| When Resource Intelligence TV last interviewed our | | | | pleased with that. The 3% to 8% grades, with average |
| next guest in June 2009, his company's shares were | | | | of a little over 4% on our resource estimate, |
| trading at about $1.50 per share. Since then the market | | | | represents a very significant value per tonne. Our |
| has caught on to the potential size and grade of Rare | | | | resource report indicated that the average rate was |
| Element Resources' (TSXV: RES) huge Bear Lodge | | | | around 265 dollars per tonne, but since then the rare |
| project and have bid the price above $3.45 per share. | | | | earth prices have gone up, plus if we take into account |
| Perhaps this is a reaction to the sizzling rare earths | | | | some of the elements that we did not consider before. |
| (REE) sector, but also reflects Rare Element's | | | | John Kaiser has recently done a recalculation and put |
| consistent high-grade results at its Bear Lodge project | | | | out a notice that the rare earth at Bear Lodge would |
| and the acquisition of the Nuiklavik REE Project in | | | | be more like 370 dollars per tonne. That is especially in |
| Labrador. Rare Element Resources' President and | | | | this oxide zone where we are getting good |
| CEO Don Ranta is a Doctor of geology and this year | | | | metallurgical results. |
| led his company to the 2010 TSX Venture 50 list. | | | | RI: What is the target size for the project that you are |
| Resource Intelligence: Your stock has outperformed | | | | projecting now? |
| the market substantially in the last 12 months. So much | | | | DR: We are hoping and expecting that we are going |
| so that Rare Element Resources was recently named | | | | to increase the oxide resource especially. We focused |
| to the TSX Venture 50, which is a ranking of the | | | | on the oxide this year because that's where we're |
| strongest performers listed on the Venture Exchange. | | | | having the best metallurgical results. I anticipate that we |
| What are you doing that others are failing to do? | | | | may have as much as a doubling of the oxide |
| Don Ranta: The answer has several different parts to | | | | resource. I'm not positive of that, but we'll just have to |
| it. First on the technical side, it all came together when | | | | wait and see what comes out of our resource |
| we completed a 43-101 resource estimate that | | | | estimate. We should have that new resource report |
| showed that we had about 8.9 million metric tonnes of | | | | done sometime in the spring. I am hoping by the end of |
| over 4% rare earth oxide (REE) and that caught the | | | | the first quarter, but it could be March or April. |
| market's interest. | | | | RI: You are also doing a scoping study or is that the |
| Secondly, we started getting metallurgical results back, | | | | same report? |
| especially on the oxide, near surface mineralization, | | | | DR: The scoping study would be a follow-on report. |
| which is about half the deposit. The oxide metallurgy | | | | We feel we will do the resource estimate first and we |
| ended up having very attractive metallurgical | | | | feel that the increase is going to be material to the |
| characteristics. Between the report we got in July and | | | | company and we'll report that and have a separate |
| then another in September, we keep improving on the | | | | report coming out for that and then we'll have a |
| metallurgy, especially on this oxide zone. Since then, | | | | follow-on report, probably some time in the summer. |
| we more than doubled the number of drill holes in the | | | | Sometime this summer we should have that scoping |
| deposit with a very successful drill program in the fall | | | | study done. |
| and I think that has helped the stock price as well. | | | | RI: Those scoping studies are crucial, particularly to the |
| From the geopolitical side, China announced last spring | | | | investor who likes to get their hands dirty and figure |
| that they might be cutting back on their REE exports | | | | out evaluations, because at that point you are going to |
| and that got everybody in the western world a bit | | | | get into the economics. |
| nervous about where they were going to get their | | | | DR: Basically, in oxide we expect to double the |
| REEs to continue production outside of China. | | | | resource or somewhere around there. I think ultimately |
| Plus a whole series of newsletter writers caught onto | | | | we will double the total resource, 8.9 million metric |
| that before the mainstream press. Newsletter writers | | | | tonnes and there is a potential that we could triple it |
| certainly recognize Rare Element Resources because | | | | with our continued drilling. That may be after the 2010 |
| we have the second highest grade deposit in North | | | | drilling program or it might even be in 2011. The ultimate |
| America and one that is perceived as better than | | | | goals are to at least double or triple the total tonnage. |
| some of the others. | | | | RI: How much acreage does the project comprise and |
| RI: Explain how important metallurgy is. You mentioned | | | | how much of it are you focused on? |
| that you're getting great results. Can you explain how | | | | DR: All the rare earths that we found of any |
| important that is, particularly with a rare earth project | | | | significance in the Bear Lodge area are within about |
| like yours? | | | | one square mile, which is roughly the equivalent of |
| DR: The two key things with most rare earth projects | | | | three sq. km. It's a relatively small area, but it's |
| are metallurgy and infrastructure. Every rare earth | | | | interesting that surrounding it are all these gold targets |
| deposit around the earth has variable mineralogy and | | | | that Newmont is working on. There seems to be |
| variable metallurgical characteristics, so every one | | | | some kind of geological zoning there that we don't fully |
| ends up being a research and development project | | | | understand at this point, but nevertheless, that's what |
| unto itself. That's why we got an R&D metallurgy | | | | we've seen—rare earths centrally located, with gold |
| lab to work on our material. It's some of the same | | | | targets almost completely surrounding the rare earths. |
| people that did the initial work for Mountain Path and | | | | RI: These gold showings surrounding your Bear Lodge |
| Molycorp years ago—two of the largest | | | | project are called the Sundance project, which is a |
| molybdenum companies in the world, until the Chinese | | | | joint venture deal with Newmont. You're working on |
| drove them out of business in the 1990s. | | | | the rare earths; they are working on the gold. |
| The second crucial aspect of REE projects is | | | | DR: Newmont is earning a 65% interest in the |
| infrastructure. There has to be quite a bit of | | | | Sundance venture. It's basically the same property as |
| transportation either of concentrates or of chemicals, | | | | the rare earths, but the rare earths are excluded from |
| to a common location and because of that | | | | the Sundance venture. If Newmont found copper or |
| infrastructure gets to be really important. If you have to | | | | silver that would be part of the deal with them. They |
| develop your own infrastructure it gets to be very | | | | can earn 65% in the first phase by spending $5 million |
| burdensome, especially on rare earth deposits | | | | over five years. They have to spend $3.5 million by |
| because most of them aren't mined at bulk tonnage | | | | June 1st and up through about the middle of winter |
| rates. It's not a huge production rate, but if you have to | | | | they've spent about $2.7 million. So there is a bit of a |
| move a lot of concentrates or the chemicals, it ends | | | | shortfall there and it will be interesting to find out how |
| up being a problem. | | | | or if they plan to go forward. |
| RI: What is it about your present infrastructure that | | | | RI: What kind of results have they had? |
| ameliorates that? | | | | DR: They have had some good results. They are |
| DR: Our infrastructure is outstanding. The deposit itself | | | | finding lots of low-grade mineralization. Their drill hole |
| is only about twelve miles from a major interstate | | | | spacing is quite broad at 100 to 200 meter spacing. |
| highway. It's thirty five miles from a railhead. We have | | | | They are not looking for a resource, they are looking |
| water nearby and there is power within two miles of | | | | for a Newmont sized deposit. There is a question in |
| the project site. There is a major mining center just a | | | | my mind whether or not that deposit is actually there, |
| short distance to the west in Gillette, Wyoming. It's | | | | although we are confident that there is going to be a |
| mainly coal mining, but nevertheless they have a lot of | | | | small deposit, maybe one to two million ounces that |
| the same skilled laborers that we would need. Being in | | | | could be defined fairly easily. |
| northeastern Wyoming where there is lots of | | | | RI: How well-funded are you? |
| infrastructure nearby, is an ideal location plus Wyoming, | | | | DR: We have enough money for this year. If we ran |
| at least in the Fraser Institutes ranking, ranks #2 in the | | | | into a market problem we would have about $5 million |
| world. | | | | in the bank and that would be enough to complete a |
| RI: What are the grades that you are getting at Bear | | | | very serious program on the Bear Lodge project. |
| Lodge and what do they tell you? | | | | We're going to raise an additional $10 million before |
| DR: A lot of holes are getting grades anywhere from | | | | summertime or when our major drilling program starts |
| 3% to 8% and we obviously love to see those | | | | around June 1. |
| higher-grade holes. It's interesting that with our drilling | | | | Milestones: |
| results from this year, some of the best results were | | | | * New 43-101 resource estimate completed by Q2 |
| actually on the margins of our drilling, so that means | | | | 2010 |
| that it's still open for continued expansion. We are very | | | | * Newmont must spend $3. |