Geomega Resources (TSX: GMA) – Strong Contender in the Rare Earths Race
We created the following infographic to illustrate why we believe that Geomega Resources (TSX-V: GMA; Pink Sheets: GOMRF) owns one of the most prospective rare earth and strategic metals development projects on the planet and continues to be a top contender in the race to supply the world’s growing demand for elements like Neodymium that are critical for modern technology.
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Once again, if you enjoyed this company visual don’t be shy about sharing it anywhere and everywhere!
Amazing work as usual !
I’m going to share with my friends in a few french forums
Many thanks.
Very convincing. You’re much better at this than the IR people at Geomega (unfortunately, looking at my portfolio).
So just to be clear there are NO IR people at GeoMegA, they apparently feel it is still too early to get focused on that … of course we believe this is a mistake and have been vocal with them about it. But in any case, and not to be some egotistical pricks, but there really isn’t any IR out there that could create something like this because it takes a certain viewpoint and mindset that frankly we are quite, and perhaps uniquely, well suited for. Such as our ability to remain objective and critical regardless of the circumstances. At least that would be our selling point for more companies to use these compelling visuals to explain their value proposition. And not to be total used car salesmen, but if there are some quality companies that need to get their stories out you know about, we’d be happy to look at their situation to see if something like this would work for them as well.
Great presentation on the plusses-
Where is your analysis of the risks?
Price to buy below?
Price to sell?
@Howard
This is not an “analysis” per se — it is a presentation to showcase the opportunity if things go right. Of course about a thousand and one things can go wrong with a junior play and more so for one involved with rare earths. You see in the above comments one of the risks … failure to tell the story to investors … and also you can see we clearly say “Big Risk” right there at the top. We can certainly summarize the risks for subscribers instead of them having to look through our past comments but this is a public post and we aren’t going to just give that kind of information away for free. As for price to buy below or price to sell, we often don’t talk about stuff like that because we are neither a newsletter nor a broker. As a subscriber you know when WE buy and sell, and along with our comments, that could help you make your own decision. Sometimes we do talk price when it is important from a quantitative valuation standpoint or some technical reason but that is not the case here. For the record we started buying way too early closer to $2 than $1 when most of the rare earth stocks were several hundred percent higher in price. So you really still want to talk risk? Then let’s do that on a subscriber-only page…
@Howard,
A subscription is definately worth it.
Regards,
Happy subscriber
@Snoek
@Howard
I can recommend a subscription as well. The subscriber-only content gives great indepth information and the contributions of some of the subscribers in the comments section show more knowledge about the market or the mining sector than I will ever achieve. Definitely worth it.
Happy subscriber #2
Bob
Thanks Snoek and Boblp, we appreciate the compliments and hope to keep impressing with some of the things we’ve been working on!
“Once again, if you enjoyed this company visual don’t be shy about sharing it anywhere and everywhere!”
Done!
http://www.truccofinanza.it/auriferi-e-minerari/geomega-reloaded/
@Giuseppe
Thanks Giuseppe! Much appreciated.
My only comment would be that you should consider linking directly to this page instead of the full size image (since among other things some people may not realize they can blow up the image): http://www.metalaugmentor.com/geomega-the-rare-earth-stock/
Any catalysts to move GMA.V in early 2013?
@Bart
Updated resource, details on metallurgy, reveal of strategy (process for separated oxides), development update. RE market needs to get a bit more positive for these to really matter though in the short term. Value may not start getting revealed in earnest until PEA incorporating entire processing chain has been finished. Question right now if company wants to do an interim PEA that is conceptual or instead incorporate full criteria (which would make it very robust). GMA does not want to do a throwaway PEA like Hudson, Commerce and a number of others have completed this year. And even if GMA did want to do that, G Mining wouldn’t let them.
@silverax
Merci.
1 more day of tax loss selling to go.
GMA is buying the rights to the “Pearse Technology” for one million shares and a royalty if leased out. I can’t help but take that as a positive sign that the process is expected to work well at Montviel.
http://proedgewire.com/rare-earth-news/geomega-acquires-all-rights-to-ree-physical-separation-process-from-equapolar-consultants-ltd/
@forwill
This is apparently a separation technique for purified rare earth oxides that can be marketed directly. It is a process that is not necessary to the production but would improve the economics substantially. Because G-Mining is using conservative assumptions and modeling things in detail before scoping out the project parameters, having the “Pearse Technology” proven as part of the PEA process would be beneficial. Previously this technology was going to be added at a later stage. So yes a positive but it does create some delay to the overall economics and even to the updated resource (since that will be based on cutoff grades appropriate for the economic parameters).
I’ve updated the infographic primarily to reflect some changes to the timeline, namely the pushback of the PEA. This isn’t so much a delay as it is the decision or at least intention to incorporate the full processing monty into the project economics. The result should be a very robust looking project and position GMA much better for the next round of funding, but needless to say more patience is required.
Share prices, market caps, and other misc numbers have also been updated.
For anyone who’d like to investigate the exact changes, here’s the Version 1.0 infographic link: http://www.metalaugmentor.com/wp-content/uploads/2012/11/Promo png v2.0 copy.png
Thanks for the update Zurbo,
You are still acummulating as per the trading history to a point of which it almost becomes obsessive. IMO this means you still expect an eye-opening PEA. What is the NPV of the Montviel project you would expect to see more or less, and what would be an approximate estimation of the SP afterwards?
Why does the market not see what you guys are so confident of?
Long GMA as a potential multi-bagger gamble (expecting 0 return and hoping for a 50-bagger so still sleeping good)
Snoek
@Snoek
Expectations are something approaching a high quality $1 billion NPV under conservative price assumptions and a reasonable capital cost. You read that right. Not sure it ends up being quite that high, but we’re certainly looking for something very robust or we wouldn’t be involved. Any approximation of the share price is extremely difficult and largely dependent on a) state of the market including share price reaction to PEA and b) price of next big financing round on the back of PEA results to move forward with pilot plant and feasibility. One would think at least >$0.50 and hopefully closer to $1.00 without assuming any significant improvement in rare earths market generally.
Asking what the market does or does not see at this point seems sortof pointless. The market might as well be blind given the carnage endured by a long list of quality names. Geomega is certainly an exceptional case, but it has its lumps like weak IR presence, no PEA and so no analyst coverage and future funding needs (many Rare Earth companies cashed up big time when the getting was good and/or have formed partnership to help cover feasibility and pilot plant costs).
Consider for a moment that Geomega is the only company (at least publicly to our knowledge) to form relationship with Innovation Metals co-founded by Gareth Hatch of Technology Metals Research. And further, with their potentially game-changing separation technology they may not even need to rely on that relationship and are in fact actively looking at other very capable partners. Generally there is a lack of appreciation for the low-cost separation technology being developed … somewhat understandably so because it hasn’t yet been fully proven at least on commercial scale and is therefore not being pumped to investors. That’s what the PEA will be for.
@Zurbo
Recent drop in RE metal prices and need to be conservative on a base case means we are likely not going to see any respectable NPV for any REE deposit that is on the scale of $1+ billion at this point. We can take a broad brush though and make some estimates … plan is for 2000tpy of Nd oxide so at $75 that is $150 million annual revenue. Add $100 million for other RE and Nb so we are at $250 million. I would guess the plan doesn’t make sense if they can’t generate 50% margin so that gets us $125 million. Capex maybe $350 million so 3-4 year payback. Take it out 10 years and discount 10% plus add taxes and you’re probably in the $300-500 million range base line NPV. Now if you want to use the prices that others are still using then yes that gets us closer to $1 billion but Geomega is not going to be doing that. And even if they wanted to, G-Mining (the ones who will possibly help build the mine) wouldn’t go along with it.
the person I know who knows most about rare earths (has spent several years mostly studying rare earths) feels grade is low, lots of questions remain, and has never heard a real player in the market mention GMA. So, I too, Zurbo, would ask what you guys know about GMA that others don’t
@JockUlar
Grade is low, but that will be easily overcome if their technology works. It’s fair to say that lots of questions remain, but there’s really no rare earth stock out there where that isn’t the case. I guess I’d be curious what this unnamed person’s top picks are in the REE space. Certainly we’d entertain having a discussion with them if this were of interest. Perhaps maybe even turn it into a Q&A event for subscribers.
Zurbo, you write “will be easily overcome if their technology works”. Isn’t the point that nobody in the West knows how to deal with the metallurgy or mining of particularly the heavy rare earths? And the Chinese methods would likely be unacceptable in the west.
So, how does it make sense to speculate in a stock where the technology might not work, or might prove uneconomic? Isn’t this the kind of problem where DARPA quietly funds a favored defense contractor to see (at taxpayer expense) what technology might work?
The person I mention, BTW, doesn’t care to debate anyone about his views. He’s been studying almost exclusively rare earths for some years now, and is skeptical about the listed companies. I can only judge the charts, and don’t see a single one which doesn’t move from upper left to lower right. Kinda like conventional juniors? – LOL
@Jockular
Some things to consider include that significant portions of Montviel have a grade of niobium approximating that of Niobec, an underground mine that was optimized by the same company (G-Mining) that is now looking at developing Montviel. Another thing is that Geomega is not interested in Montviel as a story but rather as a bona fide mining opportunity (this ironically is why some of the dissident shareholders wanted current management replaced … because they want to mine a deposit instead of the market). And like some of the other peerless companies that have been disappointed by exploration and then rightfully abandoned their project (Ethos, Smash/Prosperity, Golden Predator, etc.) the Geomega folks are seemingly prepared to do the same if the economics cannot be made to make sense at Montviel. That they haven’t so far is a positive sign although there are no promises in exploration or mining. Also to answer a question above, the $1 billion NPV potential really no longer exists for any of the REE projects assuming they are using realistic price projections (nobody has been using good prices up to now, check out Great Western’s ludicrous Ce/LA pricing in their recent study). That doesn’t necessarily make these projects less valuable inherently because in the longer term there WILL be supply constraints but it does explain the declining charts along with the dissipating investor enthusiasm for the sector. And of course projects that don’t have advantages (whether metallurgy, location, strategy, processing, etc.) enabling them to be among the first to production will have an extremely hard time later. As for how it makes sense to speculate in such a sector with so much uncertainty, well that is the nature of speculation itself, isn’t it? You don’t speculate on a certainty, you speculate on a decent possibility after having studied the situation and picked what you believe to be a likely winner. There WILL be several successful REE deposits in production outside of China in the next few years, and they won’t be using the cheap advantage of cheap and dirty separation “technologies” like the Chinese are using, so they will have to be competitive on the basis of other factors.
I put a stink bid at 0.1 CAD. If the trend is your friend, it will be hit….
Also, an updated presentation is available on their website, dated 26nd of March:
http://ressourcesgeomega.ca/presentation/
Would you have any comments on their updated presentation, or otherwise on GMA? Personally I find their cash balance worrying. Wonder how you see this.
Regards
Snoek
@Snoek
When has the cash balance for GMA not been worrying? It is bare bones, really the minimum necessary to keep forging ahead. They will need quite a bit more dough, hopefully to be achieved without massive dilution. The presentation takes a few steps forward in hinting at the advanced plans for Geomega to be involved in Nd alloy production (in a partnership as suggested by the presentation as well). This next step is in part due to the realities of production margin economics (the expectation of low/conservative forward REE concentrate and separated oxide prices) but primarily due to recent advances in the “Pearse” separation technology that apparently makes it relatively easy to produce intermediate products at scale (oxides, refined metal, compounds, etc.). If you look at the flow sheet, besides the separation stage, there isn’t anything there that is technologically challenging so the risk now is primarily on the economics based on forward REE pricing and the separation technology itself. This technology supposedly has advantages in commercialization based on the way it functions … for example it is already being used in direct bulk/flow industrial scale processing to treat up to 50 tonnes of material per hour per unit (not in the rare earth sector to be clear). This scale of industrial processing, if it can be applied to REE separation, is perhaps two orders of magnitude higher compared to existing or proposed REE separation technologies (ion or solid phase exchange, solvent extraction, pyro/hydrometallurgical, etc.) More importantly the “Pearse” process may require only a small number of input factors compared to the extreme complexity and sensitivity involved with other known approaches. Even if it doesn’t end up working as the sole separation technology for REE, it looks quite possible that it may still make a very significant contribution to any future integrated separation process. And while Montviel would provide a nearly ideal ore for this process, it is quite possible that some other deposit out there could be even more effectively separated with this technology (and I’m not only talking about rare earths). Hopefully that provides enough detail for now as to why we are still interested in this type of speculation despite the long odds and our typical disdain for “new technology” being applied to specialty metal deposits.
@Snoek
I put in a stink bid in Feb for .29 which was filled. Seems yours will be filled as well.
Question is which market cliché should be followed right now: ‘buy when blood is running down the streets’ or ‘never catch a falling knife’? In this case it seems the knife can’t fall that much further at this point but before reaching the conclusion to get in any further it would be interesting to find out if there are any current insider transactions going on. It is clear management isn’t buying right now, judging from the share price development, but I would like to know if they are actually selling. The company website does not give any clarity. Does the MA team or any of the subscribers have an idea?
@boblp
Well no insiders selling here http://www.canadianinsider.com/node/7?menu_tickersearch=gma
Nor Markers today/yesterday? here http://www.canadianinsider.com/node/4
ps: Any chance of adding the company selector to the edit window?
@Dave
Thank you, Dave! That is very helpful information!
@boblp
Well, the 10ct bid got hit indeed. Averaged down to 20cts…
Augmentors! Do you have an opinion about thei news release of today, or are you fully occupied with this dramatic gold shakedown? Shake out some weak hands is never too bad i think. Hope we will see some ’70s scenario to continue the gold market.
I did not see any recent trading in your portfolio. Correct?
GLTA!
Snoek
@Snoek
No trading is correct. We’ve been laying low in the trenches so to speak.
Average price of $0.20, not bad at all after the 100% rally this week. The Geomega guys asked for our feedback on the press release before it went out but we didn’t have time to give them anything. If we had, we’d have said something like:
“Doesn’t provide enough detail and should use more comparatives (simpler than other processes, cheaper, etc.)” … once again it seems more like they’re doing the press release as something that’s expected/required of them not because they are actually trying to let the market know about something good. They need IR help somewhat desperately. We’ve never denied that and we continue to push them towards a solution. We’d encourage shareholders to contact them and express similar sentiment.
@Zurbo
Unfortunately (for me !), i just lost my confidence in the GMA team and consequently try to sell my holdings in GMA with the recent move. IR or not IR. Confidence is easy to lose but very hard to win again. I know i lose a lot of money but i don’t care. Maybe i will buy a new bunch of shares in the future for a fraction of my selling price, but i think that for the moment my money is better used in options or spreads trading.
@Zurbo
re “The Geomega guys asked for our feedback on the press release before it went out but we didn’t have time to give them anything. … They need IR help somewhat desperately. We’ve never denied that and we continue to push them towards a solution. We’d encourage shareholders to contact them and express similar sentiment.”
Ah well, I’m only 90% down on this, my largest losses of late (or all time?) and an MA darling of infographics and interactive data presentations. I just can’t understand what it was about “studying the market to understand the best path forward to get ourselves” that was so time-critical that just a few minutes couldn’t have been diverted into helping raise the sp (before the next disastrous pp).
If you two were mining company directors and we were share-holders what do you think might unfold.
@Dave
If we were mining company directors we would be getting paid cash money. As it is our feedback was completely voluntary and was asked for without warning late in the evening via email. Hopefully next time around it will work out better.
Insiders selling would be financial suicide! The big issue amongst all the big issues is the balance sheet with cash running out. Its hard to see financing without significant dilution.