There is some very odd news out of Canada today. A plane wreck could have, or could, have an impact on the development of rare earth metals in North America. The good news is that this appears to be a near-miss. The bad news is that fatalities did occur.
Avalon Rare Metals Inc. (NYSE: AVL) has taken a temporary blow in its management ranks. The company has issued a release noting that three of its staff and four visitors were injured in the crash of Arctic Sunwest’s Twin Otter floatplane in Yellowknife on Thursday. The charter plane was flying back from Avalon’s Thor Lake exploration camp when it crashed into Yellowknife’s Old Town neighborhood.
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The three company employees are all senior executives: Brian Chandler, Chief Operating Officer; David Swisher, Vice President Operations; and Kelly Cumming, Northern Relations Manager.
The release also lists “four other visitors” and says that the group was returning from a tour of Avalon’s Nechalacho Rare Earth Deposit located about 100 kilometres east of Yellowknife. Fortunately, “All seven passengers were injured during the crash, but none of the injuries are life-threatening.”
Avalon also noted that it has no information on the circumstances surrounding the crash and that the crash is under investigation by aviation authorities. Two pilots were killed in the crash.
Shares traded in America of the Canada-based Avalon Rare Metals were down just over 2% at $2.86 and the stock hit a new 52-week low today. The new 52-week trading range is $2.80 to $10.11.
Molycorp, Inc. (NYSE: MCP) took a major blow this week, which also acted to crush Avalon’s stock, after the stock was downgraded by J.P. Morgan based upon lower rare earth prices. That downgrade was to ‘Neutral’ from ‘Overweight’ and the price target was cut to $66.00 from $105.00 in the call. While Molycorp is up today, its shares are still under $37.00 and the 52-week trading range is $23.09 to $79.16. Before the downgrade was announced, Molycorp was at $53.01. Ouch.
Aviation wrecks have gutted companies before and it is unfortunate to say, but they will likely gut companies in the future. This looks to be one of those rare cases that was a near-miss for Avalon and its senior management.
The Globe and Mail has a more detailed report of the accident on Thursday and a photo.
JON C. OGG