De Castro’s “Just $9 of this rare metal can cut the weight of a car by 220 pounds”

Sniffing out a Penny Mining Speculator teaser

There’s nothing like a nice, mysterious teaser pitch to greet you upon a return from vacation — I’ve been traveling for ten days or so, returned to the frozen north feeling perhaps slightly grumpy about sitting at my desk instead of at the beach…

… but this morning I saw the spiel about Chuck de Castro’s new pitch for an unnamed rare metal (and, as usual, the “tiny company” that will soon be producing it), and it put a smile right back on my face. Ahh, it’s good to have a mission!

So what’s the deal? De Castro, who edits the Penny Mining Speculator, says he just opened up 200 spots in his newsletter for discriminating investors like you and I for the low, low price of just $1,000. Yippee! That’s a discount from the $5,000 “regular” price, naturally, since pretty much every pitch for every newsletter offers a discount off of the “retail” price (though to be fair, that is a lower price than they offered last time I looked at the newsletter — I think they were pitching it for $1,500-2,000 a year or so last time around, though that’s no surprise given how little enthusiasm there is for mining stocks these days).

And, yes, it’s all about some special metal. Mysterious! Here’s how the pitch begins:

“Just $9 of this rare metal can cut the weight of a car by 220 pounds (vastly increasing gas mileage)

“Few people have ever heard of it, but it’s critical to American economic and national security.

“The US is completely dependent on imports, because there are only 3 mines that produce this metal — all in foreign countries.

“The youngest mine is 37 years old, and getting long in the tooth.

“Now a tiny company is developing a new giant mine that will bust the foreign monopoly and supply the US with 7,500 tonnes of this rare metal every year.”

Good story, right? So what is this?

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First, let’s figure out which metal he’s talking about — secret number one.

“This rare metal is also essential for oil and gas pipelines, because tiny amounts of it greatly strengthen steel and enable it to withstand extreme pressures and temperatures.

“No modern refinery or petrochemical plant can be built without it. It’s critical for making super alloys necessary for jets and rocket engines.

“Because this rare metal hardens steel, it’s also essential for tall buildings, railroad tracks, and bridges. Beijing, for instance, recently mandated new building codes that require stronger steel to make Chinese buildings and bridges earthquake proof….

“The consumption of this metal has almost quadrupled in the last decade. Going forward, industry expectations are for usage to double in the next two years.

“Meanwhile, supplies are skimpy, because there are only three mines in the whole world that produce it.”

So what’s the metal? The Mighty, Mighty Thinkolator comes out of hibernation to tell us that de Castro is teasing Niobium.

And from there, it’s a pretty short hop to the name of the company — here’s a bit more clueyness on that:

“This is the company that’s going to bust the monopoly of the foreign mines. It has $27.5 billion of the metal. The value of this rare metal is about 500 times the company’s market cap.

“Moreover, the CEO is buying shares in the company hand over fist. I love it when the CEO buys into a company that I’m recommending because nobody knows the company better than him.

“Once this mine goes into production, I expect it to be selling at a price/earnings ratio of less than 1. And we all know that no profitable company sells for a p/e of less than 1.

“I think this company will give you 3 to 5-fold profits by the end of 2015….”

So who is it? The Thinkolator needs to chug along for just a few seconds to tell us that de Castro is teasing … NioCorp Developments (NB on the Venture Exchange in Canada, NIOBF over the counter in the US).

NioCorp used to be called Quantum Rare Earth minerals, under which name it was a beneficiary of the crazy bubble in rare earth stocks a few years back, but now they’re focused on niobium — which is one of the metals often mined with rare earths, but isn’t nearly as rare or expensive as most of them (it’s about $45/kg and is used mostly in large quantities to alloy steel, some rare earth metals are well over $1,000/kg). They’re still talking up the same project they’ve been working on for years now (and which other miners, including Molycorp, have been drilling and exploring, off and on, for 40 years), but now the talk is niobium.

NioCorp explains what niobium is here on their website, talking up the strategic and irreplaceable importance (particularly for superalloys in aerospace, and for high-pressure alloys in pipelines — in other applications, like structural steel, there are apparently other viable options like molybdenum, but niobium is key for high pressure and a high melt point).

And if they’re actually producing it at the end of next year, I’ll be shocked. They are making some progress recently at moving the project forward toward the goal of a bankable feasibility study by the end of this year, with cash raised recently for a bit more drilling and some accelerated analysis, and they have a new CEO (from Molycorp) who has said the right things and bought shares in recent months (at 15 and 20 cents, so he got a better deal than you can get in the open market today at near 50 cents — the stock has spiked up this year, including a double in just the last few weeks)… so the optimism and the new management has everyone pretty excited.

Will it last? I have no idea. Most reports indicate that the rural area where their leases are is hungry for some development, so they may be able to get through permitting — I have no idea what the holdup has been over the many years that this site has been known. The company thinks their deposit holds $25+ billion worth of niobium, though the next move would likely be some kind of partnership or offtake deal if they’re going to actually build the mine themselves — they’re not going to come up with the several hundred million in capital costs on their own, I expect, so the feasibility study will be key at getting someone with deep pockets on board.

Beyond that, I know almost nothing about Niobium or NioCorp, other than the fact that IamGold is the smallest of the three Niobium producers with their Niobec mine in Quebec, and the only one in North America (the other two, both much larger, are in Brazil) — I don’t know if there are other new mines being planned or built. So if you’re one of the many folks who rode the rare earths rollercoaster a few years back and happen to be a Quantum Rare Earth expert, or have other thoughts to share on these folks and their Elk Creek project, well, I’m sure we’d all be delighted to hear from you, just use the friendly little comment box below.


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bababa
Member
bababa
May 3, 2014 10:27 pm

I won’t buy because the stock now trade for 65 cents and it was 10 cents some weeks ago, it’s too late. This article is late to say the least. I will just Watch this stock and will lauph when the pulback will happen. It’s like watching sport on tv, viva internet blogs.

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blackjack
blackjack
May 4, 2014 3:44 am

company CEO’s will make money and smart day traders but rare earths aint rare at all
they are just expensive to refine
look at Lynas
that baby went to $2.50 and is now 17 cents with a fully operating refinery in Malaysia
after investing in this I say “warning Will Robertson” stay away.
The now retired CEO of Lynas cashed out at the top and the rest of us were left with little other than his rhetoric

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Element41
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Element41
May 4, 2014 9:47 am

My top pick in this space is Niocan inc. on the TSX under the symbol (NIO). The resource is awaiting the FINAL operating permit having spent the last 12 years on all required work and permitting. Many companies say that they have a Niobium resource, but the great majority will only show you resource estimates, not metallurgical results. Why, because is a very complicated metal to extract and not many will ever be viable. Niocan on the other hand is a very course grain, one of the largest known on earth, actually visible to the naked eye on the core samples which makes its recovery rate much higher. Silica is another major problem in Niobium extraction, once again the Oka deposit is vitrually FREE, so once again, its recovery will be much higher than say Niobec. One must be very careful when investing in this very complicted metal. I tend to stay clear of the ones with a BIG promotion team, GLOSSY reports and roadshows. When you have the goods, you keep the eye on the PRIZE, production and NOT promotion is the real deal.

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Frenchy
Irregular
Frenchy
May 4, 2014 12:00 pm
Reply to  Element41

Element41: What do you think of Magmahombre’s point of view on NIO (post #10) ? Below is what he had to say. Thanks for your response.

“Niocan (TSX: NIO) has been attempting to permit a second underground Nb mine at Oka, Quebec in the same carbonatite complex as IAMGOLD. Resources are 13.85 Mt at 0.66% Nb2O5. However, NIO’s project has vehement opposition from the local community and the Mohawk Nation. The company has also received a delisting notice from the TSX.”

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Element41
Guest
Element41
May 4, 2014 8:15 pm
Reply to  Frenchy

Frenchy, the company is listed on the Toronto “big board”, as opposed to the lesser “Venture Junior” exchange which is more difficult to maintain especially for a resource company in the context of today’s difficult market. The company’s 43% major shareholder is a company controlled by the Chairman of Novagold so not only are those VERY DEEP pockets, but you also want to maintain a certain credibility when your involved in other public companies. To answer the “opposition” question with a question, what project in Canada isn’t, after all the entire country is claimed by aboriginals. The solution is always to come to an agreement for money and jobs that would benefit both parties. Much has also changed during the last six in that a processing plant is planned for the Becancour area, which is only about 150kms away to send the concentrate. The 2 main advantages of this is that capex costs are reduced but more important, the byproducts from the conversion process are treated in an area that have some of the best engineers in the country having worked for the recently closed nuclear facility next door.

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Frenchy
Irregular
Frenchy
May 5, 2014 1:59 am
Reply to  Element41

Thanks Element41 for your insight. I will look into this as I am looking for a mine player in Canada. Altius is also on my list which is one of Travis’s favorite.

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Judy Appleton
Guest
May 5, 2014 2:22 pm

Most of the rare earth mineral companies are not very highly priced on the stock exchange, however, China has been hoarding rare earth minerals from wherever they can get them. Many of the rate earth minerals are for missiles, etc. One day the U.S. will have to pay high prices to China to buy some.
I plot (AVL) Avalon Rare Metals – Canada $11.0+ (MCP) Molycorp – Canada Rate Earth Oxides $4.60+ (REE) Rare Elements Res. Canada $1.30 + (REMX) Market Vectors Rare/Strategic Metals ETF $60.00+. I plot these, but I do not see a lot of money in them.

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Katy
Guest
Katy
May 5, 2014 5:11 pm

Check out the Seeking Alpha article of 11/8/13 about Texas Rare Earth Resources (TRER). This project is close to production. In six months or less you will be hearing a lot about it.

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kiddydoc
Guest
kiddydoc
May 6, 2014 1:26 pm

log

kaseymoe
Irregular
kaseymoe
November 26, 2016 6:18 pm

I see no recent comments but this stock is still very viable and the feasibility study is expected very soon – promised for the end of his year – 2016. That will be key to proceeding to financing and construction. Discussion is on IHUB under the NIOBF symbol. Current share price around 60 cents US on the OTC. I own small stake wish it were larger. i live about 2 1/2 hours south of the Elk Creek mine so visit the mine site when there’s more going on. Annual meeting Dec 9th 2016 in Denver and i do plan to attend – mostly an excuse for a road trip. Bears watching and revisiting this stock and company. All good and every campaign promise mentioning infrastructure has good vibes for Niocorp. Triple threat – niobium, scandium, titanium – all useful as alloy material in different applications.

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