Increasing Market Attention on Rare Earths in First Quarter
Improved
Prices for Key Magnet Elements in Bear Lodge Distributions
Company Website:
http://www.rareelementresources.com
LAKEWOOD, Colo. -- (Business Wire)
Rare Element Resources Ltd. (NYSE MKT: REE and TSX: RES) (the
“Company”), a mineral resource company advancing plans to develop the
Bear Lodge Critical Rare Earth Project located in northeast Wyoming,
reported today that it has filed its unaudited consolidated financial
statements on Form 10-Q for the three-months ended March 31, 2015 on www.sec.gov
and www.sedar.com.
“We started to see growing interest in the rare earth space in the first
quarter with renewed attention to our Bear Lodge Project and increased
media focus on the sector,” said Randall J. Scott, President and Chief
Executive Officer. “The Project received statements of support from both
the Wyoming legislature and the state’s economic development branch
recognizing its importance to not only Wyoming but to the nation. The
U.S. Forest Service also provided an updated schedule that indicates
they will have the draft environmental impact statement available early
this fall. We were encouraged by the rise in magnet-related rare earth
oxide prices, given their significant contribution to Bear Lodge's
projected revenues. These factors were complemented by the attention
generated by a segment on the CBS program 60 Minutes that
highlighted the importance of rare earth elements in our high-tech
world.”
Financial Results (Please note
that financial results published by the Company are all stated in U.S.
Dollars.)
The Company does not have production-related revenues at this time. The
net loss for the quarter ended March 31, 2015, totaled $2.5 million, or
$0.05 per share, compared to a net loss of $4.4 million, or $0.09 per
share, for the same period in 2014. The year-over-year decrease in net
loss was primarily driven by:
-
Lower exploration and evaluation spending of $1.7 million, as the
Company shifted its focus from the preliminary feasibility study (PFS)
and pilot plant metallurgical work to ongoing permitting and
separation studies; and
-
Lower corporate administrative cost of $0.3 million, primarily due to
the continued focus on cost containment.
Cash Balance
As of March 31, 2015, the Company had cash and cash equivalents of $7.5
million, compared with $10.1 million at December 31, 2014. The net cash
used of $2.6 million during the quarter was spent primarily on
additional test work to confirm recovery process enhancements and
initial elemental separation studies, as well as efforts to support
progress on the environmental impact statement (EIS) being generated for
the Project, and gathering the information and preparing the
applications necessary for certain state and federal permits.
On April 29, 2015, the Company announced the closing of a $3.4 million
direct registered offering, which generated net proceeds of
approximately $3.2 million. These proceeds, when combined with the cash
and cash equivalents at March 31, 2015, are believed to be sufficient to
conduct our current planned activities through the end of 2015.
Those activities include:
-
Continuing to support the U.S. Forest Service’s efforts to prepare an
EIS on the Project;
-
Submitting the mine permit application to the Wyoming Department of
Environmental Quality, as well as the application for a license to
possess source material (naturally occurring radioactive materials) to
the U.S. Nuclear Regulatory Commission, and other federal permits;
-
Continuing elemental separation tests directed at creating advanced
purification of rare earth baskets that meet end-users’ specific needs
and maximize product value to the Company;
-
Initiating engineering studies, including geotechnical confirmation
and condemnation drilling within the proposed Physical Upgrade Plant
(PUG) site to support the feasibility study (FS); and
-
Continuing to cultivate relationships with potential off-take
partners, including supplying upgraded product samples and Project
updates.
The Company has a number of other programs it plans to undertake,
subject primarily to securing additional financing. These would include:
1) larger-scale pilot plant testing to build on the positive results of
individual element separation test work completed to date; 2) certain
technical work, relating to waste rock and tailings characterization for
inclusion in the FS; and 3) a demonstration plant to generate key
information, such as materials of construction and material sizing, as
well as larger-scale product samples for potential customers.
Evolving Rare Earths Market
“Changing regulations and controls on rare earth supplies from China
would appear to bode well for non-Chinese producers. With export tariffs
and quotas being replaced with strict licensing practices and resource
taxes, we expect to see the cost of mining rare earths in China continue
to rise,” said Paul H. Zink, Senior Vice President and Chief Financial
Officer. “Rising Chinese costs should be supportive of higher prices and
encourage end-users to look to companies like ours to secure off-take
agreements to guarantee a steady, reliable future source of the rare
earths critical to so many of our modern conveniences.”
Since October, certain rare earths, particularly magnet materials, have
experienced rising prices. This benefits the Bear Lodge because over 60%
of the anticipated revenues, as contemplated in the 2014 PFS, will be
generated from the four elements most commonly used in high-intensity,
permanent magnets - neodymium, dysprosium, praseodymium and terbium.
According to asianmetal.com, the domestic Chinese price for terbium is
up 39%, dysprosium is up 15% and neodymium has risen more than 10%. In
response to a ruling in 2014 by the World Trade Organization, China
eliminated their system of export quotas and tariffs, but has replaced
quotas with a licensing program that, according to some industry
analysts, will be even less transparent than the old system. To replace
tariffs, the country has announced that they will be levying a new,
value-based resources tax on the rare earth sector starting May 1st.
These taxes, as well as rising wages and increased environmental costs,
are expected to push production costs up and help support continued
rising prices for certain rare earths.
The unaudited quarterly financial statements are available through the
Canadian securities regulatory authorities at www.sedar.com,
and with the U.S. Securities and Exchange Commission at www.sec.gov.
They are also available on the Company’s website at www.rareelementresources.com.
Rare Element Resources Ltd. is a publicly traded mineral resource
company focused on exploration and development of rare-earth element
deposits, specifically those with significant distribution of critical
rare earths. The Company is advancing plans to develop the Bear Lodge
Project, located in northeast Wyoming. Bear Lodge is a significant
mineralized district containing many of the less common, more valuable
critical rare earths that are essential for electronics, fiber optics,
laser systems for health and defense, as well as many evolving green
technologies, like hybrid cars, solar panels and wind turbines.
Permitting and feasibility work on the Project continue to advance. The
Company is an affiliate member of the U.S. Department of Energy’s
Critical Materials Institute, a combined government and private sector
organization committed to eliminating supply chain issues for rare
earths and other critical elements.
For additional information, please visit the Company’s website at www.rareelementresources.com
or contact Robbin Lee at 720-278-2462 or rlee@rareelementresources.com.
Forward Looking Statements
This news release contains forward-looking statements and
forward-looking information within the respective meanings of securities
legislation in the United States and Canada. Except for statements of
historical fact, certain information contained herein constitutes
forward-looking statements. Forward-looking statements are usually
identified by our use of certain terminology, including "will",
"believes", "may", "expects", "should", "seeks", "anticipates", "plans",
"has potential to", or "intends" (including negative or grammatical
variations thereof) or by discussions of strategy or intentions. Such
forward-looking statements include statements regarding the expected
timing and completion of permitting, technology test work and results,
ability to attract offtake partners and the ability to finance planned
activities.
Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results or
achievements to be materially different from any future results or
achievements expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include,
but are not limited to, the progression plans for the Bear Lodge
Project, the progress and results of the feasibility study, fluctuations
in demand for, and price of, rare earth products; success of process
technology under testing or development; results from geological
evaluations and programs; timing of and unexpected events at the Bear
Lodge property; delay or failure to receive government approvals and
permits; changes in U.S. and Canadian securities markets; and our
ability to raise additional financing necessary to conduct our business.
There can be no assurance that future developments affecting the Company
will be those anticipated by management. Please refer to the discussion
of these and other factors set out in our filings made from time-to-time
with the United States Securities and Exchange Commission, and the
Canadian securities regulators, including without limitation, the
Company’s most recent reports on Form 10-K and Form 10-Q. We do not
undertake to update any statements or estimate at any particular time or
in response to any particular event. Investors and others should not
assume that any forecasts in this news release represent management's
estimate as of any date other than the date of this news release.
Contacts:
Rare Element Resources Ltd.
Robbin Lee, 720-278-2462
rlee@rareelementresources.com
Source: Rare Element Resources Ltd.
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