Interview with Mark Saxon,
CEO of Tasman Metals Ltd.
September 27, 2010
Matthew B. Smith
Earlier this month we were able to conduct an interview with
Mark Saxon, CEO of Tasman Metals Ltd., one of the top rare earth exploration
companies. Below is a transcript of the on-the-record questions.
Theinvestar.com: Tasman is a relatively new company
in an industry just now beginning to be discovered by investors. So can you
give us an overview of the sector in which you are operating?
Mark Saxon: Recognition of the rare earth element (REE)
sector as an investment opportunity has occurred slowly, as it has taken
investors time to understand the critical role played by these metals in every
facet of modern society. While the metals can’t be seen everyday like copper
or gold, rare earth elements play a key role in almost every piece of high-tech
equipment that surrounds us in our home and working lives.
The rare earth story is made more compelling by the supply
imbalance that is causing consumers to drive REE prices higher. Metals like copper
and gold are produced from numerous mines around the globe, so supply alternatives
exist when political constraints intervene. In contrast, more than 95% of rare
earth elements come from just a few mines in China, supply from which for
western consumers is subject to quotas and tariffs. This lack of supply chain
diversity is not adequately robust in the eyes of consumers, so creating the opportunity
for greatly expanded Western rare earth element production.
Theinvestar.com: Can you describe for us the business
model of the company, and the role you play in the sector?
Mark Saxon: Tasman identified the growing opportunity
in the rare earth element sector early on, and through the “first-mover”
advantage gained 100% ownership of a number of heavy rare earth element projects
across Sweden and Finland. These countries provide an excellent environment
for investment in mining and exploration, with extensive high quality
geotechnical data, second to none road, rail and power infrastructure, and a
highly skilled population.
Tasman’s European portfolio provides the unique opportunity
to supply domestically sourced rare earth elements to the EU, so reducing the
regions reliance on Chinese supply.
While we are advancing numerous projects, Norra Karr in Sweden has received most of our attention and budget to date. The results have been very
pleasing, as drilling returned many intersections of REE plus zirconium
mineralization, often over thicknesses greater than 100m.
One key feature that makes Norra Karr stand out from its peers
is the high proportion of the high value heavy rare earth elements for which
supply is tight inside and outside China. Approximately 50% of our total rare
earth elements are heavy, which is uniquely high in the rare earth sector.
Theinvestar.com: What are your drilling plans for the
current year and 24 months out?
Mark Saxon: We are fortunate that most of our project
areas have road access, so logistics for drilling is pretty straight forward
for us. No helicopters, barges or float planes needed.
Over the 2010 northern summer we have focused our efforts on
mapping and sampling, but I anticipate we will be in a position to drill for
most of winter and spring on a number of project areas, and use the following
summer/autumn to assess and advance with those results.
Theinvestar.com: Where does your treasury stand? Is
it in cash, CDs, money market accounts or corporate paper? If corporate paper,
could you explain as to what?
Mark Saxon: Tasman is currently well financed, with
in excess of $4.4 million, spread principally between Bank Guaranteed
Investment Certificates, Bankers' Acceptances, and bank savings accounts. We
consider that all of these deposits and investments to be extremely liquid and
of high quality. Tasman holds no corporate paper.
Theinvestar.com: Rare earth prices are rising across
the board due to the quota cutting by China. Has this sparked interest by
institutional and hedge fund buyers?
Mark Saxon: The rare earth market has certainly drawn
plenty of attention over the last few months aided by the Chinese cut in export
quotas and efforts to reduce black market export of these metals. While some
cut was expected, the magnitude surprised market analysts, and has lead to a
sharp run up in pricing. Concern has been expressed by REE consumers about
security of supply, and the critical need for alternate REE sources.
Interest in Tasman and the niche we have to potentially
supply REE’s to Europe has certainly increased over the last few months. The
profile of the company has been raised by our positive drilling results, which
has lead on to discussion regarding financing and future metal supply
opportunities. As Tasman was the first-mover in the region, we have been able
to acquire every project of significance, giving us a strong advantage over our
competitors. We have regular contact with institutional groups, interested to
learn about the projects and potential of Tasman.
Theinvestar.com: Not including options, what
percentage of the company does management own?
Mark Saxon: Management currently owns approximately
27% of Tasman’s outstanding shares.
Theinvestar.com: Is Tasman looking to add to its
portfolio of properties or will you focus on exploring what you currently have?
Mark Saxon: Tasman runs an active project generation
group, focused on identifying new REE projects in strategic locations. Furthermore
we monitor closely the activities of our peers and competitors in all
jurisdictions. We are always interested in reviewing new projects and ideas
from any part of the globe.
All projects are reviewed against Tasman’s current portfolio
of highly prospective properties, which includes projects from greenfields to
historic resource stage, in areas supported by excellent infrastructure.
With this challenging hurdle in mind, we will only add high
quality projects that can compete within our current portfolio.
Theinvestar.com: Are you looking for JV partners?
Mark Saxon: We have recently Joint Ventured out seven
non-core projects to ASX and AIM listed exploration companies, receiving cash
and shares in compensation. We are not actively seeking JV partners for our
current portfolio, but are happy to discuss opportunities for strategic
Theinvestar.com: Will Tasman be a European focused
explorer, or could we see the company take on projects in say Canada, Africa or Australia?
Mark Saxon: Our current portfolio of projects in Scandinavia provides Tasman with the enviable combination of high geological prospectivity,
excellent infrastructure, mining-friendly jurisdictions, and local REE end
users. In addition, the EU has recently published extensive policy documents, actively
supporting the mining of strategic metals including REE’s in Europe.
We review projects from all parts of the world, and a
decision to explore a new project shall be “project driven”. Inclusion of a
project in a new jurisdiction shall require high prospectivity, and fit with
our belief that strategic metals must be in locations where secure supply of
high quality product can be guaranteed.
Theinvestar.com: Could you tell us about the
Mark Saxon: Tasman’s management have established
clear goals for the company: to focus on the exploration and development of
high merit strategic metal projects in jurisdictions where long term supply of
metals can be guaranteed, while providing a safe and healthy workplace, and
operating in a manner that respects both the natural environment and
The Company’s focus on the stable, mining friendly countries
of Scandinavia fits well with this goal.
Theinvestar.com: How do you feel Tasman is valued?
Undervalued, fairly valued, or overvalued and why?
Mark Saxon: Tasman is a well financed rare earth
element explorer, with a spread of greenfields to former REE mines in stable
mining friendly jurisdictions. The Company is less than 12 months old, and as
the Company develops we believe we have great potential to add value to our
projects, in a sector that is just beginning to gain market recognition.
Theinvestar.com: Where do you see the industry in 5
years from now? Such as overall market cap, and who do you think will be the
consolidators, if any? Where does Tasman fit into all this?
Mark Saxon: Taking a 5-year view on the REE sector is
tough, as 5 years ago the sector barely existed outside of China, and now a strong and growing exploration industry exists.
REE’s are strategic metals used in small amounts in many
modern applications. An increase in metal supply security will definitely
increase research into uses of the metals, and flow through to increased
consumption. The price outlook for heavy rare earths is particularly strong
over the coming 5 years, as resources for these metals are low in China and quotas and export restrictions are anticipated to remain in place.
Consolidation is probable over 5 years, perhaps bringing
together companies with light rare earth projects with those with heavy rare
earth projects. We may also see REE consumers stepping up the supply chain
more aggressively, to fund project development so ensuring the long term
availability of these essential metals. With this view, the market
capitalization of the sector will expand significantly.
Tasman’s unique position with the only significant REE
projects in mainland Europe provides great potential for us to play a lead role
in securing REE supply for high-tech and green-tech industry within the EU.
Theinvestar.com: Will Tasman be raising any money in
the next 12 months?
Mark Saxon: Tasman has a strong treasury, with
adequate working capital for the company’s medium term goals plus approximately
$5 million in “in-the-money” warrants.
In order to secure work programs across all our highest
priority projects, we shall take the opportunity to raise money in the next 12
months should market conditions allow.
Theinvestar.com: Based on current drill results, what
are the characteristics of your flagship property (i.e., mineralization close
to surface, large intercepts, etc.)?
Mark Saxon: Some of the key features of Tasman’s
Norra Karr project that encourages our management group to advance the project
from surface with a footprint that is hundreds of metres wide and long;
intersections of mineralization, often exceeding 100 metres, and remaining open
at depth on all drill sections;
infrastructure with existing road access to site plus power, water and skilled
communities close by;
uranium and thorium contents, therefore no mining, treatment or disposal issues
that relate to radioactivity. This will greatly simplify future permitting
processes for mining;
unusually high % of HREO, consistently exceeding 50% over greater than 100
high proportion of Dy (dysprosium) and Y (yttrium) – metals in demand with good
growth fundamentals and few new sources of supply;
grades of Zr (zirconium), and Hf (hafnium) over thicknesses greater than 100
metres, that may provide valuable byproducts;
access to existing high volume coastal ports;
Theinvestar.com: Any plans for an updated NI 43-101
report on Norra Karr, or is that a year or two out?
Mark Saxon: The next milestone for Norra Karr is the
calculation of a first time resource estimate, which is currently under way
under the leadership of Pincock Allen Holt. We anticipate this calculation
will be completed during November 2010.
We are also initiating metallurgical test work to research
concentrate preparation, which will generate further new technical data over
the winter period.
Theinvestar.com: Mr. Saxon we thank you for your time
and look forward to further news regarding your progress.