News Featured News Commerce + Ucore = REEs Made in USA

Commerce + Ucore = REEs Made in USA

Stephan Bogner, Rockstone Research

1 Comment| June 7, 2017

The Hyde Park Agreement of 1941 was one of the most significant economic agreements reached between Canada and the United States. This declaration expressed the desires of US President Franklin D. Roosevelt and Canadian Prime Minister Mackenzie King such that “in mobilizing the resources of this continent each country should provide the other with the defense articles which it is best able to produce.“

King regarded this agreement as a triumph of personal diplomacy during World War II, and when he spoke to the House of Commons about it, he emphasized that “beyond its immediate significance, the Hyde Park Declaration will have a permanent significance in the relations between Canada and the US.“ In other words, quoting from the 1942-blockbuster movie Casablanca, this was “the beginning of a beautiful friendship“.

The Hyde Park Agreement then morphed in to the Defense Production Sharing Agreement of 1956, a bilateral trade agreement between Canada and the US that aims to balance the amount of military cross-border buying in order to avoid trade imbalances. Since then, a number of US companies have sent military production to Canada, and although the agreement has been amended on several occassions, it is still in effect today. The similar Defense Development Sharing Program organized the sharing of military research and development.

California Republican Duncan Hunter recently (March 7, 2017) introduced a bill before Congress that seeks to address the supply side imbalance, whereby the US is currently completely dependent upon a foreign source that would not be considered an ally – China – for the REEs it so desperately needs to manufacture weapons and weapons systems.

“The U.S. must no longer be wholly dependent on foreign sources of strategic and critical materials,” said Rep. Hunter.

“The risk of this dependence on national security is too great and it urgently demands that we re-establish our depleted domestic industrial base.“

Over the last years, the US has made no progress to decrease its dependence upon China for metals which are crucial to the US national security and defense, according to areportfrom the Department of Defense, which lists 17 rare earths needed for the new F-35 fighter jet, laser-guided missiles, catapults that launch fighter jets from aircraft carriers, the THAAD missile defense system, and many other applications such as the magnets in the small and large motors for Electric Vehicles (“EVs“), advanced batteries in EVs, wind turbines, solar panels, geothermal steam turbines, or even smartphones.

Senator Lisa Murkowski‘s Rare Earth Supply-Chain Technology and Resource Transformation (RESTART) Act of 2010 targets the reestablishment of a competitive domestic rare earth mining, processing and refining industry to support the growth of clean technology, manufacturing and the defense sectors. Murkowski, Republican of Alaska, is one of the most vocal supporters of Ucore Rare Metals Inc. and its Bokan-Dotson Ridge Rare Earth Project in Alaska (see here and here).

James C. Kennedy, a consultant to the US government, is the leading advocate for the development of a fully integrated rare earth value chain inside the US through the creation and development of a Centralized Rare Earth Refinery. He is currently working on legislative contributions with the US Congress and Senate on bills, amendments and legislative input into various rare earth and energy legislation.

US President Donald Trump has signed huge arms deals, such as the intended $100+ billion USD deal with Saudi Arabia that includes a military sales agreement that could total $350 billion USD. Even if the numbers turn out to be smaller, Trump is ready for the mass production of weapons and weapons systems, for which REEs are essential.

On Monday, Ucore Rare Metals signed a MOU with Commerce Resources for the purpose of integrating feedstock from Commerce‘s Ashram Project with Ucore‘s recently announced rare earth separation facility and strategic metals complex (SMC) in Utah, USA. Currently at $75 million CAD, Ucore enjoys one of the largest market capitalizations in the rare earth space, also due to being a development-phase company focused on beneficiation technologies with near-term potential for production. Ucore also owns one of the highest grade heavy rare earth projects within the US, the Bokan-Dotsan Ridge

Deposit in Alaska, which, however, only has a limited mine life of about 11 years. The Ashram Deposit, on the other hand, has a very large tonnage, plus a simple mineralogy. Both Ucore and Commerce could soon turn out as perfect partners for the purpose of producing rare earths on US soil.

According to the MOU, Commerce will provide Ucore with samples of a mixed rare earth carbonate concentrate, using material from the Ashram Deposit, in order for Ucore to perform bench and pilot scale testing of the prospective feedstock. Bench work will be conducted by Ucore‘s joint venture partner IBC Advanced Technologies of American Fork, Utah, with pilot scale test work expected to take place at Ucore‘s recently completed SuperLig®-One MRT pilot facility in Vineyard, Utah. The SMC is being designed and engineered as a modular facility, capable of accepting feedstock from varying supply sources and a range of high quality concentrates.

The objective of the test work is to complete a definitive assessment of the suitability of the Ashram Concentrate as potential feedstock for the SMC, with a view to a subsequent long-term supply partnership and offtake relationship. Jim McKenzie, President and CEO of Ucore, commented in the press-release:

“This is a significant development partnership for both Ucore and Commerce. Commerce has undertaken extensive research and testing resulting in a high-quality and high-grade mineral concentrate that will allow for cost effective processing to our ideal feedstock, and therefore, looks to be a very promising candidate for processing via a MRT separation circuit. The Ashram Deposit is large tonnage, good grade, hosts a well-balanced REE distribution with an enrichment in the magnet feed REEs, and perhaps most importantly, is highly accessible. In combination with the SMC, Ashram promises to be a key link in a self-contained North American REE supply chain.”

The news release from Ucore continues as follows (confirming what Rockstone has been touting all along for 4 years):

“Commerce is well advanced with its metallurgical testing and flowsheet design for the production of the Ashram Concentrate, incorporating the conventional approach used by current and past rare earth producers. This involves an initial phase of beneficiation to produce a high-grade mineral concentrate of >45% REO and at high recovery at ~75%, followed by a hydrometallurgical phase that further processes the mineral concentrate through to a mixed rare earth carbonate product suitable for separation. The Ashram metallurgical test work and pilot plant is located and operated at Hazen Research in Golden, Colorado.“

Chris Grove, President of Commerce Resources, cut right to the chase:

“We are excited to be working with Ucore and look forward to delivering a sample of our REE mineral concentrate to the SuperLig® test facilities in Utah as soon as possible. Security of supply is vitally important, and with our simple mineralogy and successful use of standard processing, we look forward with Ucore to realizing the goal of an independent North American REE supply chain.”

Chris Grove was recently interviewed by Jeb Handwerger, explaining how Commerce could break the Chinese rare earth monopoly.

The Minister of Energy and Natural Resources for Quebec, Pierre Arcand, recently said in an interview that “we‘re very bullish on Plan Nord“, also confirming that the government will spend a minimum of $50 billion for Plan Nord over the next 20 years, a major budget to develop Quebec‘s northern regions, where Commerce‘s Ashram Deposit is located. In another interview with Kitco, Arcand answered the question why mining in Quebec might be a good idea right now.

As Jeb Handwerger recently argued, it may be time to rebalance a portfolio with rare earths as many other assets are in bubble territory at the moment and it‘s difficult to find cheap discounted assets trading at rock-bottom prices with the ability to turn around quickly. He sees signs of rare earth prices rising higher as demand picks up from electric vehicles and huge new weapons and weapons systems manufacturing. An escalation with North Korea and/or a conflict in the South China Sea could be the starting point to send rare earths soaring.

The brutal bear market in rare earth prices since 2011 has forced the only rare earths miner in the US, Molycorp and their Mountain Pass Mine, into bankruptcy. Yet Commerce Resources‘ Ashram Rare Earth Deposit in Québec may have all of the ingredients to even be profitable at these depressed market prices.

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“The above 2 figures illustrate clearly that, compared to Mountain Pass, Ashram has ~400-1,300% more enrichment in the group of REEs that have the highest $ value per kg (MHREE), as well as ~34-53% more enrichment in the REEs that have the strongest, largest, and most stable near-term, medium-term, and long-term markets (MFREE).“ Source:Rumble in the REE Jungle: Molycorp vs. Commerce Resources - The Mountain Pass Bubble and the Ashram Advantage(August 27, 2015)

According to Jeb Handwerger‘s latest article:

“If the Ashram Concentrate can be separated with Ucore’s Molecular Recognition Technology then I expect a potential merger or partnership. Why does Ucore like Commerce’s ore from Quebec? Because Commerce’s ore from Ashram has a simple mineralogy, its a well advanced asset in a mining friendly jurisdiction and it could produce a mixed rare earth carbonate concentrate suitable for separation potentially using Ucore’s MRT.

I believe Ucore and Commerce have withstood the test of a bear market in rare earths and time to be the leaders in the North American REE Supply Chain. Ucore is planning on advancing their SuperLig® MRT Pilot Plan to the commercial stage and Commerce could be a critical supplier of ore to the facility.

In conclusion, a lot of assets are in bubbles. There are very few commodities so out of favor that are rising in demand and so scarce like rare earths. With geopolitical tensions in N. Korea and the S. China Seas a turn in the rare earths is inevitable.

Both Ucore and Commerce were trading around a $1 back in 2010 when rare earths soared before. Now they are trading at a fraction of that valuation but that could change on one news item.“

(Disclosure: I have a conflict of interest as I own securities in the companies mentioned and they are website sponsors which means I have been compensated.That makes me biased.This should be considered an advertisement with forward looking statements which may not come to fruition as small cap investing is incredibly risky. Do your own due diligence as this is not financial advice.)