Mr. Randall Scott reports
RARE ELEMENT RESOURCES REPORTS THIRD QUARTER RESULTS
Rare Element Resources Ltd. has filed its unaudited consolidated financial statements on
Form 10-Q for the three months and nine months ended Sept. 30, 2014,
on the SEC website and on SEDAR.
"During the quarter, we released a very positive preliminary feasibility
study on the Bear Lodge project that integrated the results of the
multiple advancements we made over the last two years," said Randall J.
Scott, president and chief executive officer. "Since then we have built
on this with success in our testwork on an innovative approach to
separation and further optimizing of our proprietary recovery process -- both of which will contribute to lower costs. We are also advancing
plans for construction of a larger-scale demonstration plant, one that
will process between one and three tons of material a day, to minimize
start-up and commissioning risk by providing key data on materials of
construction, equipment selection and material handling parameters. This
work should allow us to smoothly transition from start-up to full
operations without many of the operational issues experienced by others
in the sector. With respect to the permitting side of the project, the
alternatives analysis under the environmental impact statement process
has not been completed as originally scheduled. Therefore, we are not
able to complete the application process for certain licences and
permits in the fourth quarter of 2014 as previously anticipated. This
has resulted in our adjusting expectations for project commissioning to
mid-2017."
Financial results (please note
that financial results published by the company are all stated in U.S.
dollars)
For accounting purposes, the company is classified as an exploration-stage company and, as such, does not have production-related revenues at
this time. The net loss for the quarter ended Sept. 30, 2014,
totalled $3.6-million, or eight cents per share, compared with a net loss of
$6.9-million, or 15 cents per share, for the same period in 2013. The key
drivers behind the reduced year-over-year loss were primarily:
- A decrease in exploration and evaluation expense of $3.3-million, the
result of a shift from exploration activities to development-related
activities;
- Lower corporate administrative cost of $500,000, primarily due to
lower stock-based compensation expense and the company's continued
focus on containing costs;
- Partially offset by
an unfavourable variance in currency translation of $500,000.
For the nine months ended Sept. 30, 2014, the net loss was $11.1-million, or 23 cents per share, compared with a net loss of $16.5-million,
or 36 cents per share, for the same period in 2013. The key drivers behind
the improved year-over-year results were primarily:
-
A decrease in exploration and evaluation expenses of $3.3-million;
- Lower corporate administrative cost of $1.3-million;
- A favourable variance in currency translation losses of $900,000.
Cash balance
As of Sept. 30, 2014, the company had cash and cash equivalents of
$12.9-million, compared with $16.1-million at June 30, 2014. The net
cash used of $3.2-million during the quarter was spent primarily on
permitting, engineering and economic evaluation work to support the
preliminary feasibility study (please see release dated Aug. 26,
2014, and the related National Instrument 43-101 technical report published on Oct. 10,
2014, for additional details on the PFS), trench work and general
corporate expenses.
Current cash balances will be used to finance the following work programs:
- Continued support of efforts by the U.S. Forest Service and the
third party contractor to prepare the environmental impact study on the project;
- Application for other permits and licences, as appropriate, once the
EIS alternatives assessment has been completed;
- Continued evaluation of recommendations identified in the PFS for
potential inclusion in the feasibility study, including certain
process optimization methods and the continuing analysis of technical
advancements made in downstream elemental separation technology;
- Distribution of separated rare earth products resulting from current
testwork to potential offtake partners for evaluation;
- Initiation of the feasibility study, pending board approval.
Over the next two years, as the company continues to move the Bear Lodge project
toward construction, the company anticipates that it will need to raise
between $45-million and $60-million to advance the EIS and necessary permitting;
to complete work on the FS and detailed engineering; and to design,
construct and operate a larger-scale (one to three tons per day)
demonstration plant to generate key operating data to inform the FS and
detailed engineering as well as provide large product samples to
prospective customers.
The unaudited quarterly financial statements are available through the
Canadian securities regulatory authorities on SEDAR and with the U.S. Securities and Exchange Commission.
They are also available on the company's website.
Permitting update
"We have seen some delays by the U.S. Forest Service in the past few
months in the preparation of the alternatives analysis for the EIS,"
said Jaye T. Pickarts, chief operating officer. "This has impacted the
company's ability to complete the application process for permits
required from other agencies. We are pleased that the forest service has
stated its intent to make up the time lost and remain on its original
schedule, but we currently expect that delays related to the other
applications will impact our schedule by three to six months. We intend
to use this time productively by building and operating a demonstration
plant, which will allow us to generate key data for the detailed
engineering portion of development and avoid some of the start-up
difficulties that have plagued others in the industry. As a result, we
are shifting our anticipated timing for project commissioning from late
2016 to mid-2017."
As originally outlined in the U.S. Forest Service timeline, the
alternatives analysis for the EIS was expected to be completed in August,
2014. At the time of this press release, however, the identification of
alternatives has not been finalized and the impact analysis has not
begun. Applications for some of the necessary state and federal permits
depend on the project modifications, if any, that may be determined from
the EIS alternatives analysis. The company's development timeline
required those applications to be made in the fourth quarter, but it now
expects they will not be made until the first quarter of 2015. While the
forest service has stated it expects to be able to make up the current
delay and remain on schedule to deliver a draft EIS in spring 2015, the
resultant delay in other permitting is expected to push back the
anticipated commissioning of the project until mid-2017.
We seek Safe Harbor.
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