Ucore Rare Metals Inc. (OTC:UURAF) (TO:UCU) is a well-funded development-stage mining company focused on establishing rare metal resources with near term potential. Ucore’s primary focus is its 100% owned Bokan – Dotson Ridge Rare Earth Elements, “REE” property in Alaska. The Bokan project is located 60km southwest of Ketchikan, Alaska and 140km northwest of Prince Rupert, British Columbia. It has direct ocean access to the western U.S. seaboard and Pacific Rim, a significant advantage in developing near term production facilities and limiting the capital costs associated with mine construction.
The Bokan property is particularly enriched with Heavy Rare Earths Elements “HREE,” including the critical elements Dysprosium, Terbium and Yttrium. Approximately 40% (by weight) of the REE contained on the Dotson Ridge property are HREE.
Ucore‘s exciting news from early March has been widely discussed. What’s the most important news since then?
The most important news is the upcoming commissioning of our pilot plant, first discussed at length in our July 8th press release. The pilot plant is slated to commence operations within six months. Many have asked what the throughput will be. We’ve upgraded our design to accept throughput volumes that will satisfy the feasibility requirements of our flagship Bokan-Dotson Ridge project and projects being evaluated with partners. Some of these projects will require significantly larger capacity. However, the pilot plant will be capable of scaling up to much larger volumes, depending on the input material we’re testing and who we’re testing it for.
We anticipate that the, “SuperLig®-One” (pilot plant) will be a high-value asset. The intention is for the unit to be capable of accepting Pregnant Leach Solution (“PLS”) and bulk concentrates from prospective REE feed stocks around the world. Ucore has already entered into agreements with a number of feed stock providers. Still, the highest priority source of test material in the near term will be from our own Bokan-Dotson Ridge Project.
Beyond the pilot plant, perhaps under-appreciated is that our partnership with IBC extends at a global level. Recall that Ucore announced an exclusive agreement with IBC for the use of SuperLig® technology for metals in the tailings and reclamation sectors, as well as processing applications related to REE’s. Make no mistake, we’re highly committed to the successful completion of the pilot plant for the purpose of refining rare earths. However, we are being approached by a range of parties wanting to discuss alternative uses for MRT, such as other the recovery of other high value metals from process flows and tailings sites worldwide.
What’s the status on Ucore‘s pilot plant? How soon might it be completed? Once completed, what happens next?
As mentioned, the pilot plant is expected to reach production within six months. It’s already in late-stage planning. We’ll be assembling the plant in American Fork, Utah, with the possibility of select components being fabricated at IBC’c satellite facility in Houston, Texas. Once the pilot plant is completed, the plan is to conduct batch jobs to work out the kinks and then run it continuously for 20-30 days to demonstrate continuous operations capability. In our opinion, the pilot plant should prove that scale up risk is more an engineering exercise, not an ongoing technology challenge.
The pilot plant will be both modular and portable in design, capable of transport to remote testing sites. To optimize utility, the plant will be customizable, with capacity for treating varying ratios of metals in different PLS feed solutions.
What could go wrong with the, “SuperLig®-One unit,” (pilot plant)?
Although we remain highly confident that the pilot plant will work as advertised, there is of course a chance of operating issues early on. We are prepared to work through potential issues as they arise. Readers should remember that IBC has engaged in the building of many MRT systems at bench, pilot and full commercial scale levels just not yet in the REE sector. We recognize that there’s a chance of intermittent process flow issues, even if a small chance. If that were to happen, we would tweak the design as required and move on. However, this is a standard aspect of all pilot plant exercises.
What is the range of end uses being contemplated?
Without going into too much detail, and in fact I’m not at liberty to do so, we are being inundated by parties anxious to interact with Ucore/IBC’s MRT. Suffice it to say that upon a successful completion of our pilot plant, the wait time to test materials will grow even longer as the testing queue continues to grow. This, however, is a good problem to have. Most end users are peer REE juniors, upstream and downstream parties, reclamation projects and tailings applications. This information is already in the public domain, but the substantial interest of upstream and downstream entities certainly caught us by surprise.
Has Ucore generated revenue this year with the transaction with a U.S. investor for US$4 million?
To be honest, whether it’s revenue or not depends on the investor’s actions regarding the conversion of their investments into common shares of the Company. Personally, I don’t believe that the two royalty deals we’ve announced are investors looking to make a quick profit on the share price. We believe they are longer-term investors, true believers in Ucore and MRT. Revenue or not, the capital did not dilute shareholder equity in the near term, so we’re more than pleased by that.
Can you comment on Ucore’s upgraded and increased resource estimate?
Yes, thanks for the question. We recently upgraded and increased our resource estimate at Bokan-Ridge. Essentially, an additional million tonnes of Inferred mineralization grading 0.604% TREO was added. More than 98% of the previously established resource was upgraded to the Indicated category under NI 43-101 standards.
Ucore is additionally pleased to report that the anomalous skew towards the more valuable HREEs remain consistent across the entire deposit, at approximately 40% and the resource remains open both at depth and along strike. Again, the Bokan feed stock is but one of many sources of REE feed stock that Ucore has on offer, with REE suppliers around the globe examining MRT. However, the Bokan resource remains our highest priority, due to its inordinate skew towards the most valuable REE’s.
It seems every country and aspiring REE producer knows that the highly energy and pollution intensive Solvent Extraction (SX) methods are coming to an end. What will replace it and how soon?
That’s a great question. Most now agree that the days of widespread use of SX are numbered. The feeling is that SX will not be tolerated in most countries outside of China (and indeed within China itself), as carbon emissions and environmental waste from mine processing come increasingly under scrutiny. We believe MRT is likely to become the go-to replacement for SX, both economically and environmentally. Said another way, MRT represents far fewer process steps, (simpler flow sheet), far less waste, limited tailings, faster production runs, and REE recoveries and purity levels above 99%. Other technologies that can achieve attractive, economical results can theoretically share this massive market opportunity with us.
That said, we believe we are the de facto front runner, given that MRT now has more than 25 years of successful history in the mining space, whereas other would-be SX killers are freshly out of the gates, yet to be proven at pilot scale. It will probably take 5-10 years to make a significant dent in China’s huge SX dominance. This is a key goal of Ucore, the Military and DOE, as well as innumerable REE users in the West. Having multiple sources of refined material, security of supply, from environmentally sound jurisdictions. In fact, one of our explicit corporate goals is to help diminish China’s role in the REE business.
As a reminder, can you share with readers your latest capital structure?
- Ucore Rare Metals
- Sure, as of August, 2015:
- Cash & Short-Term Deposits: $4.5 million
- Issued and O/S Shares: 197,563,472
- Fully Diluted shares: 266,683,029 (majority of warrants and options out-of-the money)
- Debt = zero
Can you comment on possible collaborations with the Military (“USDOD”) and Department of Energy(“USDOE”)?
Without diving too deep, I remind readers that delivering a successful pilot plant is of paramount importance. Simply put, the USDOD uses an increasing amount of the REEs that we anticipate producing. Suffice it to say that the Military has deep pockets and a long-term horizon. The last thing our Military wants to face is a shortage in a key resource such as oil and REEs.
Regarding the USDOE, that agency has similar security of supply concerns. For example, there’s been a tremendous amount of talk about Electric Vehicles (“EV’s”). However, keep in mind that traditional internal combustion engines, representing 98%+ of the market, use a considerable and increasing amount of dysprosium. Dysprosium is expected to be one of our most significant offerings.
Are there misconceptions about Ucore Rare Metals that you would like to address?
I think that we’ve covered a number of them. I reiterate takeaways, including a few that might not have been touched upon. If MRT scales up as expected, Ucore is both a valuable holder of one of the best HREE projects in North America (at Bokan, Alaska), but also a technology company with applications across a wide spectrum of end uses. A few of these end use applications could be generating revenues as soon as next year, since much of the potential feed stock is already mined and waiting for the right technology to unlock value.
That alone differentiates us. Next up, not mentioned, but extremely important, is the $145 million low-cost loan from the State of Alaska. In no way do we plan our budgets around possible sources of non-equity capital. However Ucore submitted its initial application with AIDEA for the proposed $145 million low-cost loan. We have other avenues of potentially obtaining nearer-term grants and low-cost loans from State and Federal agencies, but no assurances at this time.
As busy as we are with the pilot plant and development of our Alaskan Bokan project, I remind readers that if a successful pilot plant is achieved, the number of unsolicited inquires is likely to explode. Ucore Rare Metals‘ Canadian-listed stock (UCU.V) is down 43% from its 52-week high of C$0.44 to C$0.25 at the close on Sept. 21st. Despite meaningful accomplishments, serving to de-risk the company, I submit that this could be an excellent entry point ahead of what we hope to be announcing over the next 6-12 months.
Disclosure: Ucore Rare Metals has a small market cap. Small market cap stocks are highly speculative, not suitable for all investors. I, Peter Epstein, own shares of Ucore Rare Metals purchased in the open market. Mr. Epstein, CFA, MBA is not a licensed financial advisor. Readers should take that fact into careful consideration before buying or selling any stocks. Readers are encouraged to consult with their own investment advisors before buying or selling any stock, especially speculative ones like Ucore Rare Metals.