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Interest rate risk.
Our cash and cash equivalents consist of cash held in bank accounts and, at times,
guaranteed investment certificates that earn interest at variable interest rates. Due to the short-term nature of these
financial instruments, fluctuations in market rates did not have a significant impact on estimated fair values as of
December 31, 2015. Future cash flows from interest income on cash and cash equivalents will be affected by
interest rate fluctuations. We manage interest rate risk by maintaining an investment policy that focuses primarily
on preservation of capital and liquidity.
Foreign currency exchange rate risk.
We are exposed to foreign currency exchange rate risk as certain
monetary financial instruments are denominated in Canadian dollars. We have not entered into any foreign currency
contracts to mitigate this risk. We attempt to mitigate this risk by holding six to 12 months of U.S.-based spending
in U.S. dollars as a natural hedge against currency fluctuations. At December 31, 2015, a 1% increase/decrease in
the Canadian dollar to U.S. dollar exchange rate would have decreased/increased our consolidated net loss by $3.
Commodity price risk
. We are indirectly exposed to commodity price risk of rare earth products, which
are, in turn, influenced by the price of and demand for the end-products produced with rare earth mineral resources.
A significant decrease in the global demand for these products may have a material adverse effect on our business.
None of our mineral properties are in production, and we do not currently hold any commodity derivative positions.
Other price risk.
Other price risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices, other than those arising from interest rate risk, foreign
currency exchange rate risk or commodity price risk.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following Consolidated Financial Statements and Report of Independent Registered Public
Accountants are filed as part of this Item 8 and are included in this Annual Report.