Fellow Resource Prospector,

The Media Room coordinator was excited yesterday.

I asked him the official attendance tally of the Prospectors and Developers of Canada (PDAC) conference that had just concluded.

The answer, told me with a beaming smile and slowly nodding head: 27,200.

*****It's a record. Last year, attendance was less than 23,000. IN 2009, attendance might have been below 20,000.

It's great that records are being broken, both in the PDAC conference, and in terms of the prices of gold, silver, potash, coal, and nearly every other commodity.

But if you take one small step backward, it's still not all that impressive - or at least the attendance numbers aren't.

Across the street from the Metro Convention center, where the PDAC conference was held this week, is the Air Canada Centre, where the Toronto Maple Leafs hockey team plays 40+ games every year.

The average attendance at a Leafs game last year? 19,600.

Now, I'm not saying that it's a perfect comparison. But as far as events go, you'd think that if we were truly in the meatiest part of a commodity bull run, with prices rising in the way that they are, that more "civilian" investors would make a showing.

*****As it was, I was able to see live, in person, dozens of presentations of some of the most exciting mining investment opportunities in the market.

Most of the presentation rooms weren't all that crowded!

Well, I should point out that the best attended event that I attended was a rare earth element (REE) presentation.

Normally, attending this presentation would have cost me at least $80, but I was able to procure a press credential for this week, (which isn't a stretch considering I write an article everyday), so I had free reign to attend pretty much whatever I wanted to, for free.

And while I didn't have too much interest in the REE presentation, I decided to poke my nose in.

If I didn't learn anything else from the REE presentation, I learned a lot from the sheer amount of people crammed into the room.

*****I mean, here I was, in the center of a conference filled with the most savvy analysts, journalists, miners, geologists, and prognosticators, and the REE presentation is getting more attention than gold explorers, for instance - a presentation that was among the least attended.

The problem is, while gold and silver stocks have certainly outperformed the broad market recently, rare earth stocks have positively gone parabolic over the past few months. You basically can't find a rare earth company that hasn't at least doubled since last summer.

And the presentation I saw confirmed what I already suspected: not even expert geologists and CEOs in the rare earth field have too much savvy about the rare earth markets. All of their statements were almost pure conjecture.

One CEO uttered these words, with absolutely no irony, something to the effect of, "We just don't know where excess worldwide REE production will come from in five years."

That's not good!

Another REE presenter I saw explained the difficulty of being a REE miner. Mining the stuff isn't especially difficult. But once it's mined, it has to be milled into small pieces. Then those small pieces have to be further segmented, or cracked into smaller pieces. Then these small pieces have to be separated into the various piles of different REEs.

Only after the third step can you begin to refine individual REEs. Beyond that, each REE may need to be further purified to meet the specifications of the end consumers or manufacturers.

Now, all of those steps make the whole business of being a REE miner very uncertain. Each step needs special machinery, and that machinery is expensive. Who's to say that the Chinese or another firm won't come along and invent a new process that cuts their costs by a huge magnitude and increases output. Then every other REE miner or producer will be sitting on dated, expensive infrastructure.

It's not a place I have very much general interest in investing for the long term, because there are more uncertainties than you can count, AND, the stocks have all run past what a normal investor might call a rational level. Maybe they double again, but they're due for a pullback.

Good investing,

Kevin McElroy
Editor
Resource Prospector