Quantum Rare Earth Developments Corp. (CVE:QRE)(OTCQX:QREDF) has been added to New-York-based investment bank Hallgarten & Co.'s Model Mining Portfolio.
The US$5 mln-plus portfolio is run by Christopher Ecclestone, principal and mining strategist.
"We have added a Long position to the Model Mining Portfolio with a 12-month target price of $0.60," Hallgarten's Ecclestone wrote.
Quantum Rare Earth is an exploration company with a focus on seeking out potentially economic deposits of niobium and rare earth elements in North America and elsewhere in the world.
Its main asset is the Elk Creek niobium project in south-east Nebraska, a former Molycrop (NYSE:MCP) project.
The US Geological Survey has commented that Elk Creek is potentially one of the "largest global resources of niobium".
Molycorp left Elk Creek in the early 1990's when it abandoned its exploration efforts to focus on the Mountain Pass project in
California. Around 150,000 feet of historical drill core still exists from 113 holes drilled by Molycorp in the 1970s and 80s.
In early April of this year, the company unveiled a significant boost in resources at Elk Creek, adding a higher grade indicated
resource of 19.3 million tonnes grading 0.67% niobium, at a 0.4% niobium cut-off grade, for 129,182 contained niobium oxide tonnes.
Meanwhile, inferred resources increased from 80.1 million tonnes grading 0.62% niobium in the last estimate in April 2011 to 83.3 million tonnes grading 0.63% niobium for 523,844 tonnes of contained niobium oxide.
"With a resource of this size in a strategic metal AND located in the United States, we start to ponder who might want to make a move on this company and one candidate looks obvious if it can get over the fact that this was the "one that got away" before," Ecclestone wrote.
Hallgarten's Ecclestone said that "the attraction for us...is the niobium content".
Niobium is an alloying agent which, when added to steel, creates a material with substantial benefits in the production of high grade steel. Steel containing niobium has many properties making it stronger, lighter in weight and highly resistant to corrosion.
Adding niobium to steel also creates steel with a higher melting point.
For many applications, such as some super alloys and oil and gas pipelines, there are no substitutes for niobium as the niobium allows for withstanding extreme pressures.
Demand for niobium has increased on average by 10 percent a year for the past decade, with growth forecast to continue in similar fashion in the coming decade. Niobium prices have increased in line with this growth.
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