Canada Rare Earth to Acquire CEC Rare Earth

Canada Rare Earth (TSXV:LL) will acquire CEC Rare EArth, an affiliated, private BC company. Peter Shearing is a director of both companies, and is considered to be a non-arm’s length party to the transaction.
As quoted in the press release:

The Acquisition of the assets of REC (the “REC Assets“) will enhance the Company’s ability to develop and commercialize rare earth properties with the ultimate goal of processing and refining rare earths derived from its properties and from other sources. The REC Assets include REC’s expertise, connections and business arrangements including all of the assets, contracts and business arrangements owned by or entered into by REC that relate to exploring for, mining, concentrating, sourcing, treating, separating and selling rare earths in all forms and at all stages. More specifically the REC Assets include but are not limited to cash, receivables, contracts, letters of intent, memorandums of understanding, consulting arrangements and rights associated with supplying expertise to many aspects of the rare earth industry together with rights to earn interests in rare earth projects.

The success in finding mineable quantities of rare earths and the ability to produce a rare earth concentrate does not in itself lead to or allow the creation of a viable business. The separation of the rare earth concentrate into the individual rare earth elements is absolutely key to commercialization. China separates approximately 90% of the world’s supply of individual rare earths and therefore existing and prospective sources of rare earths must either sell their concentrate, directly or indirectly, to a small, closely connected group of purchasers within China or they must develop their own means of separation, independent of China. Unfortunately, separation is considered a lost art (and chemical science) outside of China and there are significant risks with either reinstating mothballed separation facilities or in developing new and unproven techniques and technologies at scale.
Finding and mining and even concentrating rare earths is not particularly unusual or difficult, however, the downstream processing of the ore/concentrate into oxides is problematic both technically and commercially. By and large, for the past twenty years, separation of rare earths from concentrate into individual oxides has taken place primarily within China by a limited number of closely connected separators. These separators and other very important aspects of the Chinese rare earth industry are in the midst of consolidation by six large state owned organizations which report to the Chinese Central Government in Beijing.
Hence, for rare earth deposits situated outside of China there are three choices for separation: (1) sell the concentrate to the Chinese oligopoly (and lose control of the rare earths while failing to optimize the commercial potential of the rare earths); (2) refurbish a mothballed refinery with its outdated processing techniques and technology (with less than optimum processing efficiency, greater costs and lower profitability); or (3) develop one or more new separation approaches and technologies (which have all the risks of developing new technologies and simultaneously placing the mining and concentrating assets at risk). Canada Rare Earth is extremely fortunate to have arranged a fourth and viable alternative. Through the acquisition of the REC Assets and the engagement of its consultants, Canada Rare Earth is now directly connected with one of the most experienced designers, builders and operators of rare earth separation refineries in China and therefore the world.

Click here for the full press release.