attempted to raise CAD$500,00 November 2019. They only managed to raise CAD$70,000.
It already owns several pilot plants, but Andrews explains that Search Minerals is about to build a 1% of scale demonstration plant. We ask how will this be financed and if the management team has the operational expertise to get this working? Exploration and pilot plants have not created much value for Search Minerals so far, so are its future plans going to work? Andrews points to the Deep Fox Resource economics as a game-changer, which will allow Search Minerals to have access to a 25-year life-of-mine, which can be extended as the company drills deeper. He also states that the Canadian government is very supportive of Search Minerals, and the jurisdiction is stable and favourable. Patented technology is another alleged positive, but can this be used economically and where is the evidence it will work?
Investors will want to know about timescale. Search Minerals needs to raise around CAD$5M to get all of the necessary permits and licenses, to then build the demonstration plant, then produce the products for customers to test, then turn these short-term arrangements into long-term contracts. Andrews claims Search Minerals will be in production 4-years from now. Even if this number is to be believed, it is clear this is going to be a long wait for shareholders.
- Company Overview
- Rare-Earths: Talking Macro and Where Search Minerals Fit in the Space
- Resource and Projects: What's There to be Excited About?
- 10 Years in the Making: What's Been Going on?
- Cash Position and Recent Raises
- Finding Value: Pilot Plants and Further Developments
- Timings: How Long is the Wait?
- Large Number of Outstanding Shares Putting Investors Off?
- Why Should You Invest in Search Minerals?
- Telling the Story: Are They Going to do More in 2020?
Company page: http://www.searchminerals.ca/
Make smarter investment decisions, subscribe here: https://www.cruxinvestor.com
For FREE unbiased investment information, follow us on Twitter, LinkedIn and Facebook:
Take advantage, hear it here first: https://www.youtube.com/CRUXinvestor
View our disclaimer here.