Looking back at Bokan Mountain, Kozak ask whether Ucore can indeed move forward.
In the 1950s, the US government commissioned surveys looking for sources of uranium for civilian and military uses during the Cold War. One of these identified locations was Bokan Mountain, at the head of Kendrick Bay on Prince of Wales Island (the southern-most island in the state of Alaska).
Enter Ucore Rare Metals Inc. (TSXV: UCU | OTCQX: UURAF) who acquired the property at Bokan Mountain (Bokan-Dotson Ridge) in 2006 looking for uranium. Approximately one mile away from the Ucore property, the Ross Adams open pit/underground uranium mine operated sporadically from 1957 to 1971. Other than a gravel road from the head of Kendrick Bay past the Ucore property, there is no longer any infrastructure to speak of. Notwithstanding old uranium mine workings, Ucore quickly realized the potential for rare earths.
The benefit of having a mine that close by is the extensive geologic mapping that was done – beneficial in identifying the Ucore rare earths deposit. Prior to the preparation of an NI 43-101 report in 2011, the company conducted field work through 2008 (drilling for uranium), 2009 (soil and silt geochemical testing) and 2010 (drilling to delineate rare earths deposit plus trenching) to confirm the potential.
The Bokan-Dotson Ridge project is 100% owned by Ucore and has a mix of both light and heavy rare earths. While the NI 43-101 report is now 10 years old and the Preliminary Economic Assessment is now eight years old, there is no question of the potential to mine rare earths from this site. Management of Ucore is of the belief that the project can be “near shovel ready” (engineering complete and permitting well underway) for construction in less than 30 months after receipt of development funding. But to make this a reality, Ucore has a significant capital requirement, estimated in 2013 at approximately US$220 million. There is much more work yet to be done on the project.
In the interim, not satisfied with just being a mining company, Ucore management has diversified into the value-add chain of rare earths. Of note is the 2020 acquisition of private Canadian company Innovation Metals Corp. (IMC) who are the developer of a proprietary rapid solvent extraction technology (RapidSX). The technology is being commercialized for the cost-effective bulk separation and purification of both heavy and light rare earths. The process is touted as an advanced, accelerated solvent extraction process. Theoretically, it is less expensive to operate than conventional solvent extraction of rare earths.
RapidSX could be a key step in becoming a low-cost producer of rare earths but is currently not exclusive to Ucore. IMC is in numerous advanced-stage negotiations for RapidSX Technology Testing Agreements with current and near-term rare earths producers in US-allied jurisdictions.
Ucore is also taking advantage of the US location of the project and the support of the Alaska state government to help facilitate moving forward. In 2014, the Alaska State Legislature authorized the Alaska Industrial Development and Export Authority (AIDEA) to issue bonds (up to US$145 million) to finance certain infrastructure costs for the Bokan rare earths project.
The company has also put together a plan entitled Alaska2023 with respect to creating a rare earths business in Alaska. It includes US-allied feedstock (outside of the Bokan mine), technology and market development as part of the “not-in-China” rare earths supply chain. A key part of this plan includes a Strategic Metals Complex in Ketchikan, Alaska to process US-allied heavy and light mixed rare-earth concentrates into commercial purity rare earth oxides, specifically for rare earths permanent-magnet applications.
In October 2020, Ucore and AIDEA commenced preliminary due-diligence process regarding a prospective US$3.5-million investment for the development and commercial-scale operation of the Strategic Metals Complex.
Miner, Processor or…?
There are a lot of elements in the company’s plans to execute on, not the least of which is developing a mine. Can they do it? That really is the question, as they are very ambitious. Ucore is only one of many nascent rare earths companies intent on being part of the supply chain solution. There are many pieces of the puzzle that Ucore has yet to put in place, especially the funding.
At September 30, 2020, the company had approximately $2.7 million of debt and $2.0 million of cash. For the nine months of 2020, the company had expenses of $4.2 million (including $0.65 million amortization). Ucore recently closed on an equity financing of $6.7 million, so that should fund them through much of 2021.
“Is Ucore up for the challenge? Just watch us” Pat Ryan, Ucore Chairman & Interim CEO is quoted as saying in the company’s January 2021 investor presentation.
Belief or bravado? Only time will tell.
Frederick Kozak is a Professional Engineer with extensive oil and gas, and international business experience and has more than 25 years involved in capital markets ... <Read more about Frederick Kozak>