US President Donald’s Trump’s administration is looking to Australia to break China’s domination in the rare earths sphere, with the US Office of Interior speculating rare earths demand will reach “critical” levels in the not-too-distant future.
President Trump and Australian Prime Minster Malcolm Turnbull are reported to have had discussions about how to loosen China’s stronghold on the rare earth elements used in missile production, iPhones and satellite imaging technology, to name a few.
Several ASX-listed companies are poised to take advantage of the impetus that may result from the US calling upon Australia to capture a larger proportion of the rare earths sector, and speculative investors should keep these names on their watchlist as the situation unfolds.
Arafura Resources Limited (ASX: ARU)
Rare earths mineral exploration company Arafura Resources Limited may only have a current market cap of $63.3 million, but its flagship project, the Northern Territory’s Nolan’s Rare Earths Project, appears to have solid potential.
Arafura released its half-year results on March 1, reporting a net loss for the six months to December 31 2017 of just over $1.5 million, up from a loss over the previous corresponding period of around $1.2 million, which the company pegged to a reduction in the non-capitalised portion of the R&D rebate received.
Arafura has been busy reducing overheads and expenditure in the last financial year, but will shift its focus on de-risking the Nolan’s neodymium-praseodymium project to reposition the company to take advantage of an upcoming industry supply deficit that is expected.
Arafura’s share price is down 4.55% at the time of writing to 10c per share up from 0.05c at this time last year with a high of 15c per share in October 2017.
Lynas Corporation Ltd (ASX: LYC)
All eyes will be on rare earth mineral miner Lynas Corporation Ltd as it hands down its half-year results to December 31 2017 on March 5.
Lynas has a market cap of $1.25 billion and Thomson Reuters have recently revised earnings per share estimates downwards as the results presentation looms, which may have contributed to the share price being knocked down from $2.13 in late February to $2.09 at the time of writing.
Lynas has been a standout ASX-listed rare earths performer in the last 12 months, with the share price on an upward trend from just 75c per share at this time last year and the company able to capitalise on a cut back in production from its main Chinese rivals in 2017.
Investors will be focused on company cash flows when results are handed down, but this mid-weight rare earths corporation is certainly one to watch.
Greenland Minerals and Energy Ltd (ASX: GGG)
Shares in exploration and development company Greenland Minerals and Energy Ltd are up 2.13% to 0.09c per share at the time of writing, after a volatile 12 months of share prices and a failure to go anywhere near its March 2017 high of 16c per share.
Greenland Minerals has a focus on the Kvanefjeld multi-element project in Greenland, which is picking up pace with discoveries in rare earth oxide, uranium and zinc on the rise.
Greenland was focused on its relationship with Chinese partner Shenghe Resources over the last 12 months, but with the Kvanefjeld project process now simplifying, updates about prospective output are expected in the next few weeks.
The grey mud in Greenland is well known for its richness in rare earth elements and as Greenland Minerals’ Kvanefjeld project moves into its next phase, movements out of the company will be worth watching, with the mine expected to produce large and scalable output over a very long mine life.
It will also be interesting to watch if micro-cap rare earths miners such as Victory Mines Ltd (ASX: VIC) and Peak Resources Ltd (ASX: PEK) are able to capitalise on greater interest in Australian rare earth miners by the US.
Shares in Victory Mines have experienced a volatile 12 months of pricing to sit at 0.01c at the time of writing, and the company is working to broaden its portfolio of copper, base metals, rare earth elements, uranium, gold and platinum group elements throughout Western Australia.
Peak Resources shares are down to 0.04c per share at the time of writing, a disappointing drop from 11c per share at this time last year and an 8% slide from yesterday, with speculative investors watching closely as the $30.79 million micro-cap rare earths miner’s Ngualla project in Southern Tanzania begins to make ground.
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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.