Ucore Rare Metals [TSX-V: UCU] / [OTC: UURAF] continues to make confident strides in the commercialization of its Molecular Recognition Technology (“MRT”) platform, contained in an enterprise to be co-owned between Ucore and IBC Advanced Technologies, Inc.
Key to the enterprise is that it has exclusive rights to deploy the
entire SuperLig®/MRT catalogue of metals separation products to monetize
tailings applications anywhere in the world, in addition to mining and
recycling applications in the REE and PGM sectors.
With over 60 SuperLig® products already developed for
a wide range of metals, the opportunity is a large one, and Ucore is
pursuing a technology licensing plan to get MRT in to the maximum number
of applications. Diverse applications include inserting MRT directly
into operating facilities (and/or bolting MRT onto the back-end waste handling function), recycling, remediation and, “urban mining,” which entails separating high-value metals (“HVMs”) such as Heavy REEs, PGMs, lithium, cobalt and tungsten.
There
are a handful of mission critical REE, green energy & high-tech
metals that could become difficult to reliably secure under certain
adverse circumstances. Some examples from my review of various (mostly government agency)
reports, the REEs dysprosium, yttrium, erbium, europium, terbium pop up
a lot. Oil was of crucial importance in last century’s wars, will
electric battery components and REE be this century’s show stoppers?
It’s no secret that in addition to an insatiable need for various REE,
the U.S. Department of Defense (“DOD”)
is front and center in the analysis and adoption of EVs for military,
national defense, homeland security & communications activities.
In
addition to its broader vision to license MRT technology in to multiple
metals sectors, Ucore has a near term agenda focused on accessing some
of the highest demand HVMs in the U.S. On November 15th, the Company
announced it has engaged in planning & development of a Strategic
Metals Complex (“SMC”),
capitalizing on the MRT platform developed for the recently completed
SuperLig One pilot plant in Salt Lake City. The SMC will be a
commercial production plant designed to separate feedstock containing
critical rare earth elements /metals (“REE”) (e.g., dysprosium, neodymium, terbium), and PGMs (rhodium, palladium & platinum).
This
is proof that Ucore is ready to roll, detailed engineering work is well
underway. Initial feedstock is expected to be sourced from, “recycling, swarf and tailings-generation partners in the automotive and REE permanent magnet industries.”
Ucore technology partner IBC has extensive experience in this area,
for instance in PGM applications used successfully by operators such as Impala Platinum in
South Africa. The potential economics for MRT plant placements are
impressive. Based on my experience with similar licensing platform
agreements, annual royalty fees of
between 2% and 5% are fairly common. That, and an upfront licensing
fee, plant design & maintenance fees, and recurring revenue from the
sale of proprietary materials and services. In my opinion, mandates
with large companies like Teck Resources (NYSE: TCK) could easily have Net Present Values in the tens of millions of dollars.
President/CEO & Director Jim McKenzie commented,
“Our
pilot facility provides a blueprint for construction of a new
generation of SuperLig® separation facilities to add to already-existing
MRT installations around the globe. This Strategic Metals Complex
represents not just a transition by Ucore towards near-term production
and revenue, it represents a reaction to a very real domestic need for
high-purity energy metals. In turn, the SMC represents a significant
progression for Ucore, capitalizing on the innovative design of
SuperLig®-One, and leveraging this platform in to full scale
production.”
My interest in Ucore is reinvigorated. Simply stated, MRT
is faster, less energy intensive, generates fewer emissions and waste,
does not use solvents or toxic chemicals, has a smaller surface and
environmental footprint, requires less cap-ex and will enjoy lower op-ex.
Now here’s where things get more interesting. While an important theme
underpinning Ucore remains the same, I believe it takes on new urgency
with the election of Donald Trump. That theme being– Security of Supply of
indispensable REE and critical green energy / high-tech metals. Few
may realize that China not only controls, but completely dominates, the
global supply of rare earth oxides, includes mining, processing &
refining.
It’s
reported that over 95% of pure, separated REE produced last year were
in China, REE in the hardware and software applications enabling
National & Homeland Security and the capability of conducting both
offensive and defensive military operations.
In
addition to the paramount importance of knowing where one’s
electricity, food & water come from, and the risk of supply
disruptions therein, knowing which REE and other HVMs our modern society
cannot live without, is necessary and prudent. In World Wars I &
II, people knew exactly which materials were essential to the war
effort, tin, rubber, aluminum & steel, among others…. Does the West
need to enter into a “hot” war to learn which metals are in fact
critical?
Which critical metals will be most vulnerable to steady, secure supply to the U.S. DOD and DOE?
Am I being alarmist with the talk of WW III? Perhaps, but no matter what the future holds, I think that Ucore Rare Metals is
well positioned to thrive in a world becoming more dangerous and more
dependent on technology, with no end in sight. Investment funding for
companies like Ucore are increasingly becoming available, for example
this “Innovation Summit” organized by “America’s largest angel investment fund, representing over $2.5 billion in early-stage, high-risk technology funding...”
Regardless
of what readers think of Mr. Trump, he has explicitly stated things
that favor larger military budgets. Without further commentary, here is
what he has said, 1) Japan and Korea should strongly consider defending
themselves 2) western Europe is not paying nearly enough for the
military protection provided by the U.S. 3) given items 1, & 2, the
belief that the military has been meaningfully underfunded and is in
desperate need of a face lift. In addition to National Defense
considerations, remember that Trump is gunning for China as well.
A
larger U.S. military budget correlates well with larger military
expenditures around the world. That’s why a group of 6 well known
military and homeland security stocks including Raytheon (NYSE: RTN), Lockheed Martin (NYSE: LMT), Harris Corp (NYSE: HRS) L-3 Communications (NYSE: LLL), Rockwell Collins (NYSE: COL) and General Dynamics (NYSE: GD) is up 15% since November 8th, vs. the S&P500, up 4%. Why should it be any different for Ucore,
on the leading edge of new, green, high-tech platforms that will shape
global geopolitics and our technology paradigm for decades?
Finally,
readers might recall that President-elect Trump said he will designate
China a “currency manipulator,” and slap a 45% tariff on Chinese
imports. Given that country’s giant pile of U.S. Treasuries, and its
control and utter dominance of all things REE, a trade war with China
could be a dangerous undertaking.
As
has been reported in detail by Ucore, REE and hard to replace or
substitute HVMs are essential ingredients in a large and growing number
of DOD & Department of Energy (“DOE”)
applications, not to mention in mining and industrial settings. Also
contained in prior Ucore press releases is evidence that its MRT
platform has been proven and independently verified, at pilot scale and
ready for production scale in the near future.
What
makes MRT superior to other proposed solutions? Relying heavily on
last century’s separation technologies like solvent extraction is an
ill-advised and increasingly non-viable strategy, especially in China.
It’s impossible to ignore the horrendous air and water pollution,
perhaps the worst on the planet, in Chinese cities. Not only is
China de-emphasizing coal and going all-in on nuclear power, it already
leads the world in wind and solar power and the electrification of its
transportation sector. MRT is not only greener, it will deliver
desperately needed security of supply to global end users, especially in
the U.S.
Just-in-time
processing and supply chains are the norm. Turning complex facilities
and integrated systems off, and on, is time consuming, costly and
introduces unnecessary operating risks. It’s alarming that U.S.
agencies, both inside and out of the DOD, not to mention powerful
industry trade associations, have failed to address this critically
important issue. The ongoing failure to obtain some semblance of
security of supply is a clear and present danger.
Conclusion
The implications for REE mining and production outside of China, are profound. Ucore Rare Metals [TSX-V: UCU] / [OTC: UURAF] is
in a prime position to 1) benefit from higher REE & HVM prices 2)
be part of the solution of the rallying cry for security of supply, and
3) address increasing demand for products and technologies that
accelerate the game-changing shift away from fossil fuels.
All
roads lead to greater use of select metals like the ones mentioned, but
also greater use of metals that galvanize steel and can be used in next
generation alloys. However, perhaps most important to recognize, is
that some of the REE/HVMs most in demand and most
difficult to secure in the future, might not be on anyone’s radar
screen today. That’s why the flexibility afforded by over 60 SuperLig®
products embedded into Ucore’s flagship enterprise with IBC on MRT is an
increasingly important and valuable asset.
End note
: Hiding in plain sight, China’s monopoly on critical REE is a well-researched and reported topic.
ThreeConsulting.com
Article
April, 2016
BreakingDefense.com Article March, 2016
Russia Direct Article February, 2016
U.S. Government Accountability Office Report February, 2016
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Peter Epstein, about
Ucore Rare Metals
,
including
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