May 7 2013
Canada Rare Earth Corp. ("CREC" or the "Company") is pleased to announce that it has entered into a letter of intent ("LOI") for the acquisition of its initial site for a rare earth refinery in the Pacific Northwest region of the United States.
A location in North America is viewed by CREC as critical to providing stable supply of rare earths to businesses and industries in the United States, Canada, and Mexico. The site is comprised of approximately 100 acres and has excellent infrastructure with readily available power, water, and robust transportation infrastructure. The LOI also includes a right of first refusal to acquire two adjacent land parcels, which are each subject to separate option agreements. The site is zoned for heavy industrial use and is associated with some existing permits for heavy industrial use that will likely need some adaptation. Our preliminary assessment of the location is that it is ideally suited for a rare earth refinery and provides flexibility due to its size, location and characteristics.
Our corporate strategy is to establish a vertically integrated rare earth business with multiple refineries in strategic locations. We envision full spectrum (light and heavy) rare earth refineries in as many as five separate countries with combined annual capacity of 15,000 metric tons of separated rare earth oxides. Locations under consideration include North America, four countries in Southeast Asia, two countries in the Caribbean, several in the middle east, and eastern Europe.
Our due diligence on the proposed refinery site in the Pacific Northwest will include investigating and assessing: the availability of suitable domestically sourced rare earth concentrate; anticipated operation costs; suitable financing arrangements for the contemplated capital expenditures and operations; environmental claims, issues and remediation; regulatory and permitting issues; and local, state and federal community involvement and support. Although we believe that the selected site will meet the necessary requirements for building a refinery there can be no assurance that results of our due diligence will result in findings suitable to the Company.
CREC recently appointed Nick Vermeulen to spearhead this initiative. Nick will be supported by CREC management and advisors and our strategic partner, CEC Rare Earth Corporation ("REC").
As stated by Tracy A. Moore, CEO of CREC, "Nick's initial focus will be on community and government relations, permitting and seeking concessions from utilities. Our partner, REC, will investigate sources of rare earth concentrates with a view to aligning those to customer needs (particularly North American domestic customers), preliminary scoping of the refinery, financial modeling and cost analysis. After we are successful in permitting, negotiating pro-forma contracts and proving our business case, we will move then to detailed design and construction."
The purchase price for the site is US$50,000 per acre subject to negotiation. A first refundable deposit of US$50,000 is to be provided upon signing the LOI. Within 60 days CREC is to ratify its intention to proceed and confirm the exact purchase price at which time a second refundable deposit of US$50,000 is to be provided. CREC will continue with due diligence for another 120 days at which time a further deposit of US$100,000 will be required. CREC may at that time either remove subjects and the deposits of $200,000 will become non-refundable or may continue due diligence procedures for up to another 180 days with no additional deposits required but US$50,000 will become non-refundable. Closing of the acquisition is to occur no later than 180 days after CREC completes due diligence to its satisfaction.