Rare Element (REE) Early FY12 Winner; Can It Continue? (MCP)
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Forget Molycorp (NYSE: MCP), here's the real rare earth winner in 2012 so far.
Rare Element Resources (AMEX: REE).
Shares ended 2011 at $3.25, and the stock has ripped 72 percent higher to its current level of about $5.60 per share.
There are at least two key items to consider with Rare Element: the recent hiring of Thompson Creek's (NYSE: TC) Randall Scott as Chief Executive, and the potential for stronger results from continuing assessment at the Bull Hill area of the Bear Lodge project, which should continue through 2012. For more color on the Bull Hill assessment, click here.
There are risks laying ahead, however. China recently said it would maintain its quota for 2012, but with the country accounting for about 96 percent of all rare earth mineral production, couldn't it just one day decide to slightly increase quotas to meet demand, and diminish profits for competitors? Increasing its production could diminish rare earth prices, and subsequently profits, for miners outside China.
Rare earth minerals are used in everything from batteries to glass, lasers, X-ray machines, and aerospace components, so with a flailing global economy, demand for these things might sink as well. (Though aerospace and medical equipment will always find a spot in governmental and private budgets, those budgets could be cut with less tax revenue coming in.)
So, keep an eye on Rare Element moving forward. Should shares even get close to its recent high of $16.55, that spells multiples of returns for investors. Just be aware of the risks.
Rare Element Resources (AMEX: REE).
Shares ended 2011 at $3.25, and the stock has ripped 72 percent higher to its current level of about $5.60 per share.
There are at least two key items to consider with Rare Element: the recent hiring of Thompson Creek's (NYSE: TC) Randall Scott as Chief Executive, and the potential for stronger results from continuing assessment at the Bull Hill area of the Bear Lodge project, which should continue through 2012. For more color on the Bull Hill assessment, click here.
There are risks laying ahead, however. China recently said it would maintain its quota for 2012, but with the country accounting for about 96 percent of all rare earth mineral production, couldn't it just one day decide to slightly increase quotas to meet demand, and diminish profits for competitors? Increasing its production could diminish rare earth prices, and subsequently profits, for miners outside China.
Rare earth minerals are used in everything from batteries to glass, lasers, X-ray machines, and aerospace components, so with a flailing global economy, demand for these things might sink as well. (Though aerospace and medical equipment will always find a spot in governmental and private budgets, those budgets could be cut with less tax revenue coming in.)
So, keep an eye on Rare Element moving forward. Should shares even get close to its recent high of $16.55, that spells multiples of returns for investors. Just be aware of the risks.
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