Achieved permitting milestone and successfully separated rare earths
at Pilot Plant
Care-and-Maintenance project spending planned for 2016 to conserve
cash
Rare Element Resources Ltd. (“Rare Element” or the “Company”) (OTCQB:
REEMF) reported today a net loss for the year ended December 31,
2015 of $9.7 million, or $0.19 per share, compared with a net loss of
$14.0 million, or $0.29 per share, in 2014. The net loss for the quarter
ended December 31, 2015 was $2.5 million, or $0.05 per share, compared
with $2.9 million, or $0.06 per share, for the same period in 2014. At
December 31, 2015, the Company had cash and cash equivalents of $3.9
million, compared with $6.2 million at September 30, 2015 and $10.1
million at December 31, 2014. The Company has filed its Form 10-K for
the twelve-month period ended December 31, 2015, on www.sec.gov
and www.sedar.com.
“Looking back at 2015, we realize just how far we progressed the Bear
Lodge Project, including receiving a draft Environmental Impact
Statement (EIS) and completing the initial phase of our pilot plant
campaign to separate rare earths into several more marketable and higher
value baskets,” said Randall J. Scott, President and Chief Executive
Officer. “Although we have had to slow down on our progress toward the
end of 2015 and into 2016 and place our project on care-and-maintenance
due to the difficult capital markets, we were able to do so at a good
point in our project’s development. We are now focused on pursuing
strategic alternatives, including off-take agreements, mergers,
acquisitions, asset sales, joint ventures or other partnerships to move
Bear Lodge forward to being the next domestic supplier of critical rare
earths.”
Quarter-End December 31, 2015 Unaudited
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 revenue at this time. The
net loss for the quarter ended December 31, 2015, totaled $2.5 million,
or $0.05 per share, compared to a net loss of $2.9 million, or $0.06 per
share, for the same period in 2014. The $0.4 million decrease in
consolidated net loss was primarily the result of:
-
Lower exploration and evaluation expense of $0.1 million, primarily
due to a reduction in environmental and permitting costs as well as
reduced site administration costs, as the Company continued to focus
on cost reduction while awaiting the draft EIS;
-
Lower corporate administrative costs of $0.2 million, primarily due to
the Company’s cash conservation efforts and a reduction in stock-based
compensation; and
-
A $0.1 million positive variance in the loss on currency translation.
Year-End December 31, 2015 Financial Results
The net loss for the year ended December 31, 2015 totaled $9.6 million,
or $0.19 per share, compared with a net loss of $14.0 million, or $0.29
per share, for the prior year. The $4.4 million decrease in the
consolidated net loss was primarily the result of:
-
A decrease in exploration and evaluation expenses of $3.5 million; and
-
Lower corporate administrative costs of $0.9 million.
Year-End Cash Balance
At December 31, 2015, the Company had cash and cash equivalents of $3.9
million, compared with $6.2 million at September 30, 2015 and $10.1
million at December 31, 2014. Cash and cash equivalents used during the
year were $9.3 million, compared with $13.8 million in 2014.
Activities funded during 2015 included: metallurgical and separation
test work; baseline environmental data collection and other efforts to
support the EIS and advance the permit applications for the project;
geotechnical and condemnation drilling; and general and corporate
activities.
Activities to be funded in 2016 include on-going regulatory compliance
costs and efforts to raise capital and pursue potential strategic
alternatives, including off-take agreements, mergers, acquisitions,
asset sales and joint ventures.
Permitting Update
The U.S. Forest Service completed the draft EIS in January 2016. The EIS
process, as well as other Wyoming state permitting and the U.S. Nuclear
Regulatory Commission (NRC) licensing, were subsequently suspended by
the Company to conserve cash resources. Assuming these processes are
resumed within a reasonable time, the Company anticipates it will take
approximately 12 to 18 months from such resumption to complete the EIS
and other permitting and licensing.
Pilot Plant Success
During 2015, the Company designed, built and operated a pilot plant for
testing its patent-pending rare earth separation technology. The results
of the first phase of testing, reported in early October 2015, confirmed
the ability to upgrade the concentrate coming from the
hydrometallurgical plant to over 99.9% pure total rare earth oxide. In
December, 2015, the Company announced additional results from the pilot
plant campaign including the successful testing of a lanthanum recovery
circuit that resulted in a 99%-pure lanthanum oxide product. Subsequent
bench-scale optimization of the recovery process increased cerium
removal to 99% using one mixer/settler and also separated the remaining
rare earths into light rare earth (LRE) and heavy rare earth (HRE)
baskets using only two mixer/settlers. The resulting LRE stream was
99.7% pure and consisted predominantly of lanthanum and didymium
(neodymium and praseodymium). The process represents meaningful
improvement over traditional solvent extraction (SX) methods and is
expected to reduce capital and operating costs associated with
separation. It is also expected to be more efficient and result in no
waste discharge, making it more environmentally friendly. Unique to the
process was the ability to strip the separated cerium, thorium and
lanthanum from the metal-bearing organic solution outside of SX, with
the barren organic and stripping agent being recycled. The Company is
also evaluating the potential application of its proprietary separation
technology in other industries including uranium, scandium and vanadium
processing.
Outlook for 2016
The Company will focus on raising additional capital and pursuing
potential strategic alternatives, including off-take agreements,
mergers, acquisitions, asset sales and joint ventures, and implementing
further cost-containment measures, including workforce reduction, to
preserve remaining cash balances. The Company continues to monitor
market conditions, both in the rare earth sector and in the capital
markets. If it is not successful in raising additional capital, the
Company has reduced administrative costs to provide for on-going minimal
care-and-maintenance operations.
Rare Element Resources Ltd. is a publicly traded, strategic
materials company focused on delivering rare earth products for
technology and defense applications by advancing the Bear Lodge Critical
Rare Earth Project 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 high-strength permanent
magnets, electronics, fiber optics, laser systems for health and
defense, as well as many evolving technologies like hybrid cars, solar
panels and wind turbines. 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.
Please contact Randy Scott at 720-278-2460 or rscott@rareelementresources.com,
for additional information.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning
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,” or by discussions of strategy or
intentions. Such forward-looking statements include statements regarding
the Company’s ability to implement cost-containment measures, the
potential for raising capital and executing strategic transactions, the
estimated time to complete the EIS and other permitting and licensing,
and the potential ramifications and applications of its rare earth
separation technology. Factors that could cause actual results to differ
materially include, but are not limited to, the Company’s ability to
remain compliant with U.S. Securities and Exchange Commission (SEC)
reporting requirements, the impact of the care-and-maintenance program
on the project, market conditions, and other matters discussed under the
caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2015, and our other periodic and current reports
filed with the SEC and available on www.sec.gov
and with the Canadian securities commissions available on www.sedar.com.
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 uncertainties and risk factors set out in our filings
made from time to time with the SEC and the Canadian regulators,
including, without limitation, our reports on Form 10-K and Form 10-Q.
We expect that the above estimates will change as new information is
received and that actual results will vary from these estimates,
possibly by material amounts. While we may elect to update our
forward-looking information at any time, we do not undertake to update
such information at any particular time or in response to any particular
event. Investors and others should not assume that any forecasts in this
press release represent management’s estimate as of any date other than
the date of this press release.
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