The following is a Stockhouse Q&A interview with Pierre Lortie, Chairman of Quest Rare Minerals Ltd. (TSX: T.QRM, Stock Forum).
1 Congratulations on being named Chairman at Quest. From what you have learned so far, why would anyone want to invest in this company right now?
I see three fundamental reasons why people should invest.
- Rare earths are a key ingredient in the transformation of global economies. They are essential in many applications and therefore impact a wide range of industries in Canada and around the world, including hybrid electric vehicle manufacturing, mobile phones, LCD screens, laptops and wind turbines. Due to the relative scarcity of these commodities, the United States, Japan and European community see rare earths as critical and strategic elements.
- Quest’s Strange Lake project in Quebec is one of the largest ore deposits of its kind. It has a high concentration of heavy rare earths, which are used to manufacture high performance magnets. So the project’s economic value is higher than that of projects that don’t have that mix of rare earth elements.
- Our management team includes Dirk Naumann, a highly experienced metallurgical engineer [and chemist] who understands the chemistry of rare earth elements. He will be instrumental in making sure that we proceed in a most efficient way and can deliver the rare earth oxides in the quantity and quality we are expecting to achieve.
2. With your years of experience as the COO of Bombardier and CEO/President of the Montreal Stock Exchange, how will you contribute to Quest’s success moving forward? What do you see as your key role?
I have a lot of experience in overseeing and directing major projects in challenging environments and where the technology is complex. I am also highly familiar with project financing and the way that governments work. These are attributes that will be useful and will contribute to the team.
3. What distinguishes Quest Rare from the competition?
The Quest project at Strange Lake is within the territory of the James Bay Agreement. So the framework concerning the environmental evaluation process and the participation of First Nations is already established and proven. That is a significant advantage because delays can be costly.
Location is also key. As the project is relatively close to an available port, costs associated with building infrastructure to move the ore out to the Labrador coast is low in comparison to other projects.
4. What do you think this company will have evolved into in 2-3 years from now?
We should be in construction. We need to do the environmental assessment and bankable feasibility study. So if you are looking out two or three years, we should be starting the construction of the mine and the access road.
5. The company is focused on rare earth element opportunities. Can you explain exactly what these are, how the company might develop them and who are the end users?
We are lucky to have heavy rare earths, the ones that are most in demand. They include Dysprosium, a key ingredient in the production of magnets. Yttrium is another heavy rare earth that is used in energy efficient fluorescent lamp and bulbs. Fighter jet engines use Yttria-stabilized zirconia as a thermal barrier to withstand extreme heat.
6. Can you tell us what the outlook is for these commodities?
If we look at demand areas, magnets are one quarter of the total market. So the outlook is bright.
7. You say the company is led by a team of experienced professionals with a background in exploration, mining and metallurgical processing. Who are they, and what do they bring to the table in terms of professional experience?
President and CEO Peter Cashin has over 30 years of experience in all facets of mining, including exploration, development, promotion and marketing. He has a good deposit discovery success record as a geologist and was a key player in the discovery and development of the Strange Lake deposit. Executive Vice-President, Development Dirk Naumann is an outstanding engineer. He understands the chemistry of the rare earth elements that we are dealing with. He is very important to the success of the project.
8. You are currently focused on two projects – Strange Lake and Misery Lake. What is the difference between the two and where are they in terms of development?
We are in the process of revising what we should be doing. There is going to be one focus and it will be on Strange Lake. We need to focus all our resources into making sure that the Strange Lake project gets developed as quickly and efficiently as possible.
9. What have your major accomplishments been so far this year?
It is too early to brag about it. But there has been substantial work to complete elements that would de-risk the project. With regard to a Labrador port and how we move product, we have had discussions with the Newfoundland and Quebec governments. In both cases, I think we have the support of the governments. It is pretty clear that there is a keen interest in helping us make sure that the project will go forward.
10. What are your goals for the remainder of 2014 and into early 2015?
The project definition needs to be completed before the end of the year. That will trigger an environmental assessment, which is one of the steps that we have to go through. That is a major milestone. Another one is the completion of an agreement on some of the key components of the project, including port, shipping, and separation plant. We want to ensure that we, and our shareholders, have clarity as to where the project is going.
11. How much cash does the company have on hand?
We have about $2 million. Discussions are ongoing with potential investors. We have enough money to take us to the next milestone, which is the project definition stage. Meanwhile, we are in discussions with other strategic investors or parties with a keen interest in the rare earths space.
We need to do a bankable feasibility study and we will require a pilot plant to treat the ore which alone will cost about $6 million to construct and operate. To complete a serious bankable feasibility study, complete the environmental assessment review and an IBA with the aboriginal communities, we need about $50 million.
12. How are you doing in terms of attracting a joint venture partner for Quest Rare Minerals?
We are talking to firms and strategic partners for whom this project may be important. However, we do not expect potential industrial partners to commit at this early stage. Some of the potential partners are more likely to come in at a later stage.
FULL DISCLOSURE: Quest Rare Minerals is a client of Stockhouse Publishing.