21:16:06 EDT Thu 28 Mar 2024
Enter Symbol
or Name
USA
CA



Rare Element Resources Ltd
Symbol RES
Shares Issued 47,707,216
Close 2014-11-07 C$ 0.63
Market Cap C$ 30,055,546
Recent Sedar Documents

Rare Element Resources loses $3.6-million (U.S.) in Q3

2014-11-10 07:40 ET - News Release

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.

© 2024 Canjex Publishing Ltd. All rights reserved.