By Kasia Patel
Published: Wednesday, 09 March 2016
Rare earths junior GeoMega is working on securing end users and perfecting its rare earths separation technology to ensure that it retains a comfortable cash position once feasibility studies are completed and it begins to move towards production.
The lack of financing for new mining projects is spurring the evolution of creative and unconventional business models to navigate the funding drought.
Speaking to IM on the sidelines of the 2016 Prospectors and Developers Association of Canada ( PDAC) convention in Toronto, Canada, Kiril Mugerman, CEO of TSX-V-listed rare earths development company GeoMega Resources Inc., said that rather than risking developing a flow sheet and then running out of funding, the company was working from back to front.
“We have a saying, don’t climb the mountain but go around the mountain,” Mugerman told IM. “The mountain is building a rare earths mine, and right now that is not the first priority,” he explained, adding that the company had opted instead develop its separation technology and work with end users to meet customer specifications.
While Mugerman has been disappointed with the lack of project development recently, he was enthusiastic about the company’s future.
GeoMega’s strategy emphasises transparency and scaling up of the electrophoresis separation process, but it also takes into account the difficult financing situation a number of junior companies are now finding themselves in.
“Today the market doesn’t want to see a preliminary economic assessment, that’s not what’s important now,” Mugerman told IM. He said that companies are becoming strapped for cash over and over again after following the same development path of producing a flow sheet and feasibility studies before coming to a dead end in financing.
“People now want to see the separation technology, and what we’ve developed is fully patented,” Mugerman said.
The process, according to the company, is more efficient than those that Chinese companies have demonstrated for rare earths in industrial applications.
By focusing on its separation technology, it is seizing the opportunity to work with end users at an early stage – which it hopes will help secure funding in the long run.
Last week, the company was awarded a grant from the Quebecois government to further its project. As part of the Plan Nord programme, GeoMega received a cash injection in the form of Canadian dollar (C$) $500,000 ($375,545*) for the development of its proprietary separation process of rare earth elements.
In addition to obtaining funding, Mugerman said that working in reverse on the development curve ensures that the company has readily available end users once it begins processing rare earths commercially. For now, the company is building an operational prototype for the separation of rare earths using waste materials from a number of sources, which will then be given to potential customers for testing.
GeoMegA is already in discussions with North American and Chinese customers, Mugerman said, and the company now plans to target European rare earths buyers.