Rare Element Resources
Bear Lodge Project
Canadian NI 43-101 Technical Report
October 9
th
, 2014
10135-200-46 - Rev. 0
4-3
Dodge royalty to Rare Element Resources, Inc. and retained the production royalty
only as it applies to the production of rare earth minerals.
On June 1, 2006, Paso Rico (USA), Inc. and Newmont signed an agreement to
establish the Sundance gold-exploration venture (Venture) on the Company’s Bear
Lodge property. Newmont spent approximately $2.85 million in exploration by May
2010 and chose to terminate the Venture agreement prior to earning any interest and
returned the original claims to Paso Rico. In addition, Newmont transferred 327
unpatented mineral claims held outside the Venture to the Company. Newmont holds
a 0.5% NSR royalty on the 327 claims it previously held independent of the Venture,
and retains a right-of-first-refusal (ROFR) to the gold and other metals, but excluding
rare earths, for both the royalty and the ROFR, on the property if Rare Element
chooses to sell an interest or bring in a partner. The right of first refusal applies only
to parties or partners for non-rare earth extraction and terminates on May 14, 2015.
In addition and with respect to the Newmont joint venture termination, the Company
assumed all obligations of Newmont in a Consulting Agreement with Bronco Creek
Exploration and Mining, Inc. requiring the Company to pay as a finder’s fee, 3% of
exploration expenditures made during each quarter until a cap of $500,000 has been
paid. The claims covered by the Consulting Agreement are outside of the rare earth
deposit and are further subject to a 0.25% Net Smelter Returns Royalty with a cap of
$3,000,000. As a result of the n
e
w agreement with Newmont, the Company retains a
totally unencumbered rare earth project on 499 claims, and now has 100% interest in
all gold and other minerals in the Bear Lodge district, subject to the above royalties
on minerals other than rare earths. The core group of claims (original Venture area) is
free of royalties other than the former Phelps Dodge royalty on rare earth production
now payable to Rare Element’s parent. Additional claims were added in 2011 and
2012.
The Company acquired 634 acres (263 hectares) in 2013 through a land exchange
with the State of Wyoming, State Board of Land Commissioners within the project
area and now own that land in fee. The Wyoming Patent to the land issued by the
State Board of Land Commissioners provides for a production royalty to be
determined for any mineral production from the land and further states that the
mineral estate will revert to Wyoming State ownership at the conclusion of mining and
termination of the Company’s mining permit. The land was acquired for ancillary
facilities in support of the actual mining operation on adjacent land. Rare Element’s
ownership of this land provides increased flexibility in the development of the planned
waste rock storage facility adjacent to the open pit development.
