Canada Rare Earth Corp. (TSX.V: LL): Sourcing, Adding Value and Selling Rare Earths and Other Mineral Products; Interview with Tracy Moore, CEO

By Dr. Allen Alper, PhD Economic Geology and Petrology, Columbia University, NYC, USA
on 3/22/2019
Canada Rare Earth Corp. (TSX.V: LL) is generating revenues and gross profits as it develops an integrated, international commodity supply chain business based on the rare earth industry and with increasing attention directed to valuable by-products. The business involves sourcing, adding value and selling rare earths and other mineral products in all stages and forms utilizing proprietary, affiliated and third-party sources and facilities. We learned from Tracy A. Moore, CEO of Canada Rare Earth, that the Company is focusing primarily in South America and Southeast Asia for sourcing and processing products. It is gaining momentum and plans to double and triple the volume of its revenue (currently in the order of 2.4 million dollars). We further learned from Mr. Moore that Canada Rare Earth is in discussions to secure a position with a refinery currently in construction and expected to be operational in the near future and that is to become the cornerstone for the company's business. In the meantime, Canada Rare earth continues to seek permitting of a completed refinery in Laos. Near term plans include strengthening and reinvigorating some relationships in South America including a prospective rare earth mine and a tailings processing operation.

High-Purity Rare Earth Oxides

Dr. Allen Alper: This is Dr. Allen Alper, Editor-in-Chief of Metals News, interviewing Tracy A. Moore, who is CEO of Canada Rare Earth Corp. Could you give our readers/investors an update on what's been going on since the last time we interviewed? Also for the benefit of the thousands of new readers/investors, who have joined us since our last interview, could you give us an overview of your Company?

Tracy A. Moore: With pleasure. We are achieving great strides in our international commodity supply chain business. Our proprietary sources of supply are forming through joint ventures and partnerships while we are expanding and diversifying sources from independents and agents. With increased security of supply, we are placing even greater emphasis on processing facilities and operations particularly in South America and Southeast Asia. The facilities increase our options of selling supply raw materials or selling value-added products for greater returns. Our solid customer base is expanding and is encouraging us to accomplish more, faster.

Our trading revenue, for the last two years, has been in the order of 2.4 million dollars. I believe revenues in the current quarter will be much above historical average. So, we're gaining momentum.

We continue to study opportunities, which will add to our proprietary supply and processing capabilities. With our momentum and accomplishments, we are asked, with increasing frequency, to participate in other situations. One of our challenges is to maintain focus on the key building blocks to our business and yet be open to new opportunities and new relationships.

We are aware of a state-or-the-art refinery currently in construction and we are in discussions to secure a position. Meanwhile we are continuing to seek operating permits for the completed refinery in Laos. I suspect we'll be changing our approach, in dealing with the Laotian government, as we sincerely believe we've done everything reasonable and still the operating permits are being withheld.

Dr. Allen Alper: That sounds very good. Is this in some other country?

Tracy A. Moore: The refinery that's in progress is in a country more stable than Laos and better in terms of greater assurance in receiving operating permits. We're also looking at a number of other locations in South America. We have a good team of people that work with us. They have a like mind in terms of understanding the value that enhancement and separation refineries can add to the rare earth chain.

Dr. Allen Alper: That sounds great. Could you elaborate on what the business model is?

Tracy A. Moore: Our model focuses generating revenues and gross profits as we develop our international, integrated supply chain. We are selling commodities though hedged transactions, however, our goal is to enhance concentrates into higher purity and different saleable products and, in the case of rare earth concentrate, separation into the individual elements in oxide and metal form. This value-add processing is the weak link in the chain outside of China. That's where we can add the greatest value, due to the closely-knit team we've accumulated. Each refinery requires four key components. One is a long-term supply of robust concentrate, and so we will work with mining operations or tailing operations to have a good source of product to feed into a refinery. The second key ingredient is the location of a refinery in a jurisdiction that would be stable, in which we can operate as a good corporate citizen in terms of the environment and social aspects and anything else that's required.

The third is having three to eight customers, who will take up a majority of the produced product from the refinery. The fourth aspect is the financing, which is required to acquire or build the refinery and to provide the working capital needed to buy the concentrate and operate.

Dr. Allen Alper: That sounds like an excellent model. Could you discuss the primary uses for some of the Rare Earths that you are recovering?

Tracy A. Moore: Well, typically, all rare earth elements are found in any one source, although they likely be found in varying percentages depending on the deposit. The most important and highest profile elements currently are neodymium and praseodymium. These are used for permanent magnets. One of the high profile uses for these magnets is in electric vehicles. Prices are at a good level right now, and they're expected to go up as the demand for electric vehicles increases.

Dr. Allen Alper: Wow! That sounds excellent! It sounds very good to be tied into a growing market like the electric vehicle market. That's exciting. Could you highlight your goals for 2019?

Tracy A. Moore: Our goal for 2019 is to secure a position with a fully built refinery, and this will be the cornerstone for our business. Other key aspects are to maintain our trading of the rare earths and to double or triple our revenues and product volumes. We'll enhance our relationships with some key financing groups who share our vision and seem to be sincerely interested in working with us. We will also be spending more time securing relationships with customers for the rare earth products.

Dr. Allen Alper: Sounds excellent! Could you update our readers/investors on the share structure of your Company?

Tracy A. Moore: There's 173 million shares issued along with 23 million warrants and options. Our strategy for many years has been to avoid issuing shares and we have been successful in following this approach as our operations generate gross profits which help to offset some of our expenses.

Over the past year we made one exception in the case of a financing and strategic relationship. We accepted a $1,500,000 working capital loan from a wholly-subsidiary of a major Asian-based trading company. The ally converted $300,000 of the loan onto shares and warrants and is considering converting some or all of the balance.

Dr. Allen Alper: That sounds very good. Could you update our readers/investor on your background and your team?

Tracy A. Moore: Our team has worked together for many years in a cohesive and complementary fashion. My background for over 20 years has been primarily corporate finance and international business development. For the past 7 years I have focused on the global rare earth industry. Peter Shearing, our Chief Operating Officer, has a background in engineering and contract manufacturing. Other member of our team have extensive relevant experience in project management, government relations and natural resources. So, we feel that we have a very good team, a very rounded and very capable team of people that can carry out our business plans.

Dr. Allen Alper: That's excellent. Could you tell our readers/investors the primary reasons they should consider investing in your company?

Tracy A. Moore: One of my mentors would say that until we have a shovel in the ground, we're a concept. We've waited to promote our company until we have moved beyond the concept stage – and that time is now. We are one of the few companies involved in the rare earth industry outside of China that has revenues.

Most companies outside of China, in this industry, are years from revenues and have numerous technical and commercial issues to resolve. Whereas we have access to proven processing know how, and we are in business.

We are starting to promote our company, creating a greater awareness. The promotion should have a direct impact on the appreciation for our company and therefore an increase in share price.

Dr. Allen Alper: That sounds like an excellent approach, an excellent business plan, and execution. Is there anything else you'd like to add Tracy?

Tracy A. Moore: Just to thank you for interviewing us for Metals News, Allen. I appreciate it and I look forward to speaking with you in the very near future. We're most hopeful about achieving some major milestones in the not too distant future.

Dr. Allen Alper: Well that sounds excellent. We’ll publish your press releases as they come out so our readers/investors can follow your progress.

http://www.canadarareearth.com/

Tracy A. Moore
Chief Executive Officer
tmoore@canadarareearth.com