NI43-101Pre-Feasibility Study Report - page 563

Rare Element Resources
Bear Lodge Project
Canadian NI 43-101 Technical Report
October 9
, 2014
10135-200-46 – Rev. 0
are a few relatively well-known sources of published estimated prices that are based
on surveys of market participants by the websites or organizations that publish them.
These include, and “Industrial Minerals” magazine.
However, prices for individual RE elements among these sources can differ markedly
even in the same timeframe and, according to some market participants, prices for
actual market transactions in rare earths sometimes differ significantly from the prices
quoted by these sources.
There are some specialized consulting firms in rare earths or industrial minerals that
perform market studies in the rare earths business and create rare earths price
forecasts for clients based on the individual project’s rare earths distribution and
intended products. These organizations tend to use conventional mineral economics
approaches to forecasting, based on historical experience in the rare earths markets
and the limited information available. Such studies and forecasts are hindered by the
lack of information in rare earths markets that lack the transparency that can be found
in many other markets for the more common mineral commodities. The relatively
recent start-up of newly created rare earths exchanges provides extremely limited
data on exchange trades of certain physical RE metals, and there is no futures
market or forward price curve for rare earths that could inform RE price forecasting.
Because of the rapid evolution of technology, forecasts of future demand for rare
earths overall and for individual RE elements are inherently uncertain. Rare earth
elements are used for their unique magnetic, catalytic and phosphorescent
properties, and they are a significant enabler in many high-technology
applications. This often makes them particularly difficult to substitute without
sacrificing product performance or quality. Rare earths tend to be used in small
amounts in many of their applications, in conjunction with other materials or in smaller
components that make up much larger products. For these reasons, they can also be
challenging to recycle. New applications for rare earths and RE products are being
developed continuously, and successful new applications can have an outsized
impact on what are typically relatively small global markets. We expect these factors
to continue to cause significant volatility in RE markets and prices from time to time.
Given the opaque nature of much of the rare earth market and the limitations of
pricing methodologies noted, the Company took and empirical approach to the
assumed rare earths pricing for this PFS to determine the discount to reflect the cost
of separation as described in detailing Chapter 19, Rare Earths Markets and Pricing.
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