Ucore Rare Metals Inc.

The element dysprosium was first identified in 1886 by a French chemist who named it after the Greek word meaning “hard to find.” The rare earth metal – which cannot be found in its pure form in nature – has nonetheless become an important element in the emerging alternative energy sector.

As with most rare earth elements, however, the overwhelming majority of dysprosium currently comes from China. With China recently announcing plans to withdraw much of its attention from the rare earths market, the search is on for other sources of elements such as dysprosium, terbium and yttrium.

That’s what makes Ucore Rare Metals Inc. so proud of its Bokan Mountain Project mine in southern Alaska. As CEO Jim McKenzie explains, the project represents a significant resource not only for dysprosium, but also for a number of other rare earth metals that will have potentially significant impact on the alternative energy sector, domestic defense and other industries. The U.S. Department of Energy has identified dysprosium as the No. 1 most critical strategic metal to the United States going forward, and Ucore Rare Metals believe its Alaska property puts it in prime position to come through.

“We’re the largest heavy rare earth deposit on U.S. soil,” McKenzie says.

Based in Nova Scotia, Ucore Rare Metals has been focused for the last several years on exploration in the Bokan Mountain Project, but now McKenzie says the company is gearing up to begin production at the mine.

With the potential resources contained within the property and the eagerness of the U.S. government to take advantage of such resources, McKenzie says the Bokan Mountain Project could be a “quantum leap” for the rare earth metals market outside of China.

For instance, Alaska intends to develop a complete “mines to metal” strategy, beginning with Bokan ore and installing a complete refining and metal producing industry in the state. McKenzie says this gives Ucore confidence that its strategy is right for the current time and place, and that the company stands to achieve substantial levels of success because of it.

“There’s huge blue sky; there’s tremendous demand,” McKenzie says.

History of Production
The Bokan Mountain mine was discovered at first because of its uranium content in the 1950s. More than 1.3 million pounds of uranium was produced between 1957 and 1973. In the 1980s, after uranium production ceased, the U.S. Geological Survey conducted tests for rare earth metals in the area and estimated there could be as much as 374 million pounds of rare earth metals at the site.

Ucore Rare Metals acquired the Bokan Mountain property in 2006, and now controls a 100 percent interest in it through direct staking and property option agreements. Since acquiring it, Ucore Rare Metals has completed drill programs each year between 2007 and 2010, resulting in the release of an Ni 43-101 compliant resource estimate in March 2011. McKenzie says the property should be upgraded from inferred to indicated, with a preliminary economic assessment coming soon. “So we’re right on the threshold,” he says.

The deposit also should be relatively easy to mine, McKenzie says. “It’s almost straight up and down in the ground,” he says, adding that the nature of the deposit means there will be easy access to the inner workings of the mines. Also, because the property is located on deep water that provides easy access to ships, Ucore Rare Metals will save millions on infrastructure that would have been spent building roads to an inland site.

Domestic Resource
Along with the richness of the mineral resources found there, McKenzie says Bokan Mountain other qualities that make it a solid property. First and foremost is the fact that it is based in the United States, on the southern tip of the Alaska panhandle.

“That’s what really sets us apart, is the fact that we’re contained on U.S. soil,” McKenzie says, especially considering that the United States is one of the world’s largest users of these critical rare metals.

The Bokan Mountain site is located within the Tongass National Forest, in a mineral reserve set aside specifically for mining, due to the strategic importance of uranium during the Cold War. The U.S. government has expressed the same eagerness to mine rare earth metals, McKenzie says.

In December 2010, the U.S. Department of Energy released a report finding that the United States was “dangerously dependent” on China for rare earth supplies and listed five rare earth metals it deemed most critical to the nation’s energy policy. Four out of the five, including dysprosium, are found in extremely high levels at Bokan Mountain, according to Ucore Rare Metals.

This report demonstrates the urgency with which the United States will be seeking out domestic sources for these metals, as well as the tremendous strategic market advantages Ucore Rare Metals has by being in the Bokan Mountain area, McKenzie says.

Not only is there a significant amount of political willpower in Washington, D.C., to make this happen, but the Alaskan state government is traditionally friendly with the resource sector and helpful in moving mine projects forward. In fact, the Alaska House of Representatives passed a resolution in April 2010 in favor of expediting the permitting and production of heavy rare earth resources at Bokan Mountain.

Making the Transition
McKenzie says the company is focused on making the transition from an exploration company to the production mode, and as such is hiring several experienced mine development personnel to help oversee the process. McKenzie says this includes hiring Ken Collison as the company’s new COO. As COO of Blue Pearl Mining/Thompson Creek Metals from 2005 to 2009, Collison has extensive experience in molybdenum mining, building and mining operations management.

Ucore Rare Metals also is in the process of hiring a team of technologists, who will oversee the development of the mine as well as the corporate infrastructure to operate it.

“That’s a major benchmark event for the company,” McKenzie says. He adds that Ucore Rare Metals anticipates being able to produce its first rare-earth products by 2015.