Ucore Rare Metals, The Next US Mine
According to local Alaskan media, Ucore is set to become America’s second producing rare earth elements mine after Molycorp Inc, commencing production in 2016, if all goes to plan. Ucore, will develop its flagship Bokan Mountain rare earth element property situated at the southernmost part of the Alaskan panhandle, on the southern end of Prince of Wales Island. The Bokan Mountain project covers 30 sq. km (19 sq. miles.) Construction of the mine is due to start in 2014. Once in production, Chinese domination of the rare earths and metals sector, will come to a long overdue end. In recent years China has become something of an unreliable exporter of rare earth elements, due to an island dispute in the East China Sea with Japan.
Last November Ucore released their preliminary economic assessment on Bokan, showing a before-tax net present value of $577 million at a 10% discount rate and an impressive internal rate of return of 43 percent. According to Jim McKenzie, Ucore’s CEO, Bokan Mountain is the largest NI 43-101 compliant heavy REE resource located in the United States of America.
From Ucore’s website:
The Bokan – Dotson ridge REE project is located 60 km southwest of Ketchikan, Alaska and 140 km northwest of Prince Rupert, British Columbia and has direct ocean access to the western seaboard and the Pacific Rim, a significant advantage in developing near term production facilities and limiting the capital costs associated with mine construction.
The Bokan property is particularly enriched with heavy rare earth elements, including the critical elements Dysprosium, Terbium and Yttrium. Approximately 40% (by weight) of the rare earth elements contained on the Dotson Ridge property are heavy rare earths elements, as disclosed in the Company’s NI43-101 compliant resource estimate, released in March of 2011.
As anyone who follows the rare earths sector knows, it’s the heavy rare earths that are most desirable for profitability, being key components used in defence systems, green energy projects, electric vehicles, and medical devices, among other critical uses. That desirability in unlikely to alter anytime soon.
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But that’s not all, Ucore’s property comes with some additional advantages that can fast track the development of the Bokan property. According to Bokan’s management, the Bokan-Dotson ridge project is the “only rare earth element deposit worldwide that comes with immediate deep water access; accessible labour and prospective power.” The US project also lies in Alaska, America’s most mining friendly state. There are unlikely to be permitting delays, meaning their timetable has a better than average chance of staying on track.
Being a second critical materials mine located in the USA, and blessed with the heavy rare earths, raising additional finance is unlikely to become an issue. And with the global economy tentatively having turned the corner in 2012, Ucore’s 2016 production timetable looks to me fortuitous at this time. Come 2016 there’s likely to be a resurgent REE demand.
Ucore Management Discussion, September 30, 2012.
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