EDITOR: | September 10th, 2013 | 10 Comments

Texas Rare Earths dramatically revises CAPEX and has largest Holmium deposit in the world

| September 10, 2013 | 10 Comments

Weslosky-MarcheseSeptember 10, 2103 – Tracy Weslosky Publisher of InvestorIntel, interviews Anthony Marchese, Chairman of Texas Rare Earth Resources Corp. (OTCQX: TRER) and discusses Texas Rare Earth Resources’ revised CAPEX from $2.1 billion to under $300 million, its low market cap, how the company’s resource (with a NPV of over $1 billion) is comprised of “critical” rare earths, its 100-plus-year mine life, the status of the company’s revised Preliminary Economic Assessment (PEA), US REE sustainability, and how TRER’s land and the China clay deposits are the only REE deposits in the world to use heap leach extraction.

Tracy begins: Anthony, your company has a shockingly low market cap for what you have. Why don’t you do our audience a huge favor and tell them what kind of opportunity they have with Texas Rare Earths Resources.

AM: We have a NI 43-101-compliant resource, which was published last year, with a net present value (NPV) of over $1 billion. We’re in the process of actually revising that PEA, originally projected to have a capital cost of $2.1 billion and still very profitable (to under $350 million). We are in the process of completing our (revised) PEA and it will be released shortly.

TW: The speculative mine life for Texas Rare Earths is 100-plus years, correct?

AM: Yes, that is correct and that’s based only on Round Top Mountain (Texas Rare Earth Resources’ flagship project in Hudspeth, Texas). We have three other mountains, which have not yet been fully developed.

TW: With all of the current issues and debate surrounding (REE) sustainability in the US, I would think that the federal government would be looking to participate with Texas Rare Earths Resources. Can you tell me what’s happening on the sustainability front and what kind of initiatives that you’re currently working on?

AM: Interestingly enough, our resource is comprised primarily of what is now referred to as “critical” rare earths. In the not-too-distant future we will be producing elements like yttrium (which is not technically a heavy rare earth, but critical rare earth), dysprosium, and holmium. We strongly believe the US federal government will have an interest in what we’re doing — and I’ll leave it at that for now.

TW: Can you define what a “critical” metal is from the US government’s perspective? This is something that doesn’t get enough attention in the mainstream media.

AM: Several years ago, the federal government, published a report outlining projected supply and demand. The old concept of ‘heavy’ and ‘light’ rare earths was based on a technical definition; ‘critical’ rare earths is really a more apt description to describe what the federal government feels they will need and what industry will need in the short- to intermediate-term future with regards to elements. And again, there are comprised of both heavy and light, but mostly heavy.

TW: InvestorIntel published an article on the critical metal holmium and Gareth Hatch got in on the debate and commented that how significant your holmium deposit is. Based on our research Texas Rare Earth Resources has the largest deposit potential resource for holmium in the US. Is that correct?

AM: I would venture to say – according to Gareth and his statistics – I would venture to say probably the world. Holmium is an interesting element. One of the readers commented: “gee, the demand isn’t that great. Yet you have supply which significantly exceeds demand”. I believe, as have others in the field, that once you have supply that demand follows. There are lots of industries, lots of companies that would love to have this kind of supply, in order to develop products. And unfortunately, in our industry, supply first has to come online in order for demand to pick up. We strongly believe that we could be a major supplier of holmium, which primarily for the most part would be in defense programs for the foreseeable future.

TW: With holmium it’s my understanding that some of the most advanced technological applications in the military utilize holmium. Can you just talk generally about some of these technologies?

AM: You can look at some of the prime contractors for the federal government and they’re household names, Fortune 50 companies, who are doing research in this field. But basically they’re used in laser-guided weapons. For example, you may have read several months ago that the navy is developing a laser gun. I would believe that holmium would be a key element in this program.

TW: You have a host rock for extraction that provides a metallurgical competitive advantage. Can you give a bit of an overview?

AM: Sure. Our host rock is yttrofluorite. To the best of our knowledge, we are the only deposit in the world that is whose host rock is yttrofluorite. In more practical terms, what that means is that we will be able to use (and we have made this public) sulphuric acid to potentially heap leach the deposit. Heap leaching means extremely low costs. The only deposits to the best of our knowledge in the world that are heap leachable are the China clay deposits – and ours as well.

TW: You have numerous elements that provide a competitive advantage. What other benchmarks can we expect to see?

AM: We will get the (revised) PEA out. We believe that based on our PEA, which we have publicly stated, our CAPEX should come in anywhere from $150 to $350 million, down form $2.1 billion. We believe based on the strength of our upcoming PEA, we will have an edge with securing potential memorandums or offtake agreements with interested parties around the world. And we have received interest in that area as well. The next step would be to finish the bankable feasibility study as well as start the licencing procedure. And I can’t emphasize this enough: being in the state of Texas is a huge advantage. The other advantage we have is that we are not on federal property. We are not under BLM management; we’re not under Forest Service management. The state of Texas is our partner. And it’s a great partner to have because what we owe them is a royalty. The way the state makes its money is for the mine to come into production. So we believe that Texas is an incredible partner.

Disclaimer: Texas Rare Earth Resources is an InvestorIntel advertorial member.



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  • Veritas Bob

    Prior to the forthcoming release of the revised PEA, have we been told the general basis for how the CAPEX is decreased from 2.1 billion to 150 to 350 million? I presume that a reduction of that magnitude entails more than just getting a better price on paper clips from Staples.

    I found Mr. Marchese’s use of “which we have publicly stated” at 6:20 to be unclear. Is he just stating that the original PEA has been released to the public, and therefore the (old) CAPEX value of 2.1 billion has been publicly stated, or is he stating that reduction of the CAPEX to 150 to 250 million has been publicly stated, and if the latter, what was said, where?

    September 10, 2013 - 12:36 PM

    • Anthony Marchese


      TRER has a June 2012 PEA, a copy of which is posted on its website, with a resource estimate and a CAPEX of $2.1 billion. In the past several investment presentations, a copy of which may be found on the TRER website, the Company has stated that as a result of the metallurgical advances (heap leach or agitated leach processing) associated with a Yttrofluorite hosted rock, the CAPEX in the upcoming revised PEA is estimated to be somewhere between $150-$300 million.

      Hope that clarifies your questions,
      Anthony Marchese
      Texas Rare Earth Resources

      September 10, 2013 - 2:48 PM

      • Veritas Bob

        Thank you for the reply and information, and for clarifying that the capex figures in the recent presentations are for total capex. I look forward to seeing your revised PEA. reflecting the lower capex. among other things.

        September 10, 2013 - 3:16 PM

  • Aat Oskam

    TRER had a cash burn rate of about 10M US$ from August 2011- August 2012, ending with about 6.5 M US$ in August 2012. Now a year later, what cash has TRER left to finance the ultimate goal of producing Holmium etc?

    September 10, 2013 - 3:39 PM

  • Sue Glover

    Hi Veritas Bob. I just wanted to thank you for your questions and commentary…we truly appreciate your contribution!

    September 10, 2013 - 4:28 PM

  • bourque

    Sounds too good to be true. That’s a heap of leaching for a 0.064% TREO deposit. Environmental issues? What about separation into oxides? and further processsing into metals.

    September 11, 2013 - 7:42 AM

  • Bill Keenes

    I am not familiar with Texas Rare Earths, they discuss metallurgical advances, but I am still unclear where they are up to in relation to the metallurgy (other than they can use heap leach).

    Do they intend to produce separated rare earth oxides, and exactly at what stage are the metallurgical studies at – have they already developed a process to separate out each individual rare earth oxide?, and tested the process?

    How much more testing is required?.

    You can have the biggest rare earth resource in the world but if you don’t yet know how to extract out the rare earths then what’s it worth.

    Cracking the metallurgy is what is required to get these projects into production.

    September 11, 2013 - 5:54 PM

  • Rare Earths & Critical Minerals Month-in-Review: A sector back on its feet; major announcements affect stocks (very) positively; Texas Rare Earth (+68.52%), Quest Rare Minerals (+52.73%), Critical Elements Corporation (+52.67%)… |

    […] Corp. (OTCQX: TRER) soared into top spot, gaining a phenomenal +68.52% for the month. Recently, I interviewed Chairman Anthony Marchese and discussed Texas Rare Earth Resources’ revised CAPEX from $2.1 billion to under $300 million, […]

    October 3, 2013 - 10:15 AM

  • Veritas Bob

    Tracy, the next time you interview Mr. Marchese, or Mr. Gorski for that matter, perhaps you could ask him about the incident, described in http://trer.com/_resources/uploads/2012/04/8KInvestigationrelease-06-13-12.pdf , ‘the Corporate Governance and Nominating Committee (the “Committee”) of the Board of Directors (the “Board”) of Texas Rare Earth Resources Corp. (the “Company”), which is composed entirely of independent directors, with the assistance of independent special counsel to the Committee, has been conducting an internal review and investigation of certain matters of corporate governance and compliance with federal securities laws (the “Internal Review”).
    As a result of the recent report of the independent counsel on such counsel’s findings of the Internal Review and a further review of the recommendations of independent counsel by the Committee and the Board, at the direction of the Board, the Company contacted the Securities and Exchange Commission (the “SEC”) on June 8, 2012, to report the Company’s findings of potential federal securities law violations concerning two directors of the Company.

    Among other matters the Internal Review identified certain statements by Mr. Daniel Gorski and Mr. Anthony Marchese, directors of the Company, …’ .

    Instead of resigning, Mssrs. Gorski and Marchese continued on the Board, with Mr. Gorski announced as CEO on August 6, 2012, and all other (complaining) members of the Board replaced – see http://trer.com/_resources/uploads/2012/08/FINAL-PR-New-CEO-Board-Members.pdf , and eventually Mr. Marchese becoming Chairman of the Board.

    You might also ask Jack Lifton about this incident, given his recent addition to the TRER Board of Directors. In all fairness, I suppose the whole incident could be a hatchet job by disgruntled (now) former Directors, who tried to oust the impeccably honest Mssrs. Marchese and Gorski, and I wouldn’t be surprised if their response, were they to give one, were something along those lines. The whole thing seems rather unseemly to me, though.

    October 20, 2013 - 5:56 PM

  • Texas Rare Earth Resources releases robust revised PEA to confirm position as an Amerrican critical rare earth leading explorer | InvestorIntel

    […] permitting and regulatory issues). Commenting on the State of Texas as its partner, TRER Chairman Anthony Marchese stated: “I can’t emphasize this enough: being in the state of Texas is a huge advantage. The […]

    December 4, 2013 - 11:54 AM

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