EDITOR: | March 27th, 2014 | 10 Comments

Alaska approves $145 million in financing for Ucore’s Bokan-Dotson Ridge Project

| March 27, 2014 | 10 Comments
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DSC_1992On March 26, Ucore Rare Metals Inc. (‘Ucore’, TSXV: UCU | OTCQX: UURAF) announced that the Alaskan senate has voted in favor of USD$ 145 Million in long term bonds to finance the Company’s Bokan-Dotson Ridge Project through the Alaska Industrial Development and Export Authority (“AIDEA” or the “Authority”). Support for the bill, SB99, was unanimous, passing “with 20 yes votes and zero nays”, stressed Ucore’s COO, Ken Collison, who spoke to me on the phone last night from the Juneau airport. Ken also noted that SB99 “still has to go through a routine minority mandated re-vote on Friday – routine – and then the Alaska House of Representatives but the Unanimous vote sends a strong message and the biggest step is done”. The bonds will remove a lot of risk from the project, allowing us to complete our feasibility study this year, said Collison – and in rare earth projects, the risk these days is largely financial – because it would lower the total CAPEX of the project to only USD$ 221 million, a very small amount compared to the industry average of well over USD 1 billion.

Ucore is not the sole beneficiary of SB99. In fact, the bill essentially allows for AIDEA to offer more support for new mining developments in Alaska, sending a very clear message to investors that Alaska is open to new mining business. Unlike other mining companies operating in remote jurisdictions, Ucore has enjoyed strong support from the local communities and from local politicians, said Collison. Already in 2012 there were hints of this kind of support when House Representative Don Young (R-AK) managed to pass an amendment to the National Strategic and Critical Minerals Production Act of 2012 (H.R. 4402) that expedited Ucore’s mining permit process to get its Bokan-Dotson Ridge (‘Bokan’) project underway. In turn, Ucore has developed a more environmentally sustainable ‘Solid Phase Separation’ process used to purify the mined rare earth elements at Bokan. Ucore says the technique can remove 99% of impurities and in a cheaper and cleaner manner than the typical ‘Solvent Exchange’ approach used in China. SPE is unique to Ucore.

DSC_0023Ucore boasts one the largest NI 43-101 compliant Heavy rare earth (HREE include dysprosium, terbium, and yttrium) mines in North America and it is one of the best prospects for becoming a steady supplier.  The Bokan project is located in southern Alaska about 140 km.  north of Prince Rupert, British Columbia, with direct access to the Pacific Ocean, an advantageous location for the completion of production facilities and reducing mine construction costs – due to reduced transportation infrastructure needs. The Bokan project’s economic strength comes from the claimed 40% (by weight) concentration of the highly in demand HREE’s as disclosed in Ucore’s NI43-101 compliant resource estimate, released in March of 2011, which should doubtless put the Bokan deposit among the top contenders enabling the United States to expand its REE industry.

Ucore is also developing an REE deposit at the Ray River using alluvial mining techniques such as gravity separation. The claim area is also highly prospective for tin, with an estimated average grade was 0.2-to 0.5-lbs-Sn/yd3. Ucore said that assays from REE concentrate which HREE made up for 15-25% TREO. If the quality of the resource isn’t appetizing enough, the alluvial nature of the deposit give Ucore an additional advantage. The ore is deposited in sand, rocks located along a river. There is no need to dig deep or to leave giant pits behind; there aren’t even any issues with native populations to resolve – an important issue in mining intensive states of the Southwestern US – and Alaska has proven itself to be one of the most mining friendly areas in the world.

The unanimous vote in favor of SB 99, then, suggests that the State of Alaska has recognized the great opportunity that Ucore offers, given its potential to become a primary supplier of materials that are critical to US national defense and US technological advancement. The Alaska  State Legislature, meanwhile, had already voted unanimously in favor of Senate Joint Resolution No. 8, which guarantees official backing for continued “exploration, extraction, processing and production of rare earth elements” in the State. The Alaska legislature is not the only government entity to have endorsed Ucore. Indeed, in 2012, the US Department of Defense (DOD) signed a contract with Ucore as part of its assessment of competitive domestic suppliers of neodymium-iron-boron (or ‘neo’) magnets and equivalents.


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Comments

  • Dave Glover.

    Many will decry this move as yet More Corporate Welfare but this will ultimately benefit all and support the General Welfare of every stakeholder.
    It’s about time legislators realized the role Mining/Exploration bring to a Vibrant domestic Economy. Remember if it’s not Grown it’s Mined. In this global economy Security & Sovereignty often take a back seat Americans are wary of this. Alaska has moved in the “Right” direction to ensure such matters are not marginalized. U Core understands this and they’ve used their insight to guide this Government initiative. Billions spent is actually penny’s worth when it brings Piece of Mind.
    Thank you for your insight & ability to get the real story out there.

    March 27, 2014 - 4:24 PM

  • Veritas Bob

    Here’s to capitalism – it was great while it lasted. One more step along the path toward Chinese Communistization of America. If you like China you don’t have to move there, as it is moving here.

    Can Sarah Palin see China from her window? Well, she can now.

    March 27, 2014 - 4:36 PM

    • hackenzac

      Let me ask you Bob. How do you think the American railroad got built? This pure capitalistic state of yours? Where is it? Shouldn’t you be casting your jaded eyeball about the Chinese front Conglin Yu buying the John Galt deposit? That’s ironic don’t you think? Here in New Jersey, we have The American Dream private/public partnership. You must look it up. It’s breathtaking in its boondoggleness so depending on the state, it could be worse. Ucore could squander this opportunity in ineptitude but I doubt it. It sounds like public money pretty well spent to me, better than the usual. Beside, it’s not your money. It’s not even American money. It’s not tax collected money. It’s Alaska’s money and their representatives voted to spend it this way. I guess this is where democracy trumps capitalism, as it should be. Don’t you think?

      March 27, 2014 - 9:00 PM

      • Veritas Bob

        It was my tax money, or should I say my ancestors’ tax money, or actually it would have been if any of them had been in the country at the time, which funded the 7.2 million dollars used for the U.S. to buy Alaska from the Russkies. So Alaska belongs to all Americans. In return for living in a cold climate, Alaskans benefit from a windfall of resource extraction revenues (oil, anyone?), which they are not sharing with the rest of the country. That said, if Alaskans want a government run economy, I suppose that’s their business, but I don’t view it as a favorable model for the rest of the states or the federal government to follow. In any event, if Alaska has money to blow, I can suggest some investments it can make to benefit me, although I will not provide campaign contributions, as that would be improper.

        BTW, let’s go all out in emulating everyone here’s favorite country, China, and imprison people for making statements meeting disfavor with the ruling political elites. The government’s already spying on everyone, including according to him, former President Carter, so it’s really not a big step to throw people in the slammer because the nations’ rulers don’t like their blogs or emails … or message board comments.

        March 27, 2014 - 10:29 PM

  • Jack Lifton

    I congratulate the Alaska legislature for differentiating itself from the mostly hot air that blows from the lower 48 (49) States. Alaska has certainly made the path from a good bankable feasibility study to actual financing a lot easier for those lucky enough to have their deposits in Alaska. Note that what the legislature has done is to give authority to the Alaska development agency (AIDA) to issue bonds, at its discretion, to finance the development of a mine, such as Ucore’s, after the bankability feasibility study has shown the project to be “solvent.”
    I would like to ask the readers of IIR to tell me if they know of any other American jurisdiction that has in this way empowered a state agency to have such discretion. I think that perhaps the rugged nature of Alaskan life and the need for people to pull together in order to overcome the harsh climate of most of Alaska has even affected their politicians, so that they do the right thing, rather than just the expedient thing. Thank goodness that Alaska has no contiguous border with any other American State. Otherwise we would have to fence it off, so that people with good ideas couldn’t try to emigrate and pollute the pristine resource ignorance in most of the legislatures of the lower 48 (49).

    March 27, 2014 - 7:03 PM

    • David Mortimer

      Where do you see the share price by years end Jack if I may be so bold!)

      March 27, 2014 - 7:38 PM

  • Kitjean

    H.R. 4402 was passed by the house nearly two years ago and presently collects dust on some shelf because members of the U.S. Senate are just to damned overworked to find the time bring it up for a vote. Truly shameful.

    March 27, 2014 - 7:46 PM

  • aurelius

    Am a shareholder in Great Western and I am laughing.

    March 28, 2014 - 7:44 AM

  • Rockstar on gold and reducing risk for the weekend | InvestorIntel

    […] him about the substantial news for InvestorIntel members this last week like Alkane Resources, Ucore Rare Metals and Focus […]

    March 28, 2014 - 11:59 AM

  • Heath Herndon BSc MBA Broker

    UCore (UURAF:US) – Open letter to Sen. Lesil McGuire nd Sen. Bert Stedman

    I am the first born legitimate grandchild of Robert “Red” Dotson of Bokan-Dotson Ridge rare earth metal deposits.

    The Alaskan financing of UCore’s $145 million ($145,000,000) debt issuance would continue to degrade the investment made by the Alaska family, the Dotsons of Ketchikan, who cultivated these mining claims for generations and the other two-thirds of Ketchikan to which the Dotsons are related in addition to burden upon the rest of the Alaskan people should UCore fail.

    I understand Alaska’s interest in having another resource to tax but I also have one word for you, “Solyndra”. Solyndra left the American taxpayers half a billion dollars when it failed. UCore is a Canadian company. Once it fails then what does the State of Alaska do to recover these funds?

    Self-evident is the mismanagement of UCore’s investment funds in annual booked losses of over $700,000 while James “Jim” McKenzie, the Chairman and CEO of UCore, continues to pay himself well over $200,000 annually. If McKenzie desires a bond float for UCore then he should be able to do that himself without any help from the Alaska State Legislature or any government entity. The fact that McKenzie took UCore public in the over-the-counter market and then turn around to issue private equity placement empirically displays that McKenzie didn’t have a clear plan on what to do with the invested funds nor the rate of return in which those funds should have attributed to them. The trade pattern on UCore’s penny-stock would appear that speculators have already entered prematurely, which is another uphill battle for UCore.

    Additionally, where are the supplier contracts for the basis of financing the $145 million bond issuance by the State of Alaska? Within the last month, I discussed supplying the Bokan-Dotson rare earth metals to an American car manufacturer and a large utility company. McKenzie has rejected all my offers over the last year to discuss it even though the acronyms to my name far out strips his own and I have contact relationship worth evaluating to assist UCore in being able to pay the royalties due to my family.

    American investors care deeply about political mudslinging and the leadership skills of executive management in which their funds are invested. Grandfather Dotson trusted McKenzie. Perhaps due to the annual payments of $60,000 which ceased once Grandfather Dotson was deceased. The $60,000 did not go to his widow, Grandmother Irene Dotson and she was forced to put the house in a reverse mortgage to survive and pay for healthcare costs. A reverse mortgage that might have not been granted if the lender had learned of the rumours that Robert Dotson was keeping radioactive “yellowcake” in the basement of that house. McKenzie was supposed to be the bored millionaire entering mining out of the telecommunications industry according to one news article, so in hindsight the $60,000 seems tantamount to a bribe.

    In deed McKenzie has interfered with family affairs on more than one occasion noted by the news article from the Alaska Journal of Commerce entitled “Family Feud at Bokan Forces UCore to Consider Legal Options” to alienate Dotson from his only two remaining children a month before he died.

    To further isolate Dotson’s children, McKenzie aggravated the situation with the grandmother in appointing a guardian and administrator. An appointment encumbered by my Cousin Derek that is too much for him. He was unprepared to have the responsibility and now he’s on medication to help him deal with the reality that is his life. My Uncle Raymond couldn’t take it either but I’ll leave that story for later as well as my own. Not knowing McKenzie’s point of origin, I am observing my obligation in giving “fair notice and warning” of “impending danger” by edict hoc volo, sic jubeo, sit pro ratione voluntas.

    If after my attestation here today, if the State of Alaska seeks to deny me once again and issue McKenzie’s UCore bond, I would ask for 25% of all contracts to be awarded to certified women-owned businesses, a third of the jobs be given to resident Alaskans who’s Social Security Number begins with “574”, further stipulations of oversight if not the removal of James “Jim” McKenzie as Chairman and CEO of UCore. In fact, UCore need not have existed in any transaction having to do with the Bokan-Dotson Ridge and everything required could have been done without UCore. A business model with cooperating agencies would have been by far more palatable.

    Amazing how the State of Alaska can summon $145 million for mining but not $250,000 to aid in a closed-ended self-contained produce solution to being able to feed more than 40,000 Alaskans for a week out of the 720,000 population. These statistics were supplied by the Anchorage Daily News on the rate of starvation.

    Are we supposed to eat dirt?

    For the journalists that take up this story, I offer nearly a decade of keeping them fed with their publications running on time.

    August 2, 2012, BOB TKACZ, “Family Feud at Bokan Forces UCore to Consider Legal Options” http://www.alaskajournal.com/Alaska-Journal-of-Commerce/August-Issue-1-2012/Family-feud-at-Bokan-forces-Ucore-to-consider-legal-options/ published Alaska Journal of Commerce

    May 4, 2014 - 7:07 PM

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