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Vancouver, British Columbia:
“Rare earth concentrates must be separated into the individual elements in order for the rare earths to be of commercial value to manufacturers. We have a long standing and secure relationship with a group having more than twenty-five years of engineering experience directly related to rare earth refinery design, construction, and importantly to operations.”
Canada Rare Earth Corp. is developing an international supply chain business based on existing, developing and planned processing facilities and its commodity-trading platform. The Company recently confirmed significant advances in the development of its vertically and horizontally integrated business which focuses on rare earths and complementary products associated with its rare earth feedstock such as cassiterite, zircon, ilmenite and rutile.
Processing and Adding Value
Rare earth concentrates must be separated into the individual elements in order for the rare earths to be of commercial value to manufacturers. The company has had a long standing and secure relationship with a group having more than twenty-five years of engineering experience directly related to rare earth refinery design, construction, and importantly to operations.
“We continue to work diligently on obtaining the final operating permit for a refinery built and ready for operations. The Laos Refinery is designed to produce 3,000 metric tons/year of the complete range of rare earth oxides (approximately 2% of the global market) and with expansion capability to 6,000 metric tons/year. Once Canada Rare Earth is successful in obtaining the final permit, we intend to exercise our right to purchase a majority interest in the Laos Refinery. We are also proactively focusing efforts to establish a rare earth refinery in South America based on our familiarity with feedstock sources in relatively close proximity,” the company management was recently quoted saying.
Sourcing Raw Materials
Canada Rare Earth Corp. business model involves recycling or repurposing tailings from past mining activities and from heavy mineral sands. With its strategy the company is not committed to any one source of feedstock and therefore have greater flexibility and negotiating position in securing longer term, consistent sources without the capital costs, risks, and issues associated with mining.
The company’s sourcing strategy focuses on:
(i) tailings generated by mining activities which are typically easier to process, less costly to process and faster to commence production compared to mining, and
ii) heavy mineral sand deposits which are easier and less expensive to process in comparison to hard rock and even alluvial mining. Heavy mineral sands typically contain multiple saleable products such as cassiterite, zircon and ilmenite in addition to rare earths.
In December, the company along two partners completed the purchase of a substantial amount of tailings, accumulated over 25 years of mining situated on 590 hectares of land in South America. Simultaneously the company arranged for a buyer of a minimum of 48,000 metric tons per year of concentrate. However, as of this date, there is no decision to commence production of these tailings as a number of factors need to be resolved including securing an operator and the prospective operator studying the tailings and being satisfied with the economic and technical viability. Accordingly, this initiative is subject to increased uncertainty including economic and technical risks of failure associated with a production decision if such decision is ultimately made.
Selling Raw Materials and Value-added Products
Over the past few years Canada Rare Earths has generated $3 million of revenues from selling rare earth concentrates and to a lesser degree rare earth oxides and alloys. The company regards itself fortunate to have a customer base that is ready, willing and able to purchase many times more concentrate than it historically and currently provide.
“We have managed our business affairs and development initiatives through proceeds and associated gross profits from the sale of products, selling a resource property, entering into a joint venture arrangement for one or more refinery projects, through a partnership type arrangement for the South American tailings project (involving financiers and operators), through a convertible loan (now converted into our shares), and occasionally from loans provided by management personnel and third parties for trade finance.
We fully expect to face much greater financing requirements in the near future particularly if the Laos Refinery becomes available and as we develop the South American refinery. The requirements are estimated to be in the order of US$200 million to US$300 million in total for purchase, development and working capital.
Our plan is to finance each refinery, and other major initiatives, through special purpose vehicles, to avoid or minimize dilution to existing Canada Rare Earth shareholders,” the management was quoted saying.