rare element resources - june 2010
DESCRIPTION
TRANSCRIPT
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Corporate Overview
Management PresentationJune 2010
RARE-EARTH ELEMENTS & GOLD
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Disclaimer
• The information contained herein, while obtained from sources which we believe are reliable, is not guaranteed as to its accuracy or completeness. The company is an exploration company and its mineral project has yet to be proven to be economic. Many references to geologic and technical information contained herein are historical or have been generated by external consultants who may or may not be QPs under NI 43-101 and are therefore not in accordance with the requirements under NI 43-101 or have to be prepared in accordance with a preliminary or final feasibility study. The content of this presentation is for information purposes only and does not constitute an offer to sell or a solicitation to purchase any securities referred to herein.
• Forward-looking statements: This presentation includes certain forward-looking statements about future events and/or financial results which are forward-looking in nature and subject to risks and uncertainties. Forward-looking statements include without limitation, statements regarding the company’s plan, goals or objectives and future mineral projects, potential mineralization, resources and reserves, exploration results and future plans and objectives of Rare Element Resources. Forward-looking statements can generally be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, or “continue” or the negative thereof or variations thereon or similar terminology. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from expectations include risks associated with mining generally and pre-development stage projects in particular. Potential investors should conduct their own investigations as to the suitability of investing in securities of Rare Element Resources.
• Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated and Inferred Resources This presentation uses the term “Inferred” Mineral Resources. U.S. investors are advised that while such terms are recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize them. “Inferred Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.
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Creating shareholder value through:
• A foundation in rare-earth metals development
• A future in gold exploration and development
Vision
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Exploring the Bear Lodge Property, which potentially hosts:• One of the largest deposits of disseminated rare-earth elements (REEs)
in North America(1), with high-grade zones – “Bear Lodge Project”• NI 43-101 inferred REE resource: 17.5 mm tons @ 3.46% REO(2)
• Carbonatite deposit; similar to Bayan Obo and Mountain Pass• Scoping Study (PEA) to be completed in summer 2010
• Cripple Creek-style gold targeted – “Sundance Project”• Excellent potential in multiple targets for near-surface low-grade and
possibility for deeper high-grade gold
Well financed with clean capital structure • C$12.2 million cash on hand and no debt
Experienced management team with meaningful insider ownership• 7.0% insider holdings
Company Highlights
(1) US Geological Survey (Staatz, Professional Paper #1049-D, 1983)(2) 1.5% REO cut-off-grade; prepared by Ore Reserves Engineering, April 2009
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Bear Lodge Location and Infrastructure
Black
Hills
Rail – 35 miGillette, WY60 mi
Spearfish, SDI-90
Power & paved road Excellent Mining Infrastructure
• Paved road and power lines within 2 miles of project site
• 35 miles to nearest railhead
• Skilled labor and water available
• Communications network nearby
• Major coal mining center 60 miles West – Gillette, WY
• Top ranked mining jurisdiction(1)
(1) Wyoming ranked as one of the top worldwide locations favorable for mining by the Fraser Institute
Bear Lodge Mountains, Wyoming, USA
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Northern Black Hills Gold Belt
Black
Hills
Bear Lodge Mountains
Bear Lodge & Sundance Projects
9 M oz gold
40 M oz gold
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Bear Lodge Geology & General Target Areas
Fracture-Fault ControlBreccia HostedSediment HostedPrecambrian Granite HostedCarbonatite Hosted
Bull Hill
Corral
Carbon
TargetsRichardson
Taylor
Smith
BH
Simplified Geologic Map
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• US Geological Survey(2): Bear Lodge Mountains contain “one of the largest occurrences of disseminated rare earths in North America” plus high-grade zones; USBM study & historic resource estimate
• Updated NI 43-101 inferred mineral resource of 17.5 mm tons @ 3.46% REO(1) including 4.4 mm tons @ 6.65% REO; based on 46 holes drilled by Rare Element, Hecla, Molycorp, Duval; excellent exploration potential
• Currently exploring for oxidized REE mineralization within the Bull Hill carbonatites; inferred oxide resource of 8.0 mm tons @ 3.62% REO which includes 2.3 mm tons @ 6.9% REO
• Metallurgical testing of known REE resource with significant success on the near-surface oxide mineralization
• Preliminary mine, plant, and geotechnical engineering for a preliminary engineering-economic assessment (Scoping Study)
Bear LodgeRare-Earths Overview
(1) 1.5% REO cut-off-grade; prepared by Ore Reserves Engineering, April 2009(2 ) US Geological Survey (Staatz, Professional Paper #1049-D, 1983)
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Rare-Earth Drilling
Bull Hill drilling - 2009
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Bull Hill Area Geology & Target Areas
Bull Hill diatreme & REE resource
Whitetail Ridge REE
Bull Hill NW resource
Fault Offset &Plug?
Carbon (Au)
Taylor (Au)
Smith (Au)
(after Newmont-2008)
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Bull Hill Area Drill Holes
Bull Hill Southwest Resource Area
Bull Hill NW TargetWhitetail Ridge Target
Southeast Extension Target
Deep Carbonatite Plug Target
2009 Drill Holes, 1-3 angle holes from each site
Fault offset
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Dike-Swarm Section - Bull Hill
Inferred Mineral Resource17.5 million tons @ 3.5% REO
(compliant with NI 43-101)
Low-grade stockwork
Old holes
2009 holes
Plug?
Dikes
Fault
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2004-08 Drilling Results REE - Selected Intervals
Hole Oxide/Non-ox No. Dikes Agg. True Thick. REO (%)RES04-1 oxide 3 8.47 m 8.70
non-oxide 6 16.61 m 4.14RES04-2 non-oxide 1 36.27 m 4.06RES05-2 oxide 2 2.65 m 9.84
non-oxide 5 19.35 m 3.92RES07-1 oxide 1 5.58 m 4.19
non-oxide 3 28.53 m 4.81RES07-2 oxide 3 24.02 m 3.62
non-oxide 2 11.28 m 2.75RES07-3 oxide 1 7.92 m 10.20RES08-1 oxide 1 16.55 m 4.86RES08-2 oxide 2 36.83 m 3.00RES08-3 oxide 2 54.24 m 4.62
non-oxide 1 2.19 m 2.89
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2009 Drilling Results REE - Selected Intervals
Hole Oxide/Non-ox No. Intervals Agg. True Thick. REO (%)RES09-1 oxide 2 21.04 m 3.88RES09-2 oxide 2 13.11 m 3.70RES09-3 oxide 1 25.00 m 6.78RES09-3A oxide 2 24.70 m 7.70
including 1 10.91 m 9.24RES09-6 oxide 2 21.95 m 5.62
including 1 8.64 m 11.83RES09-14 oxide 1 20.79 m 2.97RES09-15 oxide 2 8.39 m 3.00RES09-17 oxide/non-ox 2 51.81 m 5.57
including 1 11.06 m 10.88RES09-18 oxide 3 21.15 m 5.97
including 1 8.27 m 11.56RES09-20 oxide 1 5.88 m 3.22
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REE Mineralogy by Zone
Oxidized / Unoxidized
Mineralized Body REE Mineralogy
Oxide Zone(0 to 150 m in depth)
FMR dikes and veins (FeOx + MnOx + REE)Loose and friable material
Bastnasite - group minerals + subord. monaziteEasily liberated
Transitional Zone(mixed)
Partly oxidized dikes – FMR/Carbonatite (FeOx + MnOx + REE + barite + strontianite + sulfides)
Bastnasite - group minerals + ancylite + monazite
Unoxidized Zone(below 180 m)
Carbonatite and silicocarbonatite dikes(with ~10% iron sulfides)
Ancylite + subord. bastnasite-group + monazite
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Bull Hill REE Mineralization - FMR Dikes & Veins
Bull Hill Diatreme Breccia
FMR with Bastnasite-Group Minerals (light brown)
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Typical Distribution of REE
Rare-Earth Element Oxide Sample(1) Unoxidized Sample(1)
Lanthanum 29.3% 32.5%
Cerium 45.0% 46.4%
Praseodymium 4.8% 4.3%
Neodymium 16.8% 13.7%
Samarium 2.0% 1.4%
Europium 0.4% 0.3%
Gadolinium 0.8% 0.6%
Terbium 0.1% 0.0%
Dysprosium 0.2% 0.2%
Yttrium 0.5% 0.5%Total 99.9% 99.9%
(1) From two composite metallurgical samples
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Metallurgical Test Results (Oxide Mineralization)
10 min 60 min. 60 min 60 minFlotation Gentle Attrition FlotationMachine Scrub Impeller Machine
Assay Grade (%) 14.33 14.80 14.25 13.46 12.95Recovery (%) 40.4 58.7 70.3 81.0 90.2Weight (%) 12.9 18.2 22.0 27.7 32.0
No Scrubbing
Project 6115-A: Scrubbing Characteristics Affecting the -500 mesh Fraction
Effect of Scrubbing Methods and Time on -500 mesh ProductGrade and Weight Plotted Against Recovery
14.3 14.8 14.3 13.5 13.0
18.2
12.9
22.0
27.7
32.0
0
5
10
15
20
25
30
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35 45 55 65 75 85 95Percent Recovery
Perc
ent G
rade
and
Wei
ght
Grade vs. RecoveryWeight vs. Recovery
60 Min.
10 Min.
1 2 3 4 5
1 2 3 4 5
Float Machine Projection
Scrubbing Comparison Showing Recovery, Grade & Wt-%
Pre-concentrate of oxide90% Recovery & 13% REOin 32 Wt-%
Crushing ?
Scrubbing
Screening (-500m)
(after Mountain States R & D, 2009)
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Exploration Targets
Whitetail Ridge Target
WP-2 – 186 ft @ 9.5% REOWP-1
430 ft @2.4%
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Milestones
Completed:
• 2004-2008 – Drilled 12 core holes in REE minz; in addition to 14 historic holes
• March 2009 – Estimated first NI 43-101 inferred resource
• July & September 2009 – Favorable metallurgical test results
• August – December 2009 – Drilled 20 core holes in REE mineralization
• October 2009 – Began a Scoping Study, a preliminary engineering-economic assessment
Upcoming:
• June 2010 – Begin development drilling for reserves and expansion drilling
• Summer 2010 – Projected completion of Scoping Study on oxide portion of resources with top quality consultants
• Q3 2010 – If Scoping Study is sufficiently positive, plan to initiate mine permitting and a Prefeasibility Study
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• Rare Element and Newmont established Sundance gold exploration venture on Bear Lodge property in 2006: Newmont advances the project, withdraws in May 2010, and transfers claims, data and core
• The Bear Lodge property exposes upper levels of alkaline-igneous complex, similar to Cripple Creek gold district, Colorado (23 million ounces of gold produced to date)
• Goal to define 50 to 100 million tons @ 0.015 to 0.030 opt gold at Carbon, Taylor, and Smith targets; plus other high-potential targets in district; good metallurgy for heap leaching
• Excellent potential in multiple targets for near-surface low-grade gold and possibility for deeper high-grade gold
• Gold resource estimate planned for early 2011; then consider all options for gold project
Bear Lodge - Gold Overview
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Bear Lodge Geology - Alkaline-Igneous Complex
Source: Newmont, 2008
Bull Hill
• Bull Hill in core area surrounded by gold occurrences
• Many similarities to near-surface low-grade gold mineralization of Cripple Creek alkaline system
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Geophysics & Geochemistry
Carbon
Taylor
Smith
Bull Hill
• Newmont created excellent exploration database on property
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Carbon - Drill Holes and Trenches
• Example of Newmont’s drilling
• Indicates potential for a near-surface low-grade bulk- tonnage gold deposit
• Newmont drilled 45 holes on Carbon, Taylor, and Smith targets plus 13 holes more
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2006-09 Drilling Results - Gold (Selected Holes)
Interval (m) Intercept (m) Gold Assay (g/t)Sun-01 (Carbon) 1.5 - 48.8 47.3 0.56
includes 19.8 - 29.0 9.2 1.17Sun-02 (Carbon) 1.5 - 39.6 38.1 0.40
plus 83.8 - 141.8 57.9 0.53Sun-08 (Taylor) 0 - 126.5 126.5 0.44Sun-09 (Taylor) 0 - 175.3 175.3 0.44Sun-11 (Carbon) 7.6 - 54.9 47.3 0.46Sun-13 (Taylor) 3.0 - 44.2 41.2 0.49Sun-21 (Carbon) 0 - 155.5 155.5 0.66
includes 0 - 36.6 36.6 1.35Sun-22 (Carbon) 0 - 45.7 45.7 0.66
includes 30.5 - 44.2 13.7 1.33Sun-38 (Carbon) 1.5 - 86.9 85.4 0.47
includes 48.8 - 57.9 9.1 1.18
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Proven Management Team
Donald E Ranta, PhD, PGeo, President, CEO & Director• 35 years of mining & corporate experience with successful
executive leadership roles in exploration and project evaluation• Previously at Echo Bay, Phelps Dodge, AMAX and Kennecott
Mark T Brown, BComm, CA, CFO & Director• President, Pacific Opportunity Capital Ltd, a financial-consulting &
merchant-banking firm focused on financial management and capital raising for exploration companies
James G Clark, PhD, LGeo, VP Exploration• Rare-earth geology expert with 30 years experience;
manages Bear Lodge Project field & laboratory studies• Previously at Molycorp and Hecla Mining
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Directors:
• Norman W. Burmeister, PEng, President & CEO, Saratoga Gold
• M. Norman Anderson, PEng, Past Chairman & CEO, Cominco
• Stephen P. Quin, PGeo, President & CEO, Capstone Mining Corp
• Gregory E. McKelvey, PGeo, President & CEO, Animas Resources
Directors & Strategic Advisors
Advisors:
• Jefferey D. Philips, President of Global Market Development• Dr. Tony Mariano, consulting mineralogist & geologist• Robert Bishop, former newsletter writer • William H. Bird, PhD, PGeo, President of Medallion Resources Ltd.• David Beling, PEng, Executive VP & COO of Geovic, Ltd.• Matt Bender, PEng, Senior Director, Newmont Mining company
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Bear Lodge Project Technical Consultants
• Dr. Tony Mariano & Dr. Jim Clark, LGeo – Mineralogy & geology
• Dr. Ellie Leavitt, PGeo – REE geology & exploration
• John Ray – Gold geology & exploration
• Alan Noble, PEng – Resource estimation, Ore Reserves Engineering
• Michael Richardson, PEng – Mining engineering, John T Boyd Co.
• Thomas Kerr, PEng – Geotechnical engineering, Knight Piesold
• Dr. Roshan Bhappu, PEng – Metallurgy, Mountain States R&D
• Dr. Ronald Roman, PEng – Metallurgy, Mountain States R&D
• Dr. Richard Hammen, PEng – Extraction & separation, Intellimet
• Richard DeLong – Environmental & permits, Enviroscientists
• Mark Brown, CA – CFO, economics & finance
• Dudley Kingsnorth, PEng – Rare-earth markets
• George Byers – Government & community relations
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Capital Structure
(1) As at February 10, 2010
Shares Outstanding: 32,117,737
Fully Diluted: 35,878,487 (2,546,000 opts + 3,836,250 wts)
Market Capitalization: C$110 million
Share Price: $2.75 (52 week H/L 4.69/1.10)
Insider Holdings: 7.0%
Cash on Hand: C$12.2 million and no debt
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(All figures in C$ million unless otherwise denoted)
Project Market Cap(1)
Adj. Market Cap(1)(2)
Resource(t million)
Grade REO (%)
Contained REO
(t million)
Adj. Market Cap/REO
($/t)
Contained Resource Value
(US$ million)Stage of
Production
Mt. Weld (LYC) (A$) $ 819 $ 363 12.2 9.70 1.184 290 $ 16,681 Construction
Nolans Bore (ARU) (A$) $ 205 $ 181 30.3 2.80 0.850 201 $ 12,175 Metallurgy
Thor Lake (AVL) $ 194 $ 176 71.2 1.95 1.392 127 $ 29,785 Prefeasibility
Strange Lake (QUC) $ 107 $ 100 14.3 1.30 0.186 535 Not av. Discovery Delineation
Hoidas Lake/Rareco (GWG) $ 59 $ 49 3.1 3.15 0.097 324 $ 1,450 Metallurgy
Sarfartoq (HUD) $ 40 $ 39 Not av. Not av. Not av. Not av. Not av. Discovery Delineation
Kutessay II (RUU) $ 38 $ 36 Not av. Not av. 0.063 575 $ 2,346 Discovery Delineation
Bokan-Dotson Ridge (UCU) $ 28 $ 26 Not av. Not av. 0.165 156 Not av. Discovery Delineation
Bear Lodge (RES) $ 101 $ 95 8.9 4.07 0.363 261 $ 4,576 Scoping Study
Comparable Companies Analysis
(1) As at February 10, 2010(2) Market Cap plus debt less working capital
Also, Mountain Pass (Molycorp) 20 8
(Updated) (16) (3.5) (0.530)
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Exploring the Bear Lodge Property, which potentially hosts:• One of largest deposits of disseminated rare-earth elements in North
America(1), with high-grade zones – “Bear Lodge Project”• NI 43-101 inferred REE resource: 17.5 mm tons @ 3.5% TREO(2)
• Carbonatite deposit; similar to Bayan Obo and Mountain Pass• Scoping Study to be completed in summer 2010
• Cripple Creek-style gold targeted – “Sundance Project”• Excellent potential in multiple targets for near-surface low-grade and
possibility for deeper high-grade gold
Well financed with clean capital structure • C$12.2 million cash on hand and no debt
Experienced management team with meaningful insider ownership• 7.0% insider holdings
Company Highlights
(1) US Geological Survey (Staatz, Professional Paper #1049-D, 1983)(2) 1.5% TREO cut-off-grade; prepared by Ore Reserves Engineering, April 2009
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Donald E Ranta, Phd, PGeo, President & CEO
Mark T. Brown, CA, CFO
Rare Element Resources Ltd
Suite 410 - 325 Howe Street
Vancouver, BC V6C 1Z7
Tel: (604) 687-3520
www.rareelementresources.com
For Further Information
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Appendix An Overview of Rare-Earth Elements
What are they?
What are their uses?
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Rare Earths Commercial UseREO Price (USD/kg)
Scandium Stadium Lights Not Av.
Yttrium Lasers 11.30
Lanthanum Electric car batteries 6.12
Cerium Lens polishes 4.57
Praseodymium Searchlights, aircraft parts 28.38
Neodymium High-strength magnets 29.49
Promethium Portable X-ray units Synthetic
Samarium Glass 4.50
Europium Compact fluorescent bulbs 480.00
Gadolinuim Neutron radiography 8.43
Terbium High-strength magnets 350.00
Dysprosium High-strength magnets 129.50
Holmium Glass tint Not Av.Erbium Metal alloys 30.00
Thulium Lasers 790.00
Ytterbium Stainless steal 132.00Lutetium None 288.42
What are Rare-Earth Elements?
• REEs are a unusual group of metallic elements with unique properties: chemical, catalytic, magnetic, metallurgical and phosphoricl
• REEs used in high-strength magnets, such as Neodymium, Praseodymium, Dysprosium and Terbium, are high in demand
Source: Metal-Pages as at February 4, 2010
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Sc39
Y57
La
58
Ce59
Pr60
Nd61
Pm62
Sm63
Eu64
Gd65
Tb66
Dy67
Ho68
Er69
Tm70
Yb71
Lu
- Heavy Rare Earths
- Light Rare Earths
- Other Rare Metals
Periodic Table of REEs
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What are Rare-Earth Elements?
• China accounts for 97% of the world’s current REE production • Currently operating at capacity
• No significant non-Chinese supply sources available today• Small and limited production in Russia (3,000 - 4,000 tpa)• Beach sand processed by Indian Rare Earths, subsidiary of Atomic
Energy Agency (7% thorium banned elsewhere)
• Virtually all REE deposits have thorium content and hence are environmentally challenging to unextractable, unless thorium minerals can be sequestered or a buyer of thorium is found
• Development projects currently under study:• Two projects at very advanced stage with production in 1-2 years• Others mainly at an early stage with long lead times to realization• New projects face economic and environmental hurdles
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• REEs are critical and enabling for many emerging Green Energy technologies, High Tech applications and Defense Systems; examples include hybrid cars, plug-in hybrid electric vehicles, wind power turbines, computer hard drives, missile guidance systems, lasers and cell phones
Key Applications of REE
Application Elements
• Compact fluorescent lights
• Weight reduction in cars
• Higher oil refinery yields
• Hybrid vehicles
• Auto catalytic converter
• Diesel additives
• Disk drives
• Digital cameras
• Flat panel displays
Energy Efficiency
Energy Energy EfficiencyEfficiency
EnvironmentalEnvironmental
Miniaturization Miniaturization TechnologyTechnology
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Major Applications of REE
Wind TurbinesWith Nd-Fe-B magnets
Hybrid CarsNd magnets & La batteries
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• Total demand for REE is expected to grow to ~210,000 tonnes by 2013, representing a CAGR of 10% from 2008
Applications are Driving Strong Forecasted Demand
Growth Forecast by Application2008 Demand by Application
Source: Dudley J Kingsnorth, IMCOA
Total = 132,500 tonnes
ApplicationGrowth rate
% p.a.2013 demand
tonnes
Catalysts 6-8% 32-36,000
Glass Additive 1% 14,000
Polishing Powder 6-8% 21-25,000
Metal Alloys 15-20% 50-55,000
Magnets 10-13% 45-50,000
Phosphors & Pigments 7-9% 14-15,000
Ceramics 7-9% 10-11,000
Other 7-9% 13-14,000
Total 8-11% 205-215,000
Catalysts19%
Glass Additive
10%
Polishing Powder12%
Metal Alloys18%
Magnets21%
Phosphors & Pigments
8%
Ceramics5%
Other7%
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• China wants to create major wind turbine, solar panel, and hybrid car industries
Applications are Driving Strong Forecasted Demand
Source: Metal-Pages
Chinese Production LimitsChinese Government Policy
• Largest REO mine Baotou (50% of world supply) operating at capacity• REO is a by-product of iron mining• Future ore selection forecast to result in
lower REO grades
• Sichuan• Environmental issues• Underground mining
• Jiangxi, Guangdong, Hunan, Fujian• Fragile resource due to over exploitation• Fragile environment due to mining methods
• Strategic value of REO well understood
• Mining quota of 74,680t (2% vs. 2006)
• Export quotas declining annually• -10% since 2004 to 43,600t in 2007• -13% to 38,000t in 2008• -16% to 31,888t in 2009
• Raising export tariffs to 15-25%
• Key interest in maintaining long-term domestic supply for the Chinese manufacturing industry• Force high tech companies that need these
REEs to relocate production to China
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Supply and Demand