Tasman Metals: Focused on Swedish Heavy Rare Earths

onsulting geologist John Nebocat on site at Norra Kärr while completing 43-101 report, October 2009.

Demand for strategic metals is on the rise due to the fact that the unique properties of these metals make them essential for high-tech and environmentally beneficial applications.

Close to 95 percent of rare earth element (REE) supply is currently being sourced from China, and the European Union (EU) is actively supporting policies aimed at promoting the domestic supply of strategic metals to the high-tech industry.

Rare Earth Investing News (REIN) recently sat down with Jim Powell, vice president of corporate development at Tasman Metals (TSXV:TSM), a Canadian mineral exploration and development company focused on strategic metals in the European region, to gain insight into the company’s projects and to learn his opinions on the REE market moving forward.

REIN: Tasman Metals is focusing primarily on its Norra Karr and Olserum heavy rare earth element (HREE) projects. Can you describe the aims/goals of these projects?

JP: Norra Karr is Tasman’s flagship project and is where most of the company’s efforts are currently focused. Our long-term goal for Norra Karr is for it to become a major producer of HREEs for industries outside of China. Olserum is a secondary project for Tasman; it has a more common mineral type associated with it and thus better-known processing methods.

REIN: Tasman describes itself as a company that is focused on “high-tech metals.” What elements is the company focused on, exactly? Has it already lined up any potential purchasers of REEs, or does it plan to achieve that at a later stage?

JP: Norra Karr is unusually enriched with the HREE dysprosium, used in high-temperature magnet applications such as automotive and green technologies. The other major revenue-contributing product will be yttrium, which is used in low-power lighting. We have had numerous meetings with end customers from both Europe and Japan that have expressed interest in working with us further. Once we complete more metallurgical work, we will look towards developing the relationship with these end users further.

REIN: When can investors expect to see production commencing at either of the project sites? Does the company still need to file studies or obtain permits?

JP: The current target for Norra Karr to begin production will be sometime in late 2016. We are currently working on getting our mining lease for Norra Karr, which we expect to be granted in the next couple of months. Following the mining lease, we need to apply for an environmental permit, which, once complete, gives us the right to mine at that location. We won’t be able to apply for an environmental permit until the completion of our bankable feasibility study. We don’t currently have a targeted production timeline for Olserum; however, we will be working on getting a mining lease for the project over the next year.

REIN: Let’s talk more about the deposits. Tasman recently announced the release of a NI 43-101 resource estimate for its 100-percent-owned Olserum HREE project. Highlights include an indicated resource of 4.5 million metric tons (MT) at 0.6-percent total rare earth oxide (TREO) and an inferred resource of 3.3 million MT at 0.63-percent TREO. Can you put that into perspective compared to another large-scale REE project, say, Molycorp’s (NYSE:MCP) Mountain Pass mine?

JP: Olserum would be closer in size to some of the smaller HREE projects, such as Ucore Rare Metals’ (TSXV:UCU) Bokan project in Alaska. Molycorp’s mine at Mountain Pass is significantly larger in terms of total rare earth content; however, it is largely weighted towards the light rare earths cerium and lanthanum.

REIN: The Olserum and Norra Karr projects are the only NI 43-101 compliant REE resources within the EU. What does that mean for the company and what sort of advantage does that give you over your competitors?

JP: It helps a great deal when talking to European end users about developing a solution for Europe’s HREE needs. The more important aspect is that Europe has great infrastructure, and Sweden is no exception. We are one of the few major HREE projects of significant size that can be accessed via two-wheel drive vehicles.

REIN: Tasman’s projects are a lot more accessible than many other REE projects (it has road, power, and water networks and a skilled workforce). How does the company plan to refine its products? Does it plan to construct a refinery facility itself, or will that be outsourced?

JP: On site we plan to take the product to the stage of a mixed concentrate. This mixed concentrate will be transported offsite via either truck or rail to another location in Europe for separation. The plan will be to partner with an existing manufacturer for this separation step as we believe building and running a separation facility to be much too complex for a junior mining company to handle on its own.

REIN: Are Tasman’s projects large enough to make an impact on the REE market in terms of prices?

JP: We plan to produce as much as we need such that we keep prices reasonably stable and not flood the market. Since Tasman’s output will be largely HREEs, we don’t have the issues that light rare earth projects face in terms of market oversupply.

REIN: With an increasing number of western firms advancing projects aimed at breaking the Chinese monopoly on REE production, do you feel that this project will attract investor interest moving forward? Why?

JP: Two years ago, there were way too many junior companies entering the public markets on the back of the steep rise in prices. This number has come down a fair bit as investor interest in the sector has declined. We believe Tasman has enough unique features to set it apart from the crowd, including its excellent infrastructure, good mining jurisdiction and the fact that it has a mix of metals that will be in high demand for many years to come.

JP: We think prices for HREEs will stabilize at some point. When we completed our preliminary economic assessment last year, we used very conservative pricing for both yttrium and dysprosium. Our long-term dysprosium price estimate remains $520 per kilogram and our long-term yttrium price is $20, both below current China FOB pricing. We do continue to believe that light rare earths, notably cerium and lanthanum, will continue to decline. In our discussion with end users, most see a vast oversupply of these elements such that prices will continue to decline over the long term, particularly now that both Molycorp and Lynas Corporation (ASX:LYC) are in production.

REIN: Thank you for taking the time to speak with us.

JP: Thank you.

Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.

Related media:

INN VIDEO: Tasman Metals’ Mark Saxon Sees Bright Future for Swedish REEs

Overview of Molycorp Californian Rare Earth Deposit

Ucore Sets Sights on 2016 Production Start for Alaskan Project