Ucore Rare Metals; REE Separation Pilot Plant within 60 Days

Peter Epstein  |

The following interview with Ucore Rare Metals {TSX-V: UCU} / {OTC: UURAF} Chief Operating Officer Ken Collison was conducted in the week ended January 29, 2016. In this wide-ranging discussion, Mr. Collison expresses his view, shared by senior management, that the company is just two to three months from demonstrating, at pilot scale, an exciting Rare Earth Element(s), “REE” selective separation technology. This is very important, as an essential part of the Ucore investment proposition centers on the advanced separation process, Molecular Recognition Technology, “MRT.” However, not everyone agrees that a revolutionary technology is at hand, nor that the purported breakthrough can live up to its lofty expectations.

Readers can decide for themselves by reviewing this interview, and supplementing it by clicking on useful links at the bottom of the page.

Epstein: Can we get an update on the status of the Bokan Dotson-Ridge project?

Ken Collison: Sure. In May we upgraded and increased the resource estimate, an additional 1 million metric tonnes of Inferred mineralization was included. Importantly, 98% of the previously reported resource was upgraded to the NI 43-101 compliant Indicated category. We were happy to confirm that our skew of about 40% (by weight) to Heavy Rare Earth Element(s), “HREE” remains consistent across the entire deposit.

We continue to make progress at Bokan on a timeline and budget we feel prudent. We are collecting the baseline environmental data required for permitting. It helps considerably that both Randy MacGillivray, (VP Project Development) and I have extensive experience working in Alaska. Based on ongoing interactions with constituent groups, we think support for the project is strong. We believe that the Alaskan legislature’s unanimous vote to extend a low-cost loan to Ucore for up to US$ 145 million is further evidence of support. [NOTE: The Alaska Industrial Development and Export Agency would need to complete due diligence before the proposed loan is finalized]

Perhaps most important, we’re using Bokan feedstock for proof of concept of our Molecular Recognition Technology,“MRT.” MRT is a proven technology that’s been used in mining for decades. Only now is it being brought into the REE space. If MRT proves effective at separating REE’s from Bokan material at pilot scale, it will be ready for deployment on feedstock from around the globe.

Epstein: Bokan has a 40% skew towards Heavy Rare Earth Elements, “HREE,” how does that compare to peers?

Ken Collison: Yes, 40% (by weight) of Ucore’s Indicated resource is HREE. We have the highest NI 43-101 compliant Indicated HREE deposit in the U.S.

The REE sector has new leadership outside of China. Lynas Corp, has an Australian LREE deposit that’s changing the industry. Lynas is developing strong relationships with global customers, focused on delivering high quality products with the entire supply chain outside of China. We believe this is very promising. Ucore is moving in a similar direction, through Bokan, planning to supply HREE without the involvement of China.

REE users increasingly demand traceability of input components to comply with manufacturers’ marketing claims of only using credible, green, sources of materials and adhering to environmentally friendly processing methods. Most REEs produced or processed in China cannot make these assurances.

Epstein: What are you, personally, working on lately?

Ken Collison: Although Randy and I are facilitators of key initiatives in Alaska, I’m also very involved in our pilot plant in Utah where I can report that interest in MRT is high, and growing. I’ve been approached by interested parties about using MRT for primary separations, but also for tailings reprocessing and recycling. We are optimistic that these applications are not only feasible, but profitable for the client and our Ucore/IBC alliance.

I also spend a considerable amount of time with shareholders & investors. Prospective investors are asking more detailed questions, indicating that they might be gaining confidence in our story. Without speaking to Ucore’s valuation, how many REE players have a tier-one jurisdiction, 40% HREE skew, a proposed low-cost US$ 145 million loan and access to potentially game-changing technology? That’s about as much marketing as you will get out of me.

Epstein: Is Ucore’s MRT pilot plant on time and on budget? Can you please explain its importance and future uses?

Ken Collison: That’s a great question. The answers are largely contained in November’s press release. The pilot plant remains on time and on budget for completion in the next 60 days. We’re pleased with the flexibility and functionally that we’re engineering into it. The plant will be versatile, able to run pregnant solutions from other metals. In fact, that’s the beauty of MRT, it’s flexible and easily scalable. The pilot plant is being designed to be disassembled and moved as necessary.

Epstein: Some suggest a pilot plant does not prove commercial scalability. What are your thoughts?

Ken Collison: Well, in my opinion the plant will provide both proof of concept and provide evidence of scalability without undo technical risk. To be frank, we have so much interest from a wide range of potential end users, we feel we don’t have to convert non-believers.

We’re hoping to be able to prove doubters wrong. If the pilot is successful, the impediments to full-scale production should be few. IBC has never failed to commercialize a system. In fact, most facilities have been taken straight from lab-scale to commercial operations.

Epstein: Notwithstanding the above, what could go wrong with the pilot plant?

Ken Collison: I believe challenges will be minimal, in the realm of routine tweaks necessary for any plant installation. If pressed about what could go wrong, I don’t have an answer, because if we knew, we would design a fix. While not a particularly satisfying response, let me reiterate that IBC has built dozens of commercial MRT facilities for use in multiple applications around the world. The only difference in our case is that MRT has not been proven in REE applications. So, it’s our belief that the SuperLig One pilot plant will be instrumental in proving the platform’s effectiveness, and securing near-term contracts.

Keep in mind, the US Department of Energy funded Critical Materials Institute and other groups are seeking solutions to the lack of REE production in the States. This technology could be the heart of the ‘Cleantech’ movement that will drive innovative manufacturing and help provide US energy security. We believe that we’re on the cusp of proving that this can be done not only on US soil, but also profitably at competitive price points as well. We hope to be globally competitive, especially with producers in East Asia.

Epstein: Do you think that the market appreciates Ucore’s prospective Bokan Project & opportunities to use MRT?

Ken Collison: As COO, I’m no expert on Ucore’s valuation. Most REE juniors took a major hit in 2015, with at least one leader electing to put its development on ice. I think this raised some eyebrows, especially for contrarian investors. We believe Ucore is a company that’s very well placed to lead the pack during a REE rebound.

Regarding MRT, we’re making solid progress with technology partner IBC Advanced Technologies, Inc. on the SuperLig®1 pilot plant. Our Bokan project is progressing, but commercial production is still quite a ways off. That’s why the near-term focus is on the pilot plant. We believe successful operation of the pilot plant will go a long way towards demonstrating proof of concept.

This would be the first pilot plant to refine heavy CREOs such as Dy & Eu, using US feedstock. We believe that moving from pilot plant to an early-stage production facility, right here in the US, could be just months away. We think our separation system would be less expensive on capital and operating costs than the SX platform, while achieving higher recoveries.

Epstein: What are you seeing in the pricing of key HREE?

Ken Collison: We have third party proprietary pricing data for HREE and select less-valuable elements. Prices appear to have bottomed and are up meaningfully. While we don’t directly benefit, we see it as a sign that the market is getting tighter. My role as COO does not afford me the opportunity to worry about REE pricing as so many do these days.

Epstein: How would you rank your management team and Board?

Ken Collison: I strongly believe that our management team and Board is unequalled among emerging REE companies. This is especially true given our access to some remarkable minds at IBC. Even 4 years ago when I moved from consulting for Ucore to the Company’s COO, I was impressed with the people involved. Since then, the team has only become stronger. Turnover among our most senior team members has been minimal and skin in the game is significant. For me personally, I have tremendous motivation to make the pilot plant a success!

Epstein: Are there misconceptions about Bokan Mountain and MRT that you would like to address?

Ken Collison: From my vantage point, the key misconception is that the MRT will not scale commercially on a timeline and budget put forth by our team. Our plan is to prove that the system is readily scalable. I think this represents exciting potential and should provide milestones to watch for this year. I believe MRT has the potential to be a technology that could meaningfully change the mining industry. Few people have an opportunity to be involved in something that could shape the world in such a positive way.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer



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