Ucore Announces M(3) Plan of Action for Independent U.S. HREE Supply Chain
Halifax, Nova Scotia--(Newsfile Corp. - September 10, 2019) - Ucore Rare Metals Inc. (TSXV: UCU) (OTCQX: UURAF) ("Ucore" or the "Company") is pleased to expand upon, and provide additional detail with respect to the roll-out of the following mine to metal to market plan of strategic actions; further to the Company's press release of September 4, 2019.
"Current international events suggest that the U.S. is now on the threshold of a significant disruption to the domestic REE supply chain," said Jim McKenzie, President & CEO of Ucore. "Central to that crisis are heavy REE ("HREE"); materials indispensable to a host of American industries, including defense systems and artificial intelligence ("AI"). These are materials which Bokan has at the highest levels of concentration on U.S. soil1 and prospectively available in the near term.2
"This unique combination, in concert with unprecedented U.S. Federal Government and State of Alaska support for critical minerals development, have placed Ucore on a very short list of potential U.S. government partners capable of alleviating the current HREE supply crisis; and perhaps the sole proponent capable of doing so fully and completely within U.S. soil. Without this feature -- a domestic mine-to-metal-to-market capability contained within American borders -- the U.S. cannot claim to be independent in any true sense.3"
Rare earth elements ("REE"), and heavy REE ("HREE") in particular, are now among the most valued, sought after and hard to obtain metals at a world level.4 HREE are of critical importance to America's most essential and prolific industries. These industries span all manner of high-tech applications, from national defense to AI, supercomputing, energy provision, transportation, and many more -- areas in which the U.S. is either actively working to maintain its leadership or actively pursuing this status every day. Simply put, no other naturally-occurring materials are of greater strategic importance to the U.S., in terms of competing today, at an international level, with China.
The current and long-running U.S. REE dependency on China has now garnered international attention, culminating in a series of extraordinary initiatives5 by both the State of Alaska and the U.S. Federal Government ("USG"). These measures, intended to effectively break the Chinese monopoly and establish U.S. independence in crucial areas of industrial and technical development, include: (i) State - An undertaking by the State of Alaska ("AIDEA") to provide up to $145M in financing to Ucore to establish an Alaska-based framework capable of achieving an independent national REE supply chain; and (ii) Federal - The issuance of five (5) Presidential Determinations ("Determinations") establishing the essentiality of REE to U.S. national defense. The Determinations are a pre-requisite to authorizing the USG, under the Defense Production Act Title III Program ("DPA"), to procure private capabilities in times of sufficient national crisis, to address U.S. security. Prospective DPA funding for this purpose currently stands at $64.4M.6
The remainder of this press release discusses Ucore's comprehensive strategic actions plan to achieve the objectives of the foregoing, pursuing the roll-out of a complete HREE mine to metal to market supply chain (the "M3 Plan" or "M Cubed Plan"), fully contained on US soil.
The M3 Plan of Action
Ucore's M3 Plan to satisfy the needs of an independent American REE supply chain comprises three primary initiatives, commencing immediately: (i) Mine - Advancing the HREE mine at the Bokan-Dotson Ridge Rare Earth Project ("Bokan") to "shovel-ready" status; (ii) Metal - Developing the associated engineering for the individual REE and co-products processing and separation plant, the Alaska Strategic Metals Complex (the "Alaska SMC") on the basis of a Solvent Extraction ("SX") platform, complemented by commercially proven nanotechnology, as available; and (iii) Market - North American market development and cultivation of the customer base for non-Chinese REE products in the Western World.
The following is a summary of recent, ongoing, and planned actions, pursuant to Ucore's comprehensive M3 Plan:
Component 1 - MINE
Preparation of the Bokan HREE Mine to a "Shovel Ready" Status
In order for the U.S. to address the Chinese REE monopoly and establish independence, domestic sources of REE must be developed, mined and processed. Ucore notes that its Bokan REE resource (the "Mine"), contains the highest-grade of HREE on U.S. soil that has been disclosed in compliance with National Instrument 43-101 ("NI 43-101") standards.7
In 2011, Ucore commissioned a team of geological, engineering, and metallurgical consultants to complete a preliminary economic assessment ("PEA") in accordance with the requirements of NI 43-1018, with the completed document filed on SEDAR on March 14, 2013.
The following consulting firms were commissioned to complete portions of the NI 43-101 technical report:
- Tetra Tech: Overall project management; mineral processing and recovery methods; infrastructure; capital and operating cost estimates; and financial analysis.
- Aurora Geosciences (Alaska) Ltd: Geology; mineral resource estimate; and environmental studies, permitting, and social or community impact.
- Stantec Inc.: Mining, including capital and operating costs.
- Lyntek Incorporated: Mineral processing and metallurgical testing using Dual Energy X-Ray Transmission ("DEXRT") mineralized material sorting and magnetic separation circuit design and costs.
- IntelliMet LLC: Mineral processing and metallurgical testing with leaching and solid-phase extraction ("SPE"), uranium and thorium removal, leaching and rare earth element separation design and costs.
- Knight Piésold Ltd.: Tailings and waste rock management, including capital costs.
As discussed, on March 31, 2014, Ucore announced the unanimous support of the Alaska State Legislature for Senate Bill 99 (2014), which authorized AIDEA to issue up to USD$145 million in bonds for the infrastructure and construction costs of the Bokan Rare Earth Project. The completion of the PEA and the AIDEA announcement was subsequently followed by further geological exploration and a subsequent REE resource upgrade for the Mine deposit (see Ucore press release dated May 11, 2015).
From a technical development perspective, Ucore is now ready to commence the engineering and permitting required to prepare the Mine for construction (i.e. a "Shovel Ready" Mine); and to update the financial data/projections in the PEA from the 2013 values to establish the minimum threshold market conditions which would allow mine construction to commence. Unlike the PEA, however, the forthcoming updated Bokan economic analysis will now factor in co-product metals from the Mine, a collateral asset of significant prospective value. The initial findings from the first iteration of the co-product metals report ("CPM") are scheduled to be compiled and released in the coming days.
The Company estimates the project can be fully permitted and Shovel Ready in less than 30 months from receipt of the necessary funding for these pre-construction activities. Ucore will then be positioned to commence mine site construction, mining, and mill processing upon acceptance of the project by AIDEA and receipt of additional capital market and customer offtake support.
This strategic action has commenced, with a re-evaluation study of co-products available in the existing Bokan flow sheet, with thanks to specific funding furnished in early September 2019, by Ucore major shareholder, Orca Holdings, LLC.9
Component 2 - METAL
Preparation of Detailed Planning, Engineering and IP Acquisition for the Alaska SMC
The Alaska SMC REE processing and separation facility is planned to be located in Ketchikan, Alaska, and to be the first physical component of the Mine. Notably, the Alaska SMC will be designed to process REE concentrate not just from the Bokan HREE Mine, but from other U.S. and U.S. allied-nation sources, into individual REE oxides for the burgeoning North American REE market.
As contemplated by the Ucore September 4, 2019, press release, the Alaska SMC will be a hybrid technology REE processing and separation facility founded on the most advanced, efficient, and environmentally sound application of SX technologies in the world. Where possible, SX will be coupled with the most promising aspects of nanotechnology strategically applied to maximize the throughput, efficiency, and purity of the produced individual rare earth oxides. The innovation behind the "one-of-a-kind" SuperLig®-One pilot plant commissioned by Ucore in collaboration with IBC Advanced Technologies, Inc.10 and which produced 99.99% purified Dysprosium will set the aspirations for the project. Ucore's mandate of ensuring the utilization of a green, efficient, and proven next-generation technology will be the driving determination behind all technologies associated with the Alaska SMC.
In addition to this strategic initiative aligning with the goals of the DPA Title III Program and a potential forthcoming request for proposals, Ucore has engaged in preliminary discussions with AIDEA (see Ucore's press release dated Oct. 22, 2018) regarding the development of the Alaska SMC as a funded component of the Mine. The engineering and detailed planning effort will lead to the next phase of funding discussions and mechanisms with AIDEA, the USG, and private initiatives now underway.
This strategic action will be funded by the Company and has commenced, with Ucore's senior executives recently meeting with preeminent global suppliers of SX technology.
Component 3 - MARKET
Strategic Development of the North American REE Market
The third and final near term component of the Ucore roll-out action involves the carefully planned outreach to best-in-class North American end users. As is well known, China controls approximately 84%11 of the current international REE market. Notably, China is actively buying rare earth, cobalt, lithium, and other critical mineral assets in South America, Africa, Australia and Greenland, and is now a minority owner in the Mountain Pass light REE mine in Nevada12, a trend observed by Ucore Chairman, Pat Ryan:
"China is setting themselves up to control their technological needs domestically first and are beyond a doubt self-sufficient with REEs today. Their intent is to continue to control exports and pricing; the time is now to change the flow of world metals going to China and to set up North America for the next several decades of critical minerals infrastructure growth through Ucore's and other North American companies' initiatives."
Two primary end markets have been the focus of Ucore's senior executive team over the past 18 months:
- U.S. Federal Government (USG): Rare earth elements are required for radar and sonar, missile and smart bomb guidance control systems and other military hardware. For example, a single F-35 Strike Fighter contains 920 pounds of REEs. Recent USG initiatives have acknowledged the criticality of REE to U.S. defense systems. In turn, Ucore is actively pursuing its unique, self contained, HREE supply chain message in Washington. The Company has responded to a DPA Title III Program request for information, indicating the advancement of the Bokan Mine and its associated processing separation plant as essential to independent and self-sustained national defense requirements. Spearheaded by J.A. Green & Company, a Washington, D.C., based government relations firm specializing in defense contracting, the Ucore team has had numerous recent meetings with decision makers at the White House, the Pentagon and on Capitol Hill. The latter includes recent meetings13 with U.S. Senators Lisa Murkowski (R-AK) and Dan Sullivan (R-AK) for the purpose of advancing Ucore's plans for a secure domestic HREE supply chain.
- Commercial Industry: The automotive sector is an important pillar of U.S. economic strength, especially as the industry transitions to the manufacture of electric vehicles ("EV's") at a world level. Almost all non-Chinese original equipment manufacturers ("OEMs") have expressed concern for the free-market availability of commercial products containing REE. Beyond automotive applications, and apart from the U.S. military-industrial complex, general manufacturers of a host of American high-technology products have acknowledged the clashing of U.S -China supply/demand curves. Of central concern is the relative domestic non-availability of high-strength Nd-Fe-B permanent magnets (crucial to high-efficiency electric motors), and the ongoing availability of REE for petroleum refining and automotive catalysts.
"American OEMs now face an unrelenting REE supply problem in this moment of market disruption," commented Pat Ryan, Ucore Chairman, and specialist in OEM supply chain issues. "Some have termed this situation as the automotive industry's 'tobacco moment', as American and international OEM's phase out internal combustion engines. It's all about CO2 emissions, climate change, and pollution-related health problems. GM has positioned Cadillac as its leading brand of EV, with no less than 20 new models planned for 2023. In Europe, the VW Group has unveiled its 'Roadmap E' strategy. The permanent magnet market for Tesla's Model 3 long-range EV is estimated to be in the billions of dollars and Toyota has accelerated its EV mass-manufacturing plan by 5 years such that half of its global sales will be EVs by 2025."
Pursuant to non-disclosure agreements, the Ucore team has now completed numerous meetings with industry front-runners, both in America and Japan14, exploring opportunities such as supply offtake agreements.
These strategic marketing actions will continue and intensify in H2 2019 and beyond. Readers are encouraged to look for ongoing updates to these, and other aspects of Ucore's M3 Plan in the weeks and months ahead.
See Endnote 7.
The Company is commencing engineering and permitting required to prepare the Bokan HREE Project for construction (i.e. "Shovel Ready" status). See Section ii) below.
While abundant in the earth's crust, REEs are exceedingly difficult to find at critical concentrations, globally. See Endnote 11.
The DPA Title III Program Office has requested USD$34.4 million in funding this year to address U.S. national security needs; the House Appropriations Committee has suggested adding a total of USD$64.4 million to the account.
Disclosure of the nature of PEA in compliance with NI 43-101 Guidelines: A PEA is preliminary in nature; it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.
The Company reports that, as of September 4, 2019, Ucore's largest shareholder, Orca Holdings LLC, has injected USD$300,000 (CAD $400,000) into the corporate treasury, for the purpose of immediately commencing Mine development initiatives, in due consideration of prospective revenues from the sale of REE products. The capital infusion, is based on a Bridge Loan bearing an interest rate of 12.5% and is repayable on October 31, 2020 or on such a date as the Company is able to repay the loan and continue to meet certain minimum cash levels, and is secured by a first charge on the Company's assets.
As discussed in the Ucore press release of September 4, 2019, the Company is pursuing the completion of acquisition of IBC Advanced Technologies, Inc. ("IBC"), now under dispute and the active consideration of judicial process. Molecular recognition technology ("MRT") for metals separation is the cornerstone of IBC's business enterprise, focusing primarily on platinum group metals ("PGM") and copper metals separations. Ucore retained IBC to develop MRT specifically for the individual separation of all 16 individual REEs (the 14 commercial lanthanides plus yttrium and scandium) commencing with the April 2014 "Research Agreement" between IBC and Ucore. This successful undertaking ultimately led to Ucore holding the right to purchase IBC along with its intellectual property ("IP") in its entirety, as granted by IBC and the majority shareholders of IBC, and embodied in the Option to Purchase Agreement dated March 14, 2015, as amended (the "OTP Agreement"). It is Ucore's plan to utilize MRT as a green, efficient, and transformative nanotechnology employed for high purity REE separations at Ucore's planned Alaska SMC; that the dispute with IBC can be timely/satisfactorily resolved and MRT incorporated into the Alaska SMC's intended hybrid-technology design. Nevertheless, while this plan is ideal, Ucore is equally prepared to pursue a mitigation plan which will allow it to proceed without MRT, solely on the basis SX separation technology.
Ucore has in fact had extensive meetings with all members of the 'Japanese 3', with due consideration to Japanese-American trade alliances.
Ucore Rare Metals is a development-phase company focused on rare and critical metals resources, extraction and beneficiation technologies with near term potential for production, growth and scalability. The Company has a 100% ownership stake in the Bokan-Dotson Ridge Rare Earth Project. On March 31, 2014, Ucore announced the unanimous support of the Alaska State Legislature for Senate Bill 99 (2014), which authorized the AIDEA to issue up to USD $145 million in bonds for the infrastructure and construction costs of the Bokan-Dotson Ridge Rare Earth Project.
Ucore's vision and plan is to transition to become a leading advanced technology company that provides mineral separation products and services to the mining and mineral extraction industry. This vision includes the development of the Alaska SMC in Southeast Alaska and the development of the Company's rare earth minerals property located at Bokan Mountain in Alaska (an NI-43-101 technical report was filed on SEDAR on March 14, 2013).
For further information, please contact Mr. Jim McKenzie, President & CEO of Ucore Rare Metals Inc. at: +1 (902) 482-5214 or visit http://www.ucore.com.
Michael Schrider, P.E., COO of Ucore, has approved the scientific and technical content of this news release and is the Qualified Person responsible for its accuracy. Mr. Schrider, is a registered professional engineer in the State of Louisiana, holds a B.S. degree in engineering from the University of New Orleans and a M.Eng. degree in mining engineering (mineral processing emphasis) from The University of Arizona.
IBC Dispute - Legal Updates
The Company and IBC are currently involved in four (4) active lawsuitsi, ii, iii, iv principally regarding the enforceability of the OTP Agreement and/or erroneous public comments made by IBC.
iUcore vs. IBC commenced on December 11, 2018, in the Supreme Court of Nova Scotia. IBC has challenged Ucore's successful motion recognizing the Nova Scotia Courts' jurisdiction over the dispute. The next step is for IBC to file its defense and any counterclaims within ten days of the decision of the Nova Scotia Court of Appeal.
iiIBC vs. Ucore commenced on January 4, 2019, in Third District Court, Salt Lake Division, Salt Lake County, State of Utah. The case was orally dismissed by the Court on May 23, 2019, but an IBC Motion Seeking Leave to Amend its Original Complaint is still before the Court.
iiiIBC vs. Ucore commenced on February 19, 2019, and is currently before the U.S. District Court, District of Utah. A September 19, 2019 hearing is scheduled regarding Ucore's Motion to Dismiss, or in the alternative, to "Stay" the case due to the duplicative Nova Scotia proceedings.
ivThe Company reports that on August 30, 2019, via its Nova Scotia legal counsel (Cox & Palmer), the Company filed a new civil action in the Supreme Court of Nova Scotia responding to a series of tactical, malicious, and erroneous public assertions made by IBC Advanced Technologies Inc. ("IBC") and Mr. Steven R. Izatt regarding the Company and its executives. Ucore will continue to take the steps required to protect itself as against IBC's actions.
The relevant terms of the OTP Agreement remain unchanged from the previous February 14, 2019, Ucore Announcement, with the exception of IBC Shareholder Support. Shareholders representing the majority of the outstanding shares of IBC were solicited by IBC to become a party to and sign the OTP Agreement, indicating their support for the purchase transaction, with a sufficient percentage of the voting shares of IBC for Ucore to issue the Notice of Commencement and pursue the completion of the transaction. To date, only two of the eleven IBC shareholder signatories on the Extension Agreement (both belonging to Steven R. Izatt, representing himself as an individual shareholder and as a trustee of the IBC Trust) have informed Ucore of their opposition to the OTP Agreement and have become a named litigant in the lawsuit against Ucore.
This press release includes certain statements that may be deemed "forward-looking statements". All statements in this release (other than statements of historical facts) that address future business development and/or acquisition activities (including any related required financings), timelines, litigation outcomes, events or developments that the Company expects, are forward looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance or results and actual results or developments may differ materially from those in forward-looking statements. Ucore has assumed that it will be able to procure an SX partner or SX supplier for the Alaska SMC. Ucore has also assumed that sufficient external funding will be found to develop the specific engineering plans for the Alaska SMC and its construction. Ucore has also assumed that it will in the near future be able to obtain interim financing and sufficient additional financing to acquire IBC in compliance with the terms contemplated in the existing agreements with IBC and its shareholders holding a majority of its shares. Ucore has also assumed that there will be no material adverse findings in its upcoming expected comprehensive due diligence review of IBC. Factors that could cause actual results to differ materially from those in forward-looking statements include: Ucore not being able to procure an SX partner or supplier for the Alaska SMC; Ucore not being able to raise sufficient funds to fund the specific design and construction of the Alaska SMC and/or acquire IBC (including the non-acquisition payments owed under the previous and existing agreements with IBC); adverse capital market conditions; unexpected due diligence findings; unexpected or adverse outcomes in the currently outstanding litigation matters between Ucore and IBC; resistance to or noncompliance by IBC or its key shareholders with the existing agreements; the emergence of alternative superior metallurgy and mineral separation technologies; the inability of IBC to retain its key staff members and clients; the inability of IBC to protect its intellectual property; unexpected transaction costs or other deal completion setbacks; a change in the legislation in Alaska and/or in the support expressed by AIDEA regarding the development of Bokan; the availability and procurement of any required interim and/or long-term financing that may be required; and general economic, market or business conditions.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined by the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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