Sarissa Resources Inc (SRSR)

[ltoro43]

As Lifton stated below:

HEAVY VERSUS LIGHT

But is vertical integration enough to ensure rare earth success? Independent commodities commentator and strategic metals expert Jack Lifton isn't so sure.

He puts more emphasis on mineral concentrations, favoring the heavy rare earths.

All rare earth deposits contain the 17 elements in varying concentration. The heavy rare earths are in far shorter supply, and as such, are more valuable.

"The Chinese have such enormous reserves of light rare earths that I find it very, very improbable that there could be a profitable light rare earth company developed outside of China," he said.

To get at the heavy elements, miners must also process the less valuable light ones. This could spell disaster for companies whose deposits are low in heavies, said Lifton.

"If I make 9,600 white Chevrolets, and 400 black ones, and only the black sell, please don't tell me that's good economics," he said. "Making something is not what counts, it's selling something that's important."

Avalon Rare Metals is one company that will have a lot of heavy rare earths to sell, if it can raise the money it needs to bring its Nechalacho mine into production.

The mine, located in northern Canada, has a low total concentration, but is rich in valuable dysprosium and terbium.

"That greater enrichment in heavy rare earths makes for a more valuable ore in the ground," said Avalon Chief Executive Don Bubar. "And much bigger potential profit margin on production."

Avalon's goal is to further increase profit margin by including a mill and a hydrometallurgical plant on site.

But because of the remote location and heavy infrastructure needs, the project will cost an estimated C$844 million ($792.6 million) to bring into production, which analysts see as a tough pill for investors to swallow.

"If Avalon came online it would solve the world's problems, but it wouldn't solve Avalon's problem," said Lifton. "Their problem is how do you raise that kind of money?"


Now, I believe Dahlman Rose would not be partnering with us if they did not already have some very strong indication that we have the right combination of metals.