As we expected, the rare earth sector has finally caught the eye of a broader audience and speculators are rushing to get a piece of the $1.5 Billion, and now highly political, industry. With REE demand expected to increase at an annual rate of 8% to 10% and supplies extremely tight, trading volumes and price increases in REE stocks have exploded - reaching record heights this week as the sector rose to prominence.

Whether we want to admit it or not, if we've invested in a North American junior exploration company focused on rare earth elements, it's a highly speculative play as even the most advanced projects are years from production. Even Rare Element Resources (RES:TSX-Venture), the poster boy for the sector, is years away from production. Nevertheless, it hit a 52 week high Friday, rising to an incredible $8.01 per share (was trading at $3.73 per share when we first mentioned this company in a March 2010 newsletter). This is the respect the market is showing the rare earth sector as masses (of speculators) begin to realize how real the long-term demand will be for REEs.

Our team has been a leader of the pack when it comes to the rare earth sector and have long preached its significance in the modern world (see past reports: Vol. 157 - The Commodity The World Will Fight For - Vol. 170 - China In Control Of The World's Rarest Commodity). Our first Featured Rare Earth Company of 2010, Medallion Resources (MDL:TSXV), soared to $0.38 pershare on Friday, a new 52 week high and 90% increase from our initial notification price of just $0.20 (released in our introductory research report on the company on March 7, 2010).

Towards the end of February, our team realized Medallion laid claim to some highly prospective projects and that if the rare earth market got hotter, it would very likely reflect in its share price. Sure enough, as the rare earth sector hit the front pages of major media outlets this week, Medallion's share price took off, providing a great profit taking opportunity for our members and team. We will discuss Medallion's progress later in this report.

To read our full introductory research report on Medallion released March 7, 2010 click on the title below.

Vol. 158 - THE RARITY OF RARE EARTH COMPANIES: MEDALLION RESOURCES


It was in February when our team began touting the rare earth sector and the intense demand which we believed would eventually captivate the commodity world. We continually warned that China, a country responsible for 97% of the world's rare earth production, could drastically impact supply if it chose to and that this amount of leverage was a very dangerous thing.


Well, turmoil has arisen and China has now 'unofficially' cut off Japan, the third largest economy in the world (overtaken by China earlier this year), from any and all imports of rare earth metals. This was due to a conflict in open water which resulted in Japan detaining a Chinese fishermen this week.

Japan depends heavily on rare earths to fuel its world leading automobile and electronics industries. This news has sent many rare earth companies flying and has, without question, grabbed the commodity world by storm; so much so, that despite gold hitting a new all time high, it wasn't even close to the biggest story in the commodity space.

Below is a small excerpt from our introductory report on rare earths back in February of this year.

"There is a small group of relatively unknown metals on the verge of becoming white hot. A very quiet, but important battle for control and access to these metals is already underway. The situation could turn scary and desperate very fast if our only true source of supply is disrupted. Demand is constant and continuing to increase, but supply is the x-factor which could send these metals sky-high very quickly..."


To read our entire introductory report on rare-earths please click here. The report outlines the specualtion mania which could (and thanks to China, it now HAS) come to the rare earth sector.


It was China who ignited the commodity world's focus and rush into rare earths this past week.



The New York Times released an article on Tuesday, here is an excerpt:



Amid Tension, China Blocks Vital Exports to Japan

By KEITH BRADSHER


HONG KONG - Sharply raising the stakes in a dispute over Japan's detention of a Chinese fishing trawler captain, the Chinese government has blocked exports to Japan of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles.

On Tuesday, Prime Minister Wen Jiabao personally called for Japan's release of the captain, who was detained after his vessel collided with two Japanese coast guard vessels about 40 minutes apart as he tried to fish in waters controlled by Japan but long claimed by China. Mr. Wen threatened unspecified further actions if Japan did not comply...

Read the entire article here




There has been tension between Japan and China for decades. Although they are two of the largest and closest trading partners in the world, it is not due to a longstanding friendship or desire, rather geographic and economic reasons. There is a growing rift that will more than likely escalate before cooler heads have a chance to prevail.

China's exportation ban has increased the already immense pressure on the rest of the world to find and begin producing rare earth metals. This conflict with Japan shows how dangerous of a situation it can be when one nation controls almost the entire world supply of a commodity. China has too much leverage when it comes to rare earths and they know it!

As we've stated in the past, speculative markets are all about timing and positioning oneself early in the growth stage. If you're positioned in before speculation fever hits the markets, liquidity can increase rapidly, along with profits.


Our first ever rare earth Featured Company, Medallion Resources (MDL:TSXV), has taken advantage of the raging rare earth market. Medallion has benefited from the fierce speculation which is currently overwhelming this sector. Our team expected this and prepared for it by introducing it to our members in the very early stages. We initially wrote up Medallion in March of this year when its average trading volume was less than 50,000 shares per day, trading at $0.20, and almost unknown to the investing public. On Friday, Medallion traded over 1.7 million shares and hit $0.38 - a 90% gain from our introduction price.

Medallion has been working hard to advance its two rare earth projects. Although both projects are still at an early stage, there are a limited number of high quality rare earth deposits in North America and it appears Medallion has identified two of them.


Eden REE Project Update

Medallion's Eden Rare-Earth Project contains rare-earth elements (REE's) at one of North America's most prospective REE-enriched carbonatite complexes, located just east of Eden Lake in western Manitoba, Canada. Medallion reported on September 9th that the first-phase of its 2010 field program is designed to identify, through mapping, sampling and field checking of all previous property data, the most promising rare-earth mineralization on Eden Lake REE Project.

The field team has mapped large surface areas of mineralized and fenitized (alkali metasomatism) syenite and related REE-bearing rocks, which are now the focus of exploration. Of the four major styles of REE mineralization that occur on the Eden property, this particular fenitized rock, with its extensive exposures right at the surface, has the best potential to be mined most cost effectively. Work has now shifted to evaluating the REE content of the fenitized rock with a program of detailed diamond-saw channel sampling. For the larger outcrop areas, grids will be laid out and sampled using a concrete drill, which produces core-like samples that are equivalent, as a representative sample, to sawn channels. Assays are expected in approximately one month.

Medallion explores the Eden Lake REE property in western Manitoba, under an option agreement with Rare Element Resources (TSX-V: RES, NYSE AMEX: REE), which grants the right to earn a 65% interest in a project joint venture. Eden Lake is a recent REE discovery with potential for high neodymium values and significant heavy REE by-products.




http://www.nytimes.com/2010/09/23/business/global/23rare.html?_r=2&scp=1&sq=rare%20earth&st=cseDr. Tony Mariano (right) and Jim Clark (left), consulting REE mineralogists, on an outcrop of altered syenite in the western portion of the Eden Lake rare-earth property. The altered syenite (fenite) contains significant amounts of rare-earths over broad areas. Eden Lake is in the background.

Red Wine Heavy-REE Project

The field crew has reported widespread areas containing the REE-bearing mineral eudialyte during its first examination of Medallion's four Red Wine property blocks (six licenses covering over 42 square kilometers). The largest of the eudialyte areas is at the centre of the Red Wine South intrusion (covered by Medallion's Block "A"). In this area, three intrusive bodies, which average approximately one kilometre in length and 200 metres in width, were mapped and noted to contain common eudialyte by the Geological Survey of Canada (reported in 1981). Medallion's field crew has confirmed the Geological Survey of Canada's mapping and eudialyte identification -- major rock types have been sampled for assay and mineralogical study.

"Field work at the Eden and Red Wine properties is progressing very well," reports Dr Bill Bird, president of Medallion. "Our strategy is to target potential large-tonnage neodymium and heavy REE properties with mineralogy that indicates a cost-effective metallurgy. Initial indications are that both Eden and Red Wine have important aspects of these criteria."

Medallion Resources recently announced on September 16th, that it has appointed Anthony (Tony) Mariano, PhD, to its Advisory Board. Dr. Mariano, a consultant to the rare-earth mineral industry, is a globally recognized expert in rare-earth geology and mineralogy.

Dr. Mariano is an extremely well known name in the rare sector and will add significant depth to Medallion's management team.

"The commodity that is most rare in the rare earth field is geological talent; and Tony is among the most talented in the world" said Dr. Bill Bird, Medallion's president.

"His expertise is invaluable to us, both to cut costs and save time, as we move quickly to identify, pursue and advance the best available and potentially economically viable rare earth projects."

Dr. Mariano commented: "It's great to be working with Medallion Resources and, especially, with Bill Bird again. Bill has put together a first-rate technical team, as well as a couple of the best available rare-earth exploration properties in North America."

Dr. Mariano was recently interviewed by The Gold Report. Link below:

Tony Mariano: The Special Science of Rare Earths


Medallion Resources Ltd (TSX-V: MDL) explores for large, low-cost heavy rare-earth-element (REE) deposits with a clear metallurgical path and cost-effective infrastructure. REE's are key components required by many new energy-saving technologies including wind turbines, electric and hybrid vehicles, super magnets and all modern electronics. Medallion is headed by REE veteran Dr Bill Bird with support from an expert technical team that can meet the challenges of evaluating and cost-effectively exploring world class REE projects.

When it came to Medallion, we wanted to give our members the opportunity to get involved with a company in the right speculative sector before the masses. Well, the masses have now moved in on Medallion and the company has provided our members and our team with the opportunity to take significant profits. We will continue to closely track Medallion's progress moving forward as it advances two of the top available rare-earth exploration properties in North America.http://www.theaureport.com/pub/na/6962

All the best with your investments,

PINNACLEDIGEST.COM