1、US Rare Earths, Inc.: A Discussionwith Ed Cowle and Jack LiftonGareth P. Hatch, Ph.D.Founding Editor - Terra MagneticaDirector of Technology - Dexter Magnetic Technologies, Inc.First Published: 11/23/09Copyright 2009 Gareth Hatch. All Rights Reserved.This paper was downloaded from Terra Magnetica, a
2、n independent online resource for information and commentary on permanent magnet materials, devices Ive also been a director for an American stock exchange company, which a group of investors and I bought and took private in 2004. I spend a lot of time working on mergers and acquisitions for that co
3、mpany. That companys called Laser Technology Inc. We started the company with three people; we now have 100. Ive been working with them for the last 20 years. The reason I mention that is because parallel to that, myself and two partners, DeWorth Williams and his son Geoff Williams, heard about some
4、 thorium deposits. Let me tell you an interesting story regarding our initial acquisitions of the companys mineral reserves.G: Sure.E: So fifteen years ago, while I was involved in these various activities, after Id left the big investment banks, we were told by someone that we knew, that 80% of the
5、 US thorium was in an area in Montana and Idaho called Lemhi Pass and that Idaho Power, which was a New York Stock Exchange company, had just given up their claims to these properties. We took a chance and we staked claims over the properties where Idaho Power was. We were very proud 15 years ago th
6、at we had staked and took ownership of 80% of the US thorium supply.The problem was, that the reason that Idaho Power had left, was because thorium was not in demand. Nuclear had just fallen out of favor and I guess we were the only ones that really wanted it. There are seven states in the United St
7、ates where, through the Bureau of Land Management, you can put a claim down and say, “I have the mineral rights to this property.” And every year you have to pay a fee showing that youre active on those claims.So, for a period of, lets say the last 15 years, we have paid that fee. We also purchased,
8、 from Idaho Power, all of the old records on the property. The records included work that Tenneco did, work that Union Carbide did, reports that the US Government had done and without a question, it was at least 80% of the US thorium supply.Within the records, there was also information on something
9、 called rare earths. At the time, I didnt know what they were and I barely knew thorium. But, each year we paid the fees and kept everything going and it was just irrefutable that this is what it was, based on government and industry reports.US Rare Earths, Inc.: A Discussionwith Ed Cowle and Jack L
10、iftonGareth P. Hatch, Ph.D.Founding Editor - Terra MagneticaDirector of Technology - Dexter Magnetic Technologies, Inc.G P Hatch - U.S. Rare Earths, Inc.: A Discussion with Ed Cowle and Jack Lifton2About five years ago, we heard that nuclear was getting a stronger audience. We heard what everyone el
11、se heard; that the country and the world needed to go to nuclear and we started hearing the word thorium. We formed a company called Thorium Energy. We formed it around those claims and around the prospects that there would be thorium future in nuclear.We contacted Jack Lifton, because hes the only
12、one we had seen that was writing about thorium four or five years ago. Each year, we would Google thorium; it would come up many, many more times. In conjunction with Jack, we started reviewing all the old geology records, including the rare earth work. Im going to let Jack get into some of that, bu
13、t I just wanted to mention that.As Thorium Energy, we worked with a number of politicians. We worked with some very big companies who had told us they were going to get into thorium at some point. We communicated with people in India, China and we had very high hopes for the United States getting in
14、volved in the thorium fuel cycle very quickly, especially with a bill that was being introduced by Senators Orin Hatch and Harry Reid, calling for a thorium fuel cycle.At the same time, parallel, we also started realizing the value of rare earths and what was going on worldwide and also in the Unite
15、d States, as far as importing from China. With Jacks help and others, we started studying the area and realized that we did have a substantial amount of rare earth at Lemhi Pass.We then saw, through studying old records and old USGS reports, that there was some activity at Diamond Creek. About three
16、 years ago, we threw down our first stake at Diamond Creek. Diamond Creek has turned out to be Ill call it our jewel. Lemhi Pass is a thorium deposit with rare earths. Diamond Creek has turned out to be a rare earth deposit with thorium. We have just finished our staking of the entire Diamond Creek
17、district this summer. In the last two weeks, weve just gotten some of our final chemical reports showing higher levels of rare earth than we had originally believed, based on USGS reports.G: So, maybe we could talk about some of the key characteristics of those deposits. Theres a lot of talk about l
18、ight rare earth versus heavy rare earth and different mixes of rare earths. Jack, you may want to jump in here.J: First of all, Gareth, there are two things here to pay attention to. Thorium is always associated with the rare earths and I think you and I spoke earlier this week about an Australian r
19、adio report, where an Australian environmentalist and a mine Chairman was talking about putting the onus on, “oh, the thorium - mine doesnt have it, but the other guys does,” - i.e. its evil.G: Right.J: Well, that was the feeling outside of the mining industry, its always been the feeling about anyt
20、hing radioactive, and thorium is natures most radioactive ore, not uranium. So, its not that its dangerous, its just that its a bad word in the world.The fact is, that when you mine for rare earths, the thorium is separated almost at the very beginning of the process. It comes out with the first sec
21、tions of lanthanum and cerium. So, it can be separated immediately. Rare earths have been mined commercially for over 100 years and it really hasnt been a problem. Its more of a problem in the imagination than it is in reality.Now, in the original deposits that I looked at for US Rare Earths, there
22、was very high thorium content, so high that the USGS refigured its chart of where the thorium is in the world, and putting that deposit in there caused the United States Geological Service to declare the Lemhi Pass region as the worlds principle resource of thorium, the largest deposit there is.The
23、point here, is that is an asset, not a liability, because in fact, the thorium energy revolution is well underway. Its just that its underway in China, India, perhaps Russia, but these countries are developing thorium fuel cycles and it takes 10 years to develop a thorium fuel cycle, which is not a
24、length of time that the institutional investment community is really even aware of. They dont know of anything that exists much beyond the next quarterly report.So, this wasnt of great interest. But, thorium is always, repeat, always associated with rare earths. And whats happened for US Rare Earths
25、 is not an G P Hatch - U.S. Rare Earths, Inc.: A Discussion with Ed Cowle and Jack Lifton3unusual story in the mining of rare metals. They started out doing one thing and wound up doing something else. And the fact is that the latest data which Ive seen from the Diamond Creek area, which is in Idaho
26、 near the town of Salmon near the Lemhi Pass, shows very significant grades of rare earths - 4% material, of which a significant amount, something over 1% is heavy rare earths.Now, whats special about this? Ill tell you whats special about it. The largest rare earth deposit I have ever seen, was in
27、Canada at Thor Lake in Northwest Territories. But, its top grade is 2.6%. The typical grades at another Canadian company are 1-2%. I can tell you that the deposits at Lemhi Pass have been surveyed by many people for various reasons over the last 50 years, and what stopped them originally was when th
28、ey focused on Lemhi Pass, it was below 1% and they said, “Well, you know, there are other deposits that are much higher grade,” and they went away without even paying attention to further development.Well, the company supplies me with their geological data, and the latest as Mr. Cowle just said, the
29、 latest discovery was the real icing on the cake. The fact that Diamond Creek deposits are 4% of which a significant amount is heavy rare earths, places them, in my opinion, right in the forefront of the world rare earth deposits.The other thing is that Diamond Creek, Idaho is served by a main inter
30、state highway. Theres water power and experienced miners there, quite unlike rural Greenland, where even Eskimos have never gone, and quite unlike some of these deposits Im hearing about in Mozambique. It sounds awfully mundane, but they need to be developable theres a new word a deposit of ore need
31、s to be near a place with good logistics. It has to have a road, rail, a port. It needs electricity. It needs water. It needs miners. All of these things arent present in 90% of the great new discoveries of the world: Labrador, Greenland, Mozambique. This is silly stuff for the distant future. But,
32、Salmon, Idaho - you can get there in a car, have a hamburger at McDonalds and literally just a few minutes away is this rather rich deposit of rare earths.Now, as Ed said, this was originally looked at for thorium. Idaho Power is a utility that was interested in developing nuclear reactors. Idaho ha
33、s many of them, or several of them. They thought, “well, thoriums going to be used.” It was very much in the headlines 40 years ago. And then when it wasnt, they said, “The heck with it.” And their geologist had worked with the United States Geological Survey and they said, “You know, besides thoriu
34、m, theres an awful lot of rare earth.” They said, “So, what? How many lighter flints does anybody need?” Thats what rare earths were used for 40 years ago, plus tracer ammunition for the military. Every 50th round, I think, in a machine gun box is actually a rare earth with a shell of copper over it
35、 and it ignites in air when the copper burns off. So, thats how John Wayne can see where his machine gun is going. Unfortunately, at the present time, we use radar controls and even a high school dropout can run the same machine gun better than John.Now today, with the revolution in high tech, batte
36、ries, magnets - as you well know - the demand is not only there, it looks like were reaching saturation. It looks like the demand will go over supply. today we source everything in China. So, it looks like in the next five years were going to have a crisis of supply and the only way to sidetrack thi
37、s crisis is to begin producing rare earth materials outside of China. And the key rare earth materials are the heavy rare earths.Weve got lots of people that have large deposits of the light rare earths, the lower atomic-numbered rare earths. Very few people have the heavy rare earth deposits and qu
38、ite frankly, I know where all of the deposits with significant heavy rare earths are in North America. Thats not because Im so smart, but because there are so few of them, I can memorize them. The fact is, the Diamond Creek property is today, the most accessible, undeveloped rare earth resource with
39、 significant heavies that there is in North America, no question about it. I defy anybody to tell me otherwise if its not correct, please give me the counter data, because it is correct.There are heavy rare earths in some newer, in terms of discovery, Canadian deposits, which are today not served by
40、 infrastructure. There are no heavy rare earths that Im aware of in the California deposits of Molycorp which are, however, very significant light rare earths as are the light rare earth deposits of Lynas in Australia. I am aware of heavy rare earths in northern Quebec, and there may be some in Gree
41、nland. There may be, but in any case, neither of those places is served by more than rudimentary infrastructure in any way.G P Hatch - U.S. Rare Earths, Inc.: A Discussion with Ed Cowle and Jack Lifton4G: So, based on the current information in terms of the types of rare earths that are there, and b
42、earing in mind that each deposit around the world is pretty much unique when compared to another, are there any unique or special extraction or separation processes that would be required to exploit this resource, or would it be similar?J: See, thats where Diamond Creek is today, at the point where
43、its been discovered - the exploration phase, but it hasnt been characterized. In other words, we dont know how large it is or the extent of the high grade 4% and where that high grade is. We dont know the extent of the high grade material, in other words, we dont know just how large the deposit migh
44、t be. This is normal in mining. Its at this point that the company needs to do that work, to characterize the ore mining. That requires a drilling program.So, the companys in the process of raising some money, I think privately, to do the drilling program to characterize the deposit. At the same tim
45、e, understand, once you characterize the deposit, it tells you what types of minerals are there and what quantity. Then, because theres been very few discoveries of new minerals in this area in a long time, once thats done, then you engage a metallurgy company, as its called in the trade, a chemical
46、 engineering company, and they develop a process to crack the ore - that is, to extract the materials, and to refine the ore, to separate them and purify them. Now, this is a normal way of doing business. Whats happened here is that US Rare Earths is clearly on the right path.G: So, Diamond Creek is
47、 the newer property in terms of interest for US Rare Earths?J: Yes.G: Is there established data concerning the rare earths present at Lemhi Pass?J: Oh, yes. I mean, that goes way back. Lemhi Pass is a very large deposit, but it has very large co-existing deposits of thorium. Now, that is not the cas
48、e at Diamond Creek. Diamond Creek has the normal ratio of thorium to rare earths, which is the thorium is less than 10%, maybe much less than that, whereas its more like 1:1 at the Lemhi Pass property.So, the fact is, to avoid the cost of the thorium separation and special handling, the best place t
49、o focus now is Diamond Creek. And quite frankly, with the current issue of supply caused by the Chinese decision to marshal their own resources and conserve them, this becomes a very, very critical deposit. Because, its within the US and we have vast light rare earth deposits in Southern California, which is trying to restart and now we have Diamond Creek. The two of them together would make the United States self sufficient in rare earth materials and independent of the Chinese.G: So, Ed - there have been some recent pre
