Texas Rare Earth Resources (OTCMKTS:TRER) says it might be able to add scandium to the revenue stream for its Round Top rare earths project in Texas.
In a release put out on Monday, Texas Rare Earth reported that data from column leach testing has indicated “potentially economically significant amounts of scandium,” meaning that the company could potentially produce the metal as a by-product.
The company looked at raw data from column leach tests conducted by RDI in 2013, and found that if scandium present in those leach solutions can be recovered, the project could produce 5,400 kilograms of scandium annually. As per more recent leach tests conducted by K-Tech, the extraction of scandium from the solutions is not anticipated to require additional procedures or equipment.
“Although the production of heavy rare earths is the primary objective at Round Top, the numerous other elements being recovered in leaching of this rock are proving to make a significant contribution to the potential revenue stream,” said Texas Rare Earth CEO Dan Gorski. He also noted that uranium, lithium and beryllium have also been pegged as potential by-products, but stressed that scandium is important due to a lack of worldwide production for the metal.
To be sure, Gorski isn’t the only one to have made that point. John Kaiser of Kaiser Research has spoken extensively about the enormous latent demand for scandium, noting that thousands of patents have been filed for scandium uses, even though only about 10 tonnes of the metal are produced annually. There are plenty of potential applications for scandium; the metal helps make stronger aluminum alloys that are more heat resistant and less corrosive, and is a key component for solid oxide fuel cells.
However, as mentioned above, the current market for scandium is fairly small. Texas Rare Earth cites a report from Adamas Intelligence that estimates that worldwide production and consumption sat at around 5,000 to 15,000 kilograms per year. The metal sells for between $2,000 to $5,000 per kilogram, although Kaiser has noted that many companies looking at producing scandium have used a $2,000 price for technical reports.
Gorski said that Texas Rare Earth is looking to complete a prefeasibility study, pending financing, to incorporate scandium and the other materials mentioned above as by-products.
While he admitted that scandium would help the economics of the Round Top project, he stressed that the company is now basing all economics for the project on current Chinese rare earths prices. As other analysts, such as Jon Hykawy of Stormcrow Capital, have noted, that’s important because using averages from previous years that incorporate the 2011 price spike could be unrealistic.
“If we can’t compete with the Chinese companies, we just don’t feel like we can be in the game,” Gorski said.
Certainly, critical metals investors will be looking forward to more information on the potential addition of scandium to the Round Top project. At close of day on Monday, Texas Rare Earth’s share price was trading at $0.202, down about 2 cents from its previous close. The stock has traded within a 52-week range of $0.16 to $0.44.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.