London Metal Group specialising in Rare Earth Investments, Rare Earth Commodities and Rare Earth Metals, we aim to offer investors a professional service which can enable them to make wise and profitable choices in this particular investment arena.

London Metal Group Citibank Tower Canada Square

Canary Wharf London E14 5LB

www.rare-earth-investments.com info@londonmetalgroup.com

2

“Rare Earth Dispute Heightens China-US Divide”

Rare Earth Metals have come to dominate world economic and investment

headlines in recent months. The underlying reason for this comes down to

one of the most basic economic principles: supply and demand.

The Chinese being the largest producer of these metals account for almost

95% of the metals supplied.

They have for environmental and economic reasons decided to restrict the

supply of these precious metals which are very much in demand.

In this report, LMG (London Metal Group) takes a more in depth look at this exciting

investment arena.

In classical economic theory, the relation between demand and supply determines the

price of a commodity. This relationship is thought to be the driving force in a free

market.

As demand for an item increases, prices rise. When manufacturers respond to the

price increase by producing a larger supply of that item, this increases competition

and drives the price down.

The relationship between demand and supply underlie the forces behind the allocation

of resources. In market economy theories, demand and supply theory will allocate

resources in the most efficient way possible.

3

“Battle for Rare Earth Supply Continues"

How is Demand and Supply affecting Rare Earth Metals?

• When demand for a product increases but supply remains the same, this can

lead to higher prices.

• When supply of a product decreases but demand remains the same, this can

also lead to higher prices.

Rare earth metals are used in many everyday

items that we take for granted, such as

magnets, mobile phones, digital cameras, car

batteries and laptop computers. Rare earth

metals are used in many other electronic

applications as well as lasers, optics, missiles,

and surveillance equipment.

The demand for rare earth metals is steadily

increasing. The supply of rare earth metals,

as we shall see, however, is not increasing along with demand, and could even

decrease.

The opportunity for investment in rare earth metals arises from the fact that there is

an ever-increasing demand of materials that are in relatively short supply, which

leads inevitably to rising prices.

What are Rare Earth Metals?

Rare earth metals are a set of seventeen chemical elements in the periodic table,

specifically the fifteen lanthanides plus scandium and yttrium. Despite their name,

rare earth elements are relatively plentiful in the Earth’s crust. However, because of

their geochemical properties, rare earth elements are typically dispersed and not

often found in concentrated and economically exploitable forms.

The few economically exploitable deposits are known as rare earth. It was the very

scarcity of these minerals that led to the term “rare earth”.

4

Where do Rare Earth Elements come from?

Rare earth elements became known to the world in 1787 with the discovery of the

black mineral "ytterbite", extracted from a mine in the village of Ytterby in Sweden;

many of the rare earth elements bear names derived from this location.

Until 1948, most of the world's rare earths were sourced from sand deposits in India

and Brazil. Through the 1950s, South Africa took the status as the world's rare earth

source, after large veins of rare earth bearing monazite were discovered there. From

the 1960s until the 1980s, the Mountain Pass rare earth mine in California was the

leading producer.

Today, the Indian and South African deposits still produce some rare earth

concentrates, but they are dwarfed by the scale of Chinese production. China now

produces over 95% of the world's rare earth supply, mostly in Inner Mongolia, and all

of the world's heavy rare earths (such as dysprosium) come from Chinese rare earth

sources. New demand has recently strained supply, and there is growing concern that

the world may soon face a shortage of the rare earths.

What are common uses for Rare Earth Metals?

Rare Earth Metals have many uses. Today

they are mainly found in all our electronic

devices that we have come to depend on in

our modern day lifestyle such as mobile

phones and computers. Large quantities are

also consumed as catalysts and in the

production of glasses and sunglass lenses

and they are widely used in magnets and

phosphors. As technology moves on new

uses are being discovered for various rare

earth metals.

5

Rare Earth Metals can be used in

superconductors, electronic polishers,

refining catalysts and hybrid car

components (primarily batteries and

magnets). They can have optoelectronics

applications, such as in lasers and optical-

fibre communication systems. Phosphors

with rare earth elements are also widely

used in cathode ray tube technology such

as television sets, night vision goggles, rangefinders, radar used in some warships

and fibre-optic transmission links that carry internet traffic. Lots of “green”

technologies depend on them, including wind turbines and low-energy light bulbs.

Demand already outstrips supply and China’s near monopoly limits the supply.

Growing demand from developing countries has led to additional strain on supply, and

there is increasing concern that the world may soon face a shortage of rare earth

metals, as borne out by the recent headlines. In several years worldwide demand for

rare earth elements is expected to exceed supply unless major new sources are

developed. China controls an estimated 95-99% of the known world’s supply.

Concerns about supply constraints have intensified due to the actions of China, the

predominant supplier.

China sent shock waves through the market in 2010 when it imposed export quotas

on all rare earth elements. In 2011, it imposed an export quota of 30,184 metric

tonnes, marginally reduced from 30,258 metric tonnes in 2010. Based on analyst

calculations, the country’s full-year quota for 2012 may hit approximately 31,130

metric tonnes.

China recently stated that the curbing of exports was motivated by environmental

concerns and not trade protectionism, and do not target any specific country. The EU,

however, has stated that foreign companies pay up to twice as much as Chinese firms

for rare earth metals, claiming that the restrictions benefit the Chinese industry alone

and are therefore against WTO regulations.

6

Are there any alternative sources for Rare Earth metals?

Due to the increased demand and tightening restrictions on exports of the metals

from China, some countries are stockpiling rare earth resources. Searches for

alternative sources in the United States, Australia, Brazil, Canada, South Africa and

Greenland are ongoing. The Mount Weld project in Western Australia, for example,

plans to double production as it moves into the second phase of mining. Mount Weld

is touted to have the world’s richest rare earth deposit, and is expected to produce

some 1.1 million tonnes of rare earth oxides. That’s enough to supply up to 20 per

cent of the global market for 30 years, according to some analysts, but for the time

being China will remain the dominant source.

How can I invest in Rare Earth Metals?

Rare earth elements are not exchange-traded in the same way that precious (for

instance, gold and silver) or non-ferrous metals (such as nickel, tin, copper, and

aluminium) are. Instead they are sold on the private market, which makes their prices

difficult to monitor and track. However, prices are published periodically on the

internet. The 17 elements are not usually sold in their pure form, but instead are

distributed in mixtures of varying purity. As such, pricing can vary based on the

quantity and quality required by the end user’s application. The fact that markets are

not transparent only increases their attractiveness as an investment vehicle. The

savvy investor is able to exploit price movements to maximize returns. Some

investors may choose to buy stocks of mining companies involved in rare earth

metals. There are many variables at play when investing in this way, such as

company overheads and expenses, cash flow and environmental issues. Investors

need to study the fundamentals of these companies before making decisions on

whether or not to invest.

An alternative strategy is to buy the actual physical Rare Earth Metals. In this way,

investors can protect their assets from currency devaluation and or inflation. Like gold

rare earth metals are an insurance against the economic downturn. Understanding the

Rare Earth market so you can make informed investment decisions is vital and key to

success.

7

“China Still Ahead in Rare Earth Economic War”

Why now? What’s all this about China?

Long term investment prospects for Rare Earth Metals look very promising.

Rare Earth Metals have had quite a lot of press recently. Many factors have caused

this, chief of which is China’s export policies.

Chinese officials, in an attempt to discourage illegal trading of rare earths, as well as

an effort to reduce the environmental impact of Rare Earth mining, slashed export

quotas over 70 percent.

The media picked up this story, and as a

result governments and international

electronics companies were scrambling for

answers. The world started catching on to

the importance of Rare Earths, and the

power that the Chinese monopoly holds

over the market with over 95 percent of

world supply.

There are no signs on the horizon that these export quotas will be dropped, and as a

result prices of these elements should continue to rise.

Analysts maintain that Rare Earth Metal demand, which has been growing at about 10

per cent a year, is set to soar given the global need and growing use of green

technology which use lots of these different metals in various applications.

The growing numbers of people in the developing world who will also provide a

market for electronic goods will only push demand higher.

8

Growing Demand for Hybrid Vehicles and Green Technologies

Not just hybrid vehicles, they are increasingly

being used in gasoline vehicles-emission

controls, LCD and PDP displays, and are used

to make high-strength magnets. Several Rare

Earth Metals are essential constituents of both

petroleum fluid cracking catalysts and

automotive pollution-control catalytic

converters. They have applications in many

electronic devices. Even your favourite digital

camera has Rare Earth Elements. Some even point to its effective use in military

defence systems and insist that it is bound to be a $1-billion industry in the United

States in the near term.

There has been a dramatic shift in the last three years from oversupply to supply

shortages. And some experts fear that China is set to engineer a supply crunch to suit

its own domestic industries. This is an idea that is gaining ground and is sending a

wave of panic across the globe. Panic breeds opportunity.

As China diverts reserves to build domestic

solar panels and modernise its army, the

price of these non-exchange-traded metals

are only bound to escalate. For example,

China has only allocated 38,000 tons of rare

earths for export this year, yet demand from

Japan alone is expected to be 40,000 tons

this year.

An article in the Independent quotes Rare Earth metals expert Jack Lifton as saying,

“A real crunch is coming.

In America, Britain and elsewhere we have not yet woken up to the fact that there is

an urgent need to secure the supply of rare earths from sources outside China.”

9

“Rare Earth Market Defies Bleak Forecasts”

Why invest in Rare Earth Metals?

Given that environmental applications of Rare Earth Metals have only increased

markedly over the past three decades, analysts maintain this trend will undoubtedly

continue, given growing concerns about global warming and energy efficiency.

For the immediate future, there appears to be some investment plays for rare earth

metals. And if one believes that the future holds large numbers of hybrid cars and

those catalytic converters will continue to be used to clean the exhaust of the world’s

internal combustion engines, then with Rare Earths is clearly where the action lies.

Investing in rare earth metals with London Metal Group

LMG specialises in Rare Earth Investments, Rare Earth Commodities and Rare Earth

Metals, we aim to offer investors a professional service which can enable them to

make wise and profitable choices in this particular investment arena. For a free

investment guide go to free rare metal investment guide

Find out what we can do for you by visiting our website

10

www.rare-earth-investments.com2

LONDON METAL GROUP

Rare Earth Metals Report

Rare Earth Investments

5/24/2012

London Metal Group specialising in Rare Earth Investments, Rare Earth Commodities and Rare Earth Metals, we aim to offer investors a professional service which can enable them to make wise and profitable choices in this particular investment arena.