U.S. research report tells investors in rare earth element stocks to be wary. It says the world could be awash in rare earth elements if and when the Mountain Pass mine gets into production. A U.S. research report is raising red flags in the direction of rare earth stocks, including Canadian junior Rare Element Resources Ltd. (TSX: V.RES, Stock Forum) (AMEX: REE, Stock Forum), and telling investors to be wary.
The report by “Shareholder Watchdog’’ follows a surge in the value of Rare Element Resources shares, which traded at $13.91 on Thursday. That’s up from $2 in July.
Although the Vancouver junior has zero revenue, and posted a loss of $1.7 million or 6 cents a share in the year ended June 30, 2010, (compared to a year earlier loss of $1.2 million or 5 cents), it has a market value of $447 million, based on the 32million shares outstanding.
Rare earth elements are a collection of seventeen chemical elements with tongue twisting names such as scandium, yttrium. Found in the earth’s crust, they are applied in a wide range of devices, including superconductors, and magnets.
Stocks in the sector have skyrocketed amid concerns about export restrictions in China, currently the source of 95% of the world’s production. (more)
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