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

by Travis Johnson, Stock Gumshoe | May 1, 2014 1:20 pm

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[1], 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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  1. explains what niobium is here on their website:
  2. You and I can each earn a free share of stock right now if you open an account!:

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  1. Avatar
    Ty Hub
    May 1 2014, 02:28:31 pm

    Well does anyone out there own any STOCK in this company ?? If so, how close are they at hitting the PAY LOAD ?? ANYONE ?

    • Avatar
      Peter Ohl
      Jun 24 2014, 05:32:18 am

      Yes, I own quite a large amount of NioCorp, I first started accumulated shares in NB about
      2 years ago, most of my shares were bought at between, .11-.13 cents! I love this stock and
      company! the S/P went as high as .79 not long ago! I have not sold any shares, which should tell you how much I believe in this company! Do yourself a favor and google, NioCorp company home, it’s all there for you! I think this stock will trade at $25+ in 2years! IMHO. Cheers.

  2. Avatar
    Rusty Brown in Canada
    May 1 2014, 02:33:22 pm

    Not specifically mentioned in this Gumshoe report:
    “NioCorp is developing North America’s highest grade, large tonnage Niobium project in Elk Creek, Nebraska.”
    Just to clarify.

  3. Avatar
    May 1 2014, 03:44:29 pm

    I am a long time gumshoe reader (I love this site) and long time NioCorp shareholder. This stock is the real deal and rather than write a short novel I’ll pass this youtube video along.
    Also, we’ve got a pretty good message board going on investorshub with a lot cumulative DD. My cost basis is in the .12 range but I have not sold any shares into this run up because I expect much more in the long term. I don’t know much about DeCastro but this is one of those rare times when a teaser isn’t for a bullshit company.

  4. 14
    Marilyn Scott
    May 1 2014, 04:24:33 pm

    Jeff Opdyke’s legthy article from the Oxford Club, on how to survive the coming demise of the American dollar and the fact that Ft. Knox is empty of gold, makes a lot of sense to me….all except the price: $250. Would you please put on your fabulous thinkolator and reveal his gold and silver teasers, as well as the methods of receiving extra $ from your portfolio accounts, where to stash extra cash ( should you be so lucky as to have a lot of extra cash to stash), etc? I know I would greatly appreciate the info, perhaps others as well. Thanks.

    • Avatar
      May 2 2014, 08:48:40 am

      I do not know which companies he’s been teasing, but to get extra money out of your stocks, it’s usually by selling options against them (often called a covered call strategy). I don’t do it with volatile stocks that I’m hoping will double, but I do buy call options on stocks rather than the stocks themselves, as I get a bigger return with less capital exposure. This is not for rookies, and if you ever decide to use options, I suggest paper trading until you really get a good feel for them. You can also loose your entire investment using options.
      One good use of options is to sell them against big dividend payers. You boost the payout that way, as the option you sell will usually double the dividend, and if you choose the right option, you will not get the stocked called away from you, but get to keep the option premium you sold, as an extra ‘dividend’.

  5. Avatar
    May 1 2014, 04:55:44 pm

    I am a geologist and track niobium (Nb), molybdenum (Mo), tungsten (Nb), and to some extent vanadium (V( mine producers, resources, and significant prospects. Niobium like molybdenum (Mo) increases the tensile strength of steel by up to 3x but has the advantage over Mo of having a somewhat lower density (8.57 vs 10.28). Vanadium has a density of 6.0 and also increases the tensile strength of steel but vanadioum alloy steels are less resistant to corrosion. Mo is more available than Nb (220,000 tonnes production vs 70,000 tonnes for Nb) and Nb is significantly more expensive than Mo. Since only 1% is required to produce this effect in steel, the density difference plays very little role in determine which alloying element to use. The higher tensile strength imparted by both enables the use of significantly less steel which is the source of the weight reduction touted.
    Brazil currently produces over The current Nb producers are 1) Companhia Brasiliera de Maeturgia e Mineracao from the Araxa deosit in Brazil (mine reserves of 450Mt at 2.5% Nb2O5 + 2.0% LREE that aren’t recoverd) and controls the market. The reserves and resources are all oxidized and in saprolite and are minable via open pit. Other producers essentially operate at their pleasure. Anglo-American produces Nb at from the Boa Vista mine at Catalao I in Brazil and is expanding production by 25% (by-product of phosphate mining from the Boa Vista carbonatite (4.2 Mt at 0.83% Nb2O5 and primary production from Catalao I&II carbonatites primary Nb deposits (resources of 71.3 Mt at 1.14% Nb2O5 – Boa Vista appears to be almost mined out. There are other carbonatites in Brazil with very large Nb resources that are not in production. Niobec produces Nb from the Oka carbonatite complex in Quebec, Canada. Production is about 5,000 tones per year or about 10% of world production. Resources at Oka total 718 Mt at 0.40% Nb2O5 including minable reserves of 423 Mt at 0.42% Nb2O5 ( NioCorp has resources at the Elk Creek carbonatite in SE Nebraska are 102Mt at 0.67% Nb2O5. It will be an underground operation like Niobec. The Brazilian operation are open pits. Numerous other carbonatites are present around the world that contain Nb mineralization, though none are as high a grade as those in Brazil, so Nb deposits really aren’t that rare. Pacific Wildcat’s 70% subsidiary Cortec Mining Kenya Limited is developing the Mrima Hill Nb and REE carbonatite deposits at Kwale in Kenya. Both as open pits. Resources total 142.2 Mt at 0.70% Nb2O5 in the Nb deposit and 40Mt at 5% TREE (total rare earths) in the REE deposit. Pacific Wildcat (TSXV: PAW), however, is trading at only C$0.015 so the low share price will make raising the $200M necessary to develop the deposit difficult though in the long run, the Mrima Hill deposit should be a more profitably to mine than Elk Creek since it will be an open pit though Elk Creek has easier access to the largest market, the USA. However, P The primary market for Mrima Hill will probably be China. Another candidate for development in the Mabounie carbonatite Nb-REE-phosphate deposit in Gabon, Africa. Resources at Mabounie total 380Mt at 1.02% Nb2O5 and 2.52% TREO. 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.
    Nb mineralization also occurs in settings other than carbonatites such as high level, highly fractionated peralkaline granites to syenites (with Zr and Y), rare element greisens (with Sn and/or W) in both peralkaline and peraluminous granites, and in rare element pegmatites with tantalum and tin. Resources in the first and second are large but generally low grade. Resources in the latter are small and general low grade with most of the related production a by-product of placer mining for tin and tantalum.

      • Avatar
        May 2 2014, 06:14:51 pm

        Holy Moses- This guy knows his business. I would subscribe to his newsletter any day if I was interested in REE. As I see it, there are much better mines in undeveloped countries who do open pit mines which are cheaper to operate and are not so interested in being eco friendly. Great post Magma.

  6. Avatar
    May 1 2014, 05:02:47 pm

    There is no shortage of niobium and several large deposits are located in Brazil. The Araxá carbonatite complex hosts about 464 million tonnes averaging 2.5% Nb2O5. CBMM [Companhia Brasileira de Metalurgia e Mineração], the world’s premier supplier of niobium and niobium technology, currently mines an open pit residual pyrochlore [(Na,Ca)2Nb2O6(OH,F)] deposit with likely little blasting and probably employs back hoes and front end loaders etc to extract the weathered ore material. Thus costs to produce concentrate are a lot lower than hard rock operations.

    CBMM states that there is enough niobium in this deposit for 500 years of production at current mining rates! See links for more information:

  7. Avatar
    Ron schumacher
    May 1 2014, 06:24:19 pm

    OMG! If anyone wants to play with a pump and dump, there is certainly money to be made. Just look back at how Moly was manipulated. For those interested in the actual prospects for mining the niobium keep in mind that:
    1. It is a low grade deposit–it may be the “highest grade in the US” but it is low.
    2. The ore starts at approximately 200 meters below ground in ground not terribly suited for underground extraction (I am trying to be nice and filter my wording).
    3. Management is brought to you courtesy of the boys who brought you MolyCorp. Need I say more.

    In summary, if you want to play a low-priced stock and play press releases, there is money to be made. Moly proved that beyond any doubt. If you actually expect the company to dig the niobium out of the ground and produce that $9 weight saving for autos, don’t hold your breath. If you want to see what it would take to extract the supposed $25 billion from the ground, take a drive to Elko, NV and take a look at the pit(s) dug to extract a similar percentage of gold. Then calculate what it cost, and costs every day , to dig that hole. Then check Nio’s balance sheet. It will not happen in our lifetime.

    • Avatar
      May 1 2014, 09:49:23 pm

      Ron must either be a jealous SRSR shareholder or a disgruntled Molycorp bag holder.

      The grade is considerable higher than IamGold’s Niobec mine, which is highly profitable. The only Molycorp element here is Mark Smith, the rest are all honest Canadians who were going about this on their own until September when Peter Dickie let Smith takeover as CEO. Smith was involved in the company that originally was developing this asset 30 years ago, he also worked for CBMM in Brazil (the largest Niobium producer.) I doubt Smith bought up 10% of the company with his own money to try and pull some elaborate pump and dump.

      Molycorp earned it’s unfortunate reputation because the prices of their two main revenue producers, Cerium and Lanthanum took a nose dive. Molycorp couldn’t control the prices in a market where they were a small player.

      Niobium is not a rare earth element, this article is mistaken, and it’s prices are much more stable and steadily increasing. There are only 3 mines in the world and they will only be able to keep up with projected demand until about 2017-8.

  8. 31 |
    John Empsall
    May 1 2014, 08:55:37 pm

    I’ve looked at this before and walked away for the following reasons:
    – Niobium is a minor metal with a small market that I don’t understand. With minor metals, marketing is critical.
    – NioCorp changed their name.
    – The new CEO left Molycorp under a cloud.
    – Elk Creek was discovered several decades ago and everyone up until NioCorp has walked away. And it’s lower grade than its competitors
    – Nebraska! They will have to develop regulations since there are no hard rock mines.
    – It’s not clear to me if this will be underground or open pit. 200 m of overburden will have a large cost to remove before mining. Likewise, underground mining will have a large up front costs. I suspect this has killed previous feasibility studies of the project.
    – The above means they will need to raise several $100 million.
    – Recent stock activity smells of p&d.

  9. 7785
    frank archambeau
    frank archambeau
    May 1 2014, 11:52:40 pm

    I see what are some big problems; How do you hard rock mine where there’s no hard rock & open pit likely to be down into Ogallala aquifer is going to be a difficult sell in NE.

  10. Avatar
    Dave Hughes
    May 2 2014, 12:57:37 am

    anyone interested in this play should probably be looking at TKO , Taseko mines , in Nothern british Columbia . They already have a copper mine up and running . they are part of the Hunter Dickinson group , so they have deep pockets and they have a Niobium deposit , High grade no less .

  11. Avatar
    May 2 2014, 09:07:26 pm

    Can anyone tell me please if anyone has come across the latest “outsider Club” on the 2nd of May with the heading of “The end of the American Era” and which gold company he is Promoting?

  12. Avatar
    Mark w
    May 3 2014, 11:44:54 am

    Looks like a pure news driven rally to me. (Could be a pump and dump but i have not done the research to say that for sure) Trading news plays are great ( i have made some good returns on news rallies) when you can get in before the move but nothing but chasing at this point, (stock has more than doubled in 30days) which leads to you bieng a bag holder. If you are an investor or want to be an investor in this stock, my opinion would be to be patient and wait for the pull back that will come. Look at any stock chart you want to, there is always a pullback.

  13. Avatar
    May 3 2014, 10:27:06 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.

  14. Avatar
    May 4 2014, 03:44:11 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

  15. Avatar
    May 4 2014, 09:47:31 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.

    • 737 |
      May 4 2014, 12:00:44 pm

      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.”

      • Avatar
        May 4 2014, 08:15:09 pm

        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.

        • 737 |
          May 5 2014, 01:59:15 am

          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.

  16. Avatar
    Judy Appleton
    May 5 2014, 02:22:23 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.

  17. Avatar
    May 5 2014, 05:11:05 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.

  18. 22 |
    Nov 26 2016, 06:18:24 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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