By Peter Epstein, CFA, MBA http://EpsteinResearch.com @peterepstein2
A new treatise by Christopher Ecclestone on Ucore Rare Metals (UCU.V) / (UURAF) was released on July 15th. The report is from the very well respected Hallgarten & Company. Readers be warned, the report is filled with words that I could neither pronounce, spell or understand, words like, “bedeviled,” “impelling,” “capricious,” “stymied” and “eschewed.” Even the author’s last name is hard to spell. Further, I think I found a spelling error in the dissertation. If true, that’s disheartening to say the least. Ecclestone’s 10 page report can be grasped by the layperson, as long as he/she skips pages 2-7. For those brave souls attempting to consume the entire report, rest assured, there are pictures. Here is a July 23rd Video Clip of Mr. Ecclestone from InvestorIntel.
Seriously though, I believe that getting the gist of the report is achievable. It’s tough sledding, but maybe that’s a good thing. Ucore’s Molecular Recognition Technology, “MRT,” continues to be successfully operated at commercial scale, in a number of other applications, just not for Rare Earth Elements, “REEs,” yet. Importantly, the entire technology / flow sheet is fairly intuitive, albeit not easy to replicate. For those possessing the requisite kill set, or as Steve Izatt said, not just those with chemical backgrounds, but, “persons with processing and technical backgrounds,” virtually all fall in line. I for one think it hardly matters how complex (or not) MRT actually is. I’m excited and indebted to the experts who DO know how and why MRT works, and have become true believers. That list is growing. Therefore, I’m not a believer in MRT per se, but a believer in the dozen or more highly experienced experts using it in the field and others who are confident that MRT will be successful at commercial scale for REEs.
Common words in reports and investment articles include the ubiquitous, “de-risked,” with the phrase, “re-rating of the stock” a close second place. For Ucore Rare Metals, these words actually apply, consider the following Ecclestone quote,
“The real problem (and expense) was in the chemistry…. Rare Earths presented as a whole new level of trouble altogether. The requirement in most cases to process all the material through a myriad of chemical phases to get at the more valuable components was mind-boggling and expensive. Moreover it quickly became clear that dealing with substantial amounts of noxious by-products was the price miners would have to pay to achieve commercial product of a desirable product range.”
As Ecclestone explains, the process currently used (solvent extraction) is highly energy intensive, polluting and time consuming. A process that’s been used largely unchanged for decades. Over the past few years, new proposed technologies and flow sheets have come to the fore that show great promise. I’ve said that there’s room for more than just one improved separation solution. However, what helps make Ucore, “derisked” is that MRT is at a more advanced stage, thereby attracting investment dollars.
Notably, the recent injection of C$4.9 million from a high net worth investor in the U.S. When I say, MRT is more advanced, I point to the proposed semi-commercial scale pilot plant expected within six months. Use of the word de-risked is appropriate again as MRT has the possibility (some would say likelihood) of not only enhancing the economics of its flagship Bokan Mountain project, but also exploring the opportunities surfacing from the Company’s exclusive rights to separate all REEs globally. In fact, Ucore also has the exclusive rights to, “mine” tailings ponds and conduct reclamation activities that don’t necessarily retrieve commercially valuable materials, but would still be profitable as a much needed service.
The evidence described above has the potential to, dare I say, “re-rate” Ucore’s stock price. As investors a) see a pilot plant in action, b) Ucore potentially signing tolling mandates, c) possibly attracting additional non-dilutive investment capital and d) entering into tailings/reclamation contracts, RE-RATING could be at hand! The bottom line on the preceding awkward sentence is simply that cash flows could be coming faster than hoped, minimizing the need for death by a thousand cuts of equity dilution. Even when the bigger checks need be written, with the warranted excitement around MRT, investors should not forget about the promising US$ 145 million (what I call pre-approved) low-cost loan by Alaska’s AIDEA. Please view these excellent video clips of Jim McKenzie, President & CEO, Ucore Rare Metals Inc. in which he interviews Nobel Laureate Dr. Jean-Marie Lehn.
I’m impressed by Mr. Ecclestone’s report, I know him and believe he’s one of the best writers on a number of natural resource subjects. The fact that he’s on board with MRT and therefore sees great upside in the Company’s valuation is yet another vote of confidence. The more eyes on MRT the better, turning skeptics into believers is the name of the game at this stage. I can’t think of any cogent arguments against MRT that give me pause. Remember each set of eyes that end up believers will both “derisk” and “re-rate” the stock, hopefully at the same time, and sooner rather than later!
Ucore Rare Metals is a speculative, small cap company with Canadian and U.S. listed stocks that could continue to be volatile. An investment in Ucore Rare Metals is not appropriate for everyone. Readers and investors are encouraged to do their own due diligence before buying of selling and stocks, especially risky small caps. The author, Peter Epstein, owns shares of Ucore Rare Metals, bought in the open market. Mr. Epstein may buy or sell Ucore Rare Metals stock in the future. Mr. Epstein is not a registered investment advisor. Readers and prospective investors should take that fact into consideration. This article reflects facts and opinions that are entirely my own and not necessarily the views of Mr. Ecclestone or his firm. I have no prior or existing relationship with Mr. Ecclestone or his firm Hallgarten & Company.
Neither is this article necessarily representative of the facts and opinions of any person at Ucore Rare Metals. I wrote this article entirely on my own. I can not verify that the facts and opinions herein are accurate. Mr. Epstein believes the information contained in this article is fair and accurate. As of the date of this article, Ucore Rare Metals is a sponsor of http://EpsteinResearch.com For more information about http://EpsteinResearch.com and to sign up for free, instant article that appear on my website, please simply provide an email on the home page of the website. This is a free email alert, I do not send out more than 3-4 emails per week.