Special Interest Comment - June 19, 2012: Ucore delinquent for 2011 and Q1 2 financial statements
As of June 19, 2012 Ucore Rare Metals Inc has not filed any financials more recent than its 9 month quarterly for the period ending September 30, 2011 when it reported that it still had working capital of $9.8 million, most of it as cash. The BC Securities Commission posted Ucore as delinquent for the Dec 31, 2011 annuals on May 4, 2012 (they were due April 29, 2012) and delinquent for the Mar 31, 2012 quarterly on June 4, 2012. Given that only the very worst companies, which Ucore with its reasonably well funded Bokan rare earth project is not, or ones that were engaged in a complex corporate transaction, which Ucore was not, fail to file their financials on time, anybody who owns Ucore should be worried about the possibility of a trading suspension. Ucore has not issued a press release explaining the filing delay; sometimes this happens when the accountant changes. Ucore's Mark MacDonald has informed me that they will be filed on SEDAR by Friday (editor's note: as of Tuesday June 26 they had not been filed - because we input company financial data as soon as the filing deadline has been reached, we can attest that this delinquency is extremely unusual). Ucore is supposed to be working on a preliminary economic assessment (PEA) which will give us some idea of the Bokan output potential, flowsheet, and associated cost structure. On April 18, 2012 Ucore announced that its PEA would be based on a 1,500 tpd underground mining plan based on an inferred resource of 5,275,000 tonnes of 0.654% TREO at a 0.4% cutoff.
|Base Case Resource Estimates|
|Project Resource Estimate - Bokan - Dotson Ridge|
|Mar 7, 2011||NI 43-101||Jim Robinson, Aurora Geosciences Ltd, Yellowknife, Canada||Cutoff: 0.4% TREO |
|Note: TREO basket price deck used was domestic spot $69/kg, others 3 yr domestic $56, FOB spot $126, 3 yr FOB $110, Toyota 2016 $66|
|Metal||Grade||Recovery||Contained Metal||% of GMV|
|Inferred Mineral Resources||5,275,000||$451/t||Rare-Earth-Metals||0.654%||100.0%||34,498,500 kg||100%|
|All Categories Spot||5,275,000||$451/t||Rare-Earth-Metals||0.654%||34,498,500 kg||100%|
|Spot Gross Metal Value||Market Cap as % of Net GMV||Spot Prices Used|
Ucore has not revealed what its mining dilution will be, nor has it published results of a metallurgical study with plausible recovery rates, but just to get a sense of what contribution Bokan could make to solving the world's rare earth supply problem, I have applied the 1,500 tpd mining rate to the reported resource grade with a 100% recovery to generate an annual output of 2,500 tonnes of rare earth oxides, broken down into individual rare earths in the potential production chart below, which assumes uniform recovery of the published distribution for the resource. Ucore is processing a 20 tonne bulk sample which will be key to establishing actual recoveries and associated flow-sheet costs, key inputs for a PEA.
Ucore has created a couple mobile apps available for free on its web site, one of which educates about the uses of rare earths, while the other helps Ucore shareholders keep track of sinking rare earth prices. The basket distribution chart below shows that Chinese domestic spot prices are back in a down trend since a brief uptick in April, while FOB prices continue to fall. Because Bokan has a significant 42% heavy rare earths its basket price has not sunk as badly as the basket prices for light rare earth dominated deposits. But that will be of little consolation if Ucore cannot file its financials and gets suspended from trading.