Highlights
- Multiple North American and European startups are developing advanced rare earth element (REE) refining technologies to reduce environmental impact and break China’s monopoly.
- Companies like Phoenix Tailings and REEtec are pioneering waste-free, low-carbon REE production methods using proprietary separation technologies.
- These emerging REE startups aim to:
- Establish domestic supply chains.
- Secure critical materials for advanced technologies.
- Promote sustainable resource extraction.
Over the past year, several rare earth element (REE) startups have made significant strides in developing innovative refining technologies to reduce reliance on traditional, environmentally harmful methods. Last December, Reuters (opens in a new tab) introduced some of the leading startups in the United States, providing an overview of their focuses and goals. It has now reviewed recent updates.
First comes Nova Scotia-based Ucore Rare Metals Inc (opens in a new tab) founded in 2006. With a focus on advancing the RapidSX™ technology (opens in a new tab), aiming to refine REEs more efficiently and with a smaller environmental footprint compared to conventional solvent extraction methods, the firm’s objective is to establish a North American REE supply chain.
What are some recent developments? As of October 2023, Ucore has been commissioning its RapidSX™ Demonstration Plant in Kingston, Ontario, processing tens of tonnes of mixed rare earth chemical concentrates acquired in a simulated production environment.
Founded in 2006, Ucore Rare Metals is becoming a leader in REE in processing. The company Innovation Metals Corp. in 2020 and again is commercializing its proprietary RapidSX™ critical metals separation technology. They bough (opens in a new tab)t the asset in 2020.
Also, Ucore’s proposed Louisiana rare earth refining facility is located within the England Airpark & Community, a Foreign Trade Zone, which could mitigate the impact of proposed tariffs on the import and export of rare earth products.
Ucore Rare Metals Inc. is a well-funded development-phase mining company focused on establishing rare metal resources with near-term production potential. With multiple projects across North America, Ucore’s primary focus is the 100% owned Bokan – Dotson Ridge REE property in Alaska. The Bokan – Dotson Ridge REE project is located 60 km southwest of Ketchikan, Alaska, and 140 km northwest of Prince Rupert, British Columbia, and has direct ocean access to the western seaboard and the Pacific Rim, a significant advantage in developing near-term production facilities and limiting the capital costs associated with mine construction. The Bokan property is particularly enriched with heavy rare earth elements, including the critical elements Dysprosium, Terbium, and Yttrium. Approximately 40% (by weight) of the rare earth elements contained on the Dotson Ridge property are heavy rare earths elements, as disclosed in the Company’s NI43-101 compliant resource estimate, released in March of 2011.
Financials and Valuation
Priced at 0.8400 and a market capitalization of $56.014 million, key performance indicators and rating metrics involving their Q1 2024 Financial Statements are below.
Ucore reported a net loss of $4.42 million in Q1 2024, a significant increase from the $1.64 million loss in Q1 2023. This reflects escalating operational and R&D expenses. The comprehensive loss, which includes foreign currency translation effects, totaled $3.95 million.
As far as cash and liquidity, the company reported cash holdings of $319,459, a marginal increase from the $248,382 at year-end 2023. This indicates tight liquidity. Cash has increased to about $683,000 but this is not a lot.
As of Q1 2024, current liabilities ($5.28 million) exceed current assets ($2.41 million), indicating a working capital deficit that may challenge short-term operational flexibility.
The total outstanding loans and convertible debentures increased to $7.71 million. Ucore has been renegotiating terms to extend maturities, but debt servicing will remain a burden.
On the financing front, the company raised $1.75 million in Q1 2024, primarily through convertible debentures, signaling a dependence on external funding.
In November, the company reported (opens in a new tab) funding via a non-brokered private placement, raising $2,401,665 through the issuance of 4,803,329 units at $0.50 per unit. Each unit includes one common share and half a warrant, with each full warrant exercisable at $0.75 for 24 months. The proceeds will fund feedstock agreements, customer offtake agreements, and engineering plans for the Strategic Metals Complex in Louisiana, along with debt servicing and working capital. Insiders Pat Ryan and Orca Holdings purchased 2,856,330 units for $1,428,165. The offering is subject to TSXV final approval, with securities having a four-month hold period.
The financial statements highlight significant doubt about Ucore’s ability to continue as a going concern due to persistent losses, negative cash flows, and limited working capital. Future operations rely heavily on securing additional financing or asset monetization.
Other risks include execution risks, as commercializing RapidSX™ technology and completing the Strategic Metals Complex are critical for future revenue. However, the company has yet to demonstrate commercial-scale success.
On the positive side, the company has secured government backing from the U.S. DoD and Canadian NRC, representing a vote of confidence in the technology.
The continued focus on R&D and facility development aligns with the long-term goals of establishing a North American rare earth supply chain.
While Ucore shows potential in the rare earth sector, its financial health raises concerns. Continued losses, liquidity challenges, and execution risks on critical projects warrant caution. The company’s future hinges on the successful commercialization of RapidSX™ and securing stable funding. Investors should monitor operational milestones and financing developments closely.
What about REEtec?
REEtec (opens in a new tab) has developed a proprietary process for manufacturing high-purity REEs with a significantly reduced environmental impact. The company aims to establish a sustainable European REE supply chain.
REEtec has secured financing to build its first industrial plant in Herøya, Norway, with construction underway. The facility is expected to commence production in late 2024, providing an annual output of 720 tons of neodymium and praseodymium oxides, which represents approximately 5% of the estimated EU demand.
The company has also entered into agreements to source raw materials from Vital Metals in Canada and has secured offtake for 80% of its NdPr production, including a 5-year contract with the Schaeffler Group.
With a focus on REE separation, the REEtec process combines high efficiency and competitive cost structure with best-in-class environmentally friendliness. An important element in the process is that virtually all consumables are recovered and re-utilized.
The energy demand is also very low, and electricity consumption is 100 % based on hydroelectric sources from Norway’s green grid. REEtec’s technology allows us to produce high-quality products in a very efficient way and with a much smaller impact on the environment than any conventional rare earth separation process.
Founded in 2021, the manufacturer of REE-based products intended to help in achieving climate neutrality. The company’s products are well-documented through chemical analysis and cover most oxides and nitrates at different purity levels, enabling users to get access to elements that are produced with a small impact on the environment.
Rainbow Rare Earths
Rainbow Rare Earths Limited (opens in a new tab) (RBW.L) a mining company founded in 2011 engages in the mining and exploration of rare earth minerals. With a share price of $12.30 as of this writing, It primarily holds a 90% interest in the Gakara project covering an area of approximately 135 km2 located in Western Burundi. The company is based in Guernsey, the United Kingdom.
Rainbow Rare Earths plans to deploy a refining technology developed by its partner, K-Technologies, utilizing a process known as continuous ion exchange. The company aims to establish REE refining capabilities in South Africa by 2026.
As of December 2023, Rainbow Rare Earths reported the firm was on track with its plans, working towards deploying the continuous ion exchange technology to enhance REE refining efficiency and environmental sustainability.
Financial and Reporting
Rainbow Rare Earths has made significant progress in fiscal year 2024, emphasizing its strategic role in diversifying the REE supply chain, particularly for critical magnet materials essential for decarbonization and advanced technologies.
The company’s flagship Phalaborwa project in South Africa has achieved key milestones, including pilot production of saleable rare earth carbonate and Nd/Pr oxide, setting the stage for the first commercial extraction of REEs from phosphogypsum. A $50 million investment commitment from the U.S. International Development Corporation (via TechMet) and a $10 million post-year-end royalty and equity financing with Ecora Resources underscore strong third-party validation of Phalaborwa’s strategic importance.
The company achieved substantial optimization of the Phalaborwa flowsheet, enhancing efficiency and reducing costs, with updated project economics expected later in 2024. Resource updates extended Phalaborwa’s life to 16 years, with an estimated in-situ value of $7.3 billion, even at subdued market prices. Rainbow is advancing its partnership with Mosaic for the Uberaba project in Brazil, which offers potential scalability in secondary REE recovery.
Despite a reduced net loss of $4.3 million for FY 2024 (down from $12.9 million in FY 2023), Rainbow faces liquidity challenges, with only $0.1 million in cash at year-end, mitigated by subsequent funding. Operational expenditures focused on Phalaborwa totaled $10.6 million, while general costs remained tightly controlled. The company’s Burundi-based Gakara project remains on care and maintenance due to regulatory disputes, with its assets impaired to zero.
Rainbow’s commitment to environmental, social, and governance (ESG) principles is evident in its focus on resource recovery from waste materials and plans for renewable energy at Phalaborwa. The company’s innovative technology positions it as a leader in responsible REE production, with strong support from government and industry partners. While further funding is needed for Phalaborwa’s development and other opportunities, Rainbow’s strategic position in a high-demand market and its ability to attract capital reinforce its growth potential in the rare earth sector.
Phoenix Tailings
Reported in Rare Earth Exchanges Phoenix Tailings (opens in a new tab) was founded in 2019 as a group of MIT scientists, including:
- Michelle Chao: Co-founder and Chief Operating Officer, with a degree in materials science and engineering
- Tomás Villalón Jr. Co-founder and materials engineer
- Anthony Balladon: Co-founder and Vice President of Partnerships, with a background in process engineering and finance
- Nicholas Myers: Co-founder and entrepreneur/angel investor
Phoenix Tailings is a Massachusetts-based company that refines rare earth metals and other critical materials from mining waste.
The company’s goals include:
- Producing critical materials domestically to reduce the US’s reliance on foreign monopolies
- Creating sustainable ways to produce materials for the next generation of technologies
- Eliminating harmful waste from the environment
Phoenix Tailings’ pilot production facility in Woburn, Massachusetts, is the only site in the world that produces rare earth metals without toxic byproducts or carbon emissions. The company uses renewable energy contracts to offset the electricity used in its process.
Key focus areas for Phoenix Tailings are developing a refining process that is free of emissions and waste, aiming to produce REEs in a more environmentally friendly manner.
Earlier this year, Phoenix Tailings began refining small amounts of REEs in Massachusetts using its proprietary process. The company continues to scale its operations, contributing to the diversification of REE supply chains.
Final Thoughts
These startups are at the forefront of transforming REE refining, focusing on cleaner and more efficient technologies to reduce dependence on traditional methods and diversify.
Daniel
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