Pele Mountain Resources: Excellent Leverage to Uranium & Rare Earth Elements
Shares Outstanding: 123.5 million
Flagship Project: Eco Ridge Mine
Uranium and Rare Earth Elements
project, which hosts a large, uranium resource, provides investors with
excellent leverage to uranium. Not surprisingly, Pele’s 5-year trend
correlates closely to the spot uranium price which, in 2007, reached as
Subsequently, when the uranium price dropped to around
Pele’s share price also declined dramatically, ultimately
falling to less than
After forming a bottom around
uranium price has ratcheted higher in recent months. This price
increase is now accelerating, with last week’s closing of
pound marking its highest level since mid-2008. Likewise, Pele’s share
price has also increased during this period, roughly doubling in the
last two months.
As I’ve reported previously, Pele shares are also supported by current
strength in the market for Rare Earth Elements (REE), and the quest for
stable long-term supplies. Pele’s Eco Ridge deposit hosts the full
suite of REE, including the highly-valued “heavy” REE, along with
uranium. An updated NI 43-101 resource estimate including REE at Eco
Ridge is expected prior to year-end.
We view Pele shares as a timely speculative opportunity providing
excellent leverage to the rising uranium price along with significant
exposure to strategically critical REE. The recent increase in Pele’s
trading volume and share price suggests that considerable new interest
is building for its uranium and REE project at Eco Ridge.
Pele Mountain Resources (TSX-V: GEM) is focused on the sustainable
development of its 100%-owned, Eco Ridge Mine uranium and rare earth
elements project, located in the
strong local support, Eco Ridge provides an ideal location for a safe,
secure, and reliable long-term supply of uranium and rare earth
strategic metals for which the underlying market prices are rapidly
increasing: uranium and REE.
The Outlook for Uranium and REE
Uranium spot prices have risen over 20% since July. Much of this uptrend
occurred during the past month as price levels of U3O8 increased
per pound last week to
On the demand side, many countries including
over the next decade. The list of countries embracing nuclear power is
increasing as the global nuclear renaissance takes hold. Large uranium
deposits around the world, like
are the focus of increasing attention from countries striving to secure
long term reliable new sources of fuel to sustain their nuclear new
build programs. For example,
long-term, nuclear energy trade agreement covering everything from
constructing reactors to recycling fuel.
its nuclear power industry under an association named JINED. This
group, comprised of Toshiba, Hitachi, Mitsubishi, nine nuclear
utilities (including TEPCO) and the Innovation Network Corporation of
reactors, technology and experience.
extend the operating life-time of its 17 reactors by an additional 12
years which, alone, has the potential of creating a demand for another
100 million pounds of uranium consumption.
Supply-side constraints are becoming more frequent and pronounced. The
Megatons to Megawatts deal with
uranium for use as nuclear fuel ends in 2012. Production targets were
missed by major uranium producers this year, most notably by
its production shortfall. In
million pounds of uranium annually from its MacArthur River and Key
Lake mines, was threatened with a potential labour strike and their
giant Cigar Lake joint venture with Areva is still years away from a
possible start date. Suppliers expect prices to continue climbing and
thus, are under no pressure to sell. Therefore, spot uranium supplies
available for sale are extremely thin.
In the rare earth elements markets, concerns are rising around the
issues of sustainable supply and skyrocketing price levels as a result
of recent extraordinary export restrictions imposed by
produces about 97 percent of the global supply. There are going to be
many challenges to overcome before new supplies, outside of
come to market, including enormous costs and technological complexities
relating to REE metallurgy and refining.
Yet, Molycorp’s President,
“I don’t believe there is a bubble. These prices are absolutely
sustainable and that’s really based upon the very simple facts of
supply and demand….The Chinese are only exporting 30,000 tons of
material to the rest of the world right now and the rest of the world
needs 50,000 tons of this material a year.” Said Smith, “We don’t see
the fundamentals of this changing anytime in the near future. The
demand is like I’ve never seen it in 25 years in this business.”
Pele Mountain Resources
rate in its NI 43-101 Scoping Study, along with assays on 30 drill
holes and recovery data from leach testing at SGS Canada, its Eco Ridge
Mine leach solutions could contain up to 218,000 kilograms of
recoverable total Rare Earth Oxides (“TREO“) annually, in addition to 826,000 pounds of uranium oxide. These TREO
would contain about 50% heavy REE plus yttrium, which are among the
most valuable REE because they are in very short supply around the
world today. Another advantage of Pele’s planned mining and processing
designs is that the REE at Eco Ridge can be available in the uranium
leach solutions at no extra mining or milling costs and that
has been commercially successful in the past. In fact,
historically the most important source of heavy REE in
Given the rapidly increasing global demand for uranium and REE and the
world class size of
sense for downstream users to seek out a partner such as
Likewise, it could be beneficial to
a partner that could facilitate participation in the value-added
Pele Mountain Resources is a timely, speculative opportunity that can
provide investors with leverage to the rising prices of uranium and
exposure to the strategically critical REE in a stable and
mining-friendly jurisdiction. We have every confidence in the excellent
management skills of this company and that the Eco Ridge Mine uranium
and rare earth elements deposit can be brought into production within a
reasonable time frame. We view Pele Mountain Resources as owning the
right commodities in the right place at the right time.
Taylor Hard Money Advisors.
This is an independent report. Pele Mountain Resources has not
By its nature, exploration, development and mining are risky businesses
and there is no guarantee that current programs will result in
profitable and accident-free mining operations. The Company’s continued
existence is dependent upon the achievement of profitable operations,
and its ability to raise additional financing when needed. All phases
of the Company’s operations are or will be subject to environmental
regulation in any jurisdictions in which it does or may operate.
Environmental legislation is evolving in a manner which will require
stricter standards and enforcement, increased fines and penalties for
non-compliance, more stringent environmental assessments of proposed
projects and a heightened degree of responsibility for companies and
their officers, directors and employees. Pele Mountain Resources is
aware of and in compliance with these concerns.
Some of the statements contained in this article are forward looking
statements and not statements of facts. Forward looking statements are
subject to various risks, uncertainties and other factors that could
cause actual results to differ materially from expected results.
Readers must rely on their own evaluation of these uncertainties.
SOURCE Pele Mountain Resources Inc.