A Strange Rare Earth Segment Move... Opportunity or Trap? (MCP, REE, AVL, REMX)

The trend from rare earth moves usually seems to be like a China-regulatory move, but that is not the case today.  We have an emerging player which has delayed a feasibility study and another instance where a 10% increase and a 61% increase in certain rare earth minerals.

Avalon Rare Metals Inc. (AMEX: AVL) is seeing its shares really hit hard after providing an update on the Nechalacho Project with an indication that the feasibility study is now targeted for completion in the second quarter of calendar 2013.  That is a significant push out and time for Avalon to burn cash.  As you would expect, the drop is rather large and it is down 26.7% at $1.62 on almost 3-times normal volume.

Rare Element Resources Ltd. (AMEX: REE) is lower by 6% after news on Monday that it saw a 10% increase of M & I rare-earth mineral resources as well as a 61% increase of oxide and oxide-carbonate inferred mineral resources.  At $4.46, the 52-week range is $3.08 to $13.48.

Molycorp, Inc. (NYSE: MCP) is down with the weaker metals and a weaker growth story, but the rest of the sector woes may be the real culprit here.  Shares are down 4.1% at $25.07 agsinst a 52-week range of $23.05 to $71.43.

The last of the real rare-earth trades in the U.S. is the Market Vectors Rare Earth/Strategic Metals ETF (AMEX: REMX) and it is down 4.5% at $14.65 in active trading for this ETF.

Nothing new really out of China on this front, just relative weakness and problems impacting valuations.

JON C. OGG