VANCOUVER, B,C., Oct. 7, 2020 /PRNewswire/ -- USA News Group - You may never have heard of fluorspar, but every day you reach for products that rely on the fluorocarbons created from the mineral.
Florine – which is the most chemically reactive form of fluorspar – is a key component in fluorocarbons. In turn, fluorocarbons are a vital ingredient in the chemical, healthcare, and auto industries. As demand for Florine rises, though, government regulations are forcing fluorspar mines to close, creating a looming supply crunch. Analysts predict demand for the mineral to remain strong, at minimum through this decade.
In 2018, the U.S. government placed fluorspar and other minerals on the strategic minerals list critical for the nation. In response, resource and mining companies are stepping in to produce these metals while tech firms look to secure supplies. Many could benefit from broader investment in these areas including Lithium Americas Corp. (NYSE: LAC), Tesla Inc. (NASDAQ: TSLA), and Freeport-McMoRan Inc. (NYSE: FCX).
Junior mining company Ares Strategic Mining Inc. has acquired a fully permitted mine to kickstart domestic production of fluorspar. Ares Strategic Mining's (TSXV: ARS) (OTCQB: ARSMF) property, the Lost Sheep Fluorspar Project, comprises 1,447 acres over 67 Claims in the Spor Mountain area of Utah. The site is being developed with a NI 43-101 Technical Report that identifies extensive high-grade fluorspar on the site, now being supported by an expanded drill program.
The Lost Sheep mine is currently the only fully permitted, producing source for fluorspar in the United States. Beyond its strategic value, the mine holds what amounts to the highest naturally occurring fluorspar-grade in the US.
The Need for Fluorochemicals Grows as the Supply Shrinks
The rising demand for fluorochemicals is like something out of a sci-fi novel.
About half the world's fluorspar supply comes from mines in China. Before February 2017, that wasn't a problem. Fluorspar prices fluctuated around 5-year lows. Supply far exceeded demand. (Even then, it's worth noting that fluorspar prices were steadily rising. In the US, fluorspar cost 5 times more in 2017 than it did in 2000.)
But then in 2018 and 2019, demand for the mineral increased and the prices hit new highs each year. At the same time, several mines in Southeast China closed after failing environmental inspections. The closures came at the same time as traditional winter production cuts, compounding the problems.
Fluorspar can't be recycled, so the only way to meet the rising demand is to continue mining.
Juniors Are Quick to Offer Solutions
As is often the case, a junior mining company, Ares Strategic Mining Inc. is an eager participant, ready to offer a solution to the shortfall. Ares finalized its acquisition of the Lost Sheep Mine project in February 2020.
The Lost Sheep gives Ares several tactical advantages over other companies. Firstly, a recent NI 43-101 report confirms the presence of Acidspar, the higher-priced fluorspar, in the Lost Sheep Mine. Acidspar is significantly purer than the fluorspar coming now from areas such as Mexico and Vietnam, and therefore commands a higher price than lower-grade alternatives.
Importantly, Ares has already developed the know how to also upgrade lower-grade fluorspar ore to create a higher-graded product, allowing Ares to garner a higher price from even the lower-quality raw metspar it will produce. This all sets the stage for the company to produce high-quality Acidspar supporting expanded bulk mining operations.
Ares has taken a Fastrack approach to bringing the mine online. It requires very low start-up capital. That in turn means a higher return on investment as production is boosted. Ares Strategic Mining has also benefited from several funding rounds that have bolstered its corporate reserves in order to get the mine into production within 12 months' time.
Supply chain disruptions and the increased demand for fluorochemicals mean that the demand will almost certainly continue to outpace the global supply of fluorspar. That's where suppliers will be able to negotiate higher prices for the mineral as a result.
For now, China doesn't appear to be easing up on its environmental inspections of mines, meaning exports from China are likely to continue to decline. Manufacturers across the globe will be seeking new sources for the mineral.
Companies with the ability to produce domestic minerals and adopt their hi tech applications, such as battery production, will gain momentum from this shift in supply chain logistics including:
Lithium Americas Corp. is a resource company with a focus on lithium development. Its two large plays, the Cauchari-Olaroz project in Argentina – a joint venture with Sociedad Química y Minera de Chile - and the Lithium Nevada project in Nevada, are promising assets with significant project life spans. The company just announced that it has completed the previously announced transaction with Ganfeng Lithium Co., Ltd. in respect of their joint venture company, Minera Exar S.A. Minera Exar owns 100% of the Cauchari-Olaroz lithium project currently under development in Jujuy, Argentina.
Tesla Inc. designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems in the United States, China, Netherlands, Norway, and internationally. The company operates in two segments, Automotive; and Energy Generation and Storage. Tesla is planning to expand its small-scale battery manufacturing capabilities in Fremont, according to a Reuters report. The automaker is looking for approval in order to speed up its battery manufacturing capacity. According to Tesla, it could take about three months to build the facility and install the equipment.
Freeport-McMoRan Inc. engages in the mining of mineral properties in North America, South America, and Indonesia. The company primarily explores for copper, gold, molybdenum, silver, and other metals. It recently announced that the Phoenix-based company's iconic Grasberg mine in the Papua province of Indonesia will become an entirely underground operation in a little over a year – nearly doubling copper and gold output in the process.
For more details on the developments taking place with Fluorspar and strategic minerals, see the article at USA News Group: https://usanewsgroup.com/2020/08/16/a-beginners-guide-to-mining-stocks/
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