Taking the Rare Earths Quest to Canada (MCP, REE, GMO, REMX, AVL.TO, QRE.V, QRM.V, RA.V, RES.V, TCR.V, UCU.V)

The rare earth oxide, rare earth element, and rare earth minerals segment is continuing to see a surge.  Some could be tied to the expectations of a new ETF driving ownership interest up, but most is due to the ongoing issues in China where it exports REO/REEs and that is changing ahead due to classification of the resources.  The U.S. is seeking to secure local supplies.  The most recent US launch in rare earths in the U.S. is the Market Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX), which has globally listed companies whose  major business operations are geared toward various aspects of the rare earth elements and rare earth minerals.

Molycorp, Inc. (NYSE: MCP) has been a highly unusual IPO with exponential returns from the lows after coming public this summer without even having any production on-line. Rare Element Resources Ltd. (AMEX: REE) is not known by many but it has seen exponential gains and risen from under $3 in summer to a high of $11.58 on Tuesday.  Both are taking a breather this morning.  General Moly, Inc. (NYSE: GMO) hit a new high today despite a fairly recent filing that will allow it to raise capital.

If you think the U.S. has a monopoly on the rare earth element stocks with volatility, guess again.  Our cousins to the North in Canada have their share of Canadian companies which aim to capitalize off of the rare earth element trends.  We are providing some very basic details  on several of the Canadian equities here.  These are far from endorsements and any research needs to be conducted elsewhere as these are foreign issuers and some have limited history (Prices are in Canadian Dollars):

Avalon Rare Metals Inc. (AVL.TO) has doubled since the lows of summer and shares hit a high of C$4.60 on Tuesday.  At C$3.87, its 52-week range is $1.89 to $4.99 and shares are actively traded with more than 1 million shares a day.

Quantum Rare Earth Developments Corp. (QRE.V) is still a penny stock at C$0.51, but shares have more than doubled since September. In September it showed positive 2009 exploration results from the Archie Lake Property with a total budget of $1.1 million.  Its 52-week trading range is $0.22 to $0.64 and it trades about 200,000 shares a day.

Quest Rare Minerals Ltd. (QRM.V) is at C$4.62, down from recent highs.  Its range of the last year is $1.74 to $5.72 and it trades on average about 400,000 shares per day.  Its focus is rare earth and uranium exploration in North America at projects in the Strange Lake rare earth project, Misery Lake rare earth project, Nanuk Uranium project in Quebec and Labrador, Kenora North and Snook Lake Uranium project in Ontario, and the Plaster Rock Uranium project in New Brunswick.

Rare Earth Metals, Inc. (RA.V) is another penny stock around $0.38 versus a 52-week range of $0.14 to $0.68.  Volume is still active at more than 500,000 shares per day.  The company focuses on rare earth elements and bituminous coal properties, but its main claim is the Clay-Howells property with claims totaling 11,781 hectares located near Kapuskasing, Ontario.

Rare Element Resources Ltd (RES.V) is around C$10.77 and its 52-week range is $1.94 to $14.43.  This may be the most volatile of all the Canadian rare earths now, and average volume is over 400,000 shares per day.  The company seeks rare earth elements in Canada and the U.S. and it holds a 100% interest in the Bear Lodge property located in northeast Wyoming.

Torch River Resources Ltd (TCR.V) said last week that it had identified a number of strategic rare earth elements and molybdenum at its B.C. property.  Shares doubled on the news, but this is a deep-penny stock.  At $0.09, its 52-week trading range is $0.02 to $0.12.  This is a junior resource company which engages in the acquisition and exploration of mineral properties focused on gold, copper, molybdenum, and silver in Canada.

Ucore Rare Metals Inc. (UCU.V) is another penny stock and around C$0.48 versus a 52-week range of $0.20 to $0.74.  The company released data last month on its initial drill results from the Bokan-Dotson Ridge rare earth project in southeast Alaska.  With multiple projects across North America, Ucore notes that its primary focus is the 100% owned Bokan – Dotson Ridge REE property in Alaska.

Frontier Rare Earths Ltd. (FRO.TO) has raised its IPO to C$60 million.  The company is developing the Zandkopsdrift deposit in South Africa’s Northern Cape Province, although expected production is out to 2014.

This is a sector that does not avoid controversy, and these are likely only a handful of the companies that will spring up with ‘rare earth’ claims in the near-term.  China has limited some resource exports and is expected to keep a lid on rare earth exports.  The problem is that China is more than 95% of the rare earth mineral production.  Now countries will have to locate sources of their own rare earth minerals.  The conundrum is that if rare earth prices rise too much then China could open its doors again, and that could send the prices of rare earth elements and the shares of the companies involved in rare earths very far down the drain.

JON C. OGG