Rare Element Resources
Bear Lodge Project
Canadian NI 43-101 Technical Report
October 9
th
, 2014
10135-200-46 - Rev. 0
19-7
19.4 Prices
As demonstrated above, the rare earths industry is dominated by Chinese producers
and consumers with virtually all sales and purchases of rare earths products based
on contract prices negotiated privately by buyers and sellers. There are a few
relatively well-known sources of published estimated prices that are based on surveys
of market participants by the websites or organizations that publish them. These
include metal-pages.com, asianmetal.com and “Industrial Minerals” magazine.
However, prices for individual RE elements among these sources can differ markedly
even in the same timeframe and, according to some market participants, prices for
actual market transactions in rare earths sometimes differ significantly from the prices
quoted by these sources.
There are some specialized consulting firms in rare earths or industrial minerals that
perform market studies in the rare earths business and create rare earths price
forecasts for clients based on the individual project’s rare earths distribution and
intended products. These organizations tend to use conventional mineral economics
approaches to forecasting, based on historical experience in the rare earths markets
and the limited information available. Such studies and forecasts are hindered by the
lack of information in rare earths markets that lack the transparency found in many
other markets for the more common mineral commodities. The relatively recent start-
up of newly created rare earths exchanges in China provides extremely limited data
on exchange trades of certain physical RE metals, but there still is no futures market
or forward price curve for rare earths that could inform RE price forecasting.
Given the opaque nature of much of the rare earths market and the limitations of the
pricing methodologies noted above, Rare Element took an empirical approach to the
assumed rare earths pricing for this preliminary feasibility study. Each month, China
releases customs statistics on its exports that disclose the volumes in kilograms or
metric tonnes of most individual rare earth oxides exported in a prior month, as well
as the U.S. dollar value of those exports. The aggregated statistics do not give the
level of detail to allow determination of various purities of oxides that might be
included in those exports, but at least these statistics purport to be based on actual
market transactions. Though the statistics are imperfect, they are one of the few
available sources of empirical data on rare earth pricing from actual transactions.
As shown in Table 19.1, Rare Element has derived U.S. dollar prices per kilogram for
individual rare earth elements from the published Chinese customs statistics and
compiled a monthly time series of these prices for more than two years for most of the
rare earth elements significant to the Bear Lodge Project. To eliminate any effects of
