20 / 111
19
The audit opinion and notes that accompany our consolidated financial statements for the year ended
December 31, 2015, refer to the substantial doubt regarding our ability to continue as a going concern. The
accompanying financial statements have been prepared assuming that we will continue as a going concern. Our
financial statements do not include any adjustments that may result from the outcome of this uncertainty. We do not
have sufficient cash to fund planned operations and meet obligations for the next 12 months without raising
additional funds.
Market factors outside of our control could have significant adverse impacts on our business, operations
and/or prospects.
Operating in the volatile and cyclical natural resource industry subjects us to numerous market factors
outside of our control that could have significant and sometimes adverse impacts on our business. Such factors
could include significant price declines for key rare earth materials, inflationary impacts on capital and operating
costs, poor financial and operating performance of other companies in the same industry sector, environmental
incidents from resource projects, major technological advances that reduce demand for key rare earth products, and
unforeseen regulation or geopolitical factors that broadly impact the industry. To the extent that such factors affect
attitudes toward investments in the natural resource sector generally or the rare earths industry specifically, they
could affect our ability to raise the additional capital needed to continue to advance our Project and business plan.
We have no history of producing mineral products from our properties. Any future revenues and profits are
uncertain.
We have no history of mining or refining any mineral products, and our Bear Lodge REE Project is not
currently producing. There can be no assurance that the Bear Lodge REE Project will be successfully developed or
placed into production, produce minerals in commercial quantities or otherwise generate operating earnings.
Advancing properties from the exploration stage into development and commercial production requires significant
capital and time and will be subject to further feasibility studies, permitting requirements and construction of the
mine, processing plants, roads and related works and infrastructure. We will continue to incur losses until our
mining activities successfully reach commercial production levels and generate sufficient revenue to fund continuing
operations. There is no certainty that we will produce revenue from any source, operate profitably or provide a
return on investment in the future. If we are unable to generate revenues or profits, our shareholders might not be
able to realize returns on their investment in our common shares.
The planned development of our Bear Lodge REE Project involves numerous uncertainties that could affect
the feasibility or profitability of such project.
Mine development projects typically require a number of years and significant expenditures during the
exploration and development phases before production is possible. The economic feasibility of exploration and
development projects is based on many factors such as:
completion of feasibility studies to further verify Mineral Resources and establish Mineral Reserves
and commercial viability;
the timing and cost, which can be considerable, of further exploration, preparation of feasibility
studies, and permitting and construction of infrastructure, mining, beneficiation and processing
facilities;
our ability to utilize our proprietary process technologies, which could encounter problems or
unexpected costs in scale-up;
securing a commercially viable sales outlet for our REE products;
the potential need to enter into joint venture or other partnership arrangements to develop the Project;
the availability and costs of equipment and skilled labor, as required;
the availability and cost of appropriate processing and/or refining arrangements, if required;
compliance with environmental and other governmental approval and permit requirements;
the availability of funds to finance exploration, development and construction activities, as warranted;