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Supply and demand factors for REE products that could negatively impact REE prices the following, among other
factors:
the potential for oversupply of certain REEs due to new production outside of China and/or increased
exports by China;
the potential substitution of other materials for high-priced REEs;
economization by intermediate and end-users to reduce their usage of REEs in end-products;
the potential for increased recycling of high-priced REEs;
static or lower global growth, reducing demand for REEs; and
potential by-product production that may increase supply irrespective of the normal economics of REE
production.
The feasibility of the Bear Lodge REE Project and our ability to raise additional funds to develop the project may be
impacted by global supply and demand and future prices of REEs.
SEASONALITY
Seasonality in the state of Wyoming is not a material factor to our current exploration activities and planned
development and operating activities on the Bear Lodge Property. Snowfall in the winter may limit our access to the
Bear Lodge Property and our ability to drill or operate from approximately November through June, but it is not a
material issue at this time.
COMPETITION
The industry in which we operate is highly competitive. We compete with other mining and exploration companies
in connection with the acquisition, exploration and development of mineral properties. There is competition for the
limited number of opportunities, some involving companies having substantially greater financial resources, staff
and facilities than we do. We also compete with other mining and exploration companies in our efforts to hire and
retain experienced mining professionals. As a result, we may have difficulty attracting or retaining key personnel or
securing outside technical resources.
In 2014, China accounted for an estimated 85% of global REE production and 68% of worldwide demand. While
REE projects exist outside of China, current non-Chinese production is relatively limited. Further, even though two
large mines outside of China are in the process of ramping up production, it is likely that the Chinese will be able to
dominate the market for REEs for the foreseeable future. This gives the Chinese a competitive advantage in
controlling the supply of REEs and engaging in competitive price reductions to discourage competition. Any
increase in the amount of REEs exported from other nations increases competition and may result in price
reductions, reduced margins and loss of potential market share, any of which could materially adversely affect our
projected profitability. As a result of these factors, the Company may not be able to compete effectively against
current and future competitors.
See
“Item 1A. Risk Factors” of this Annual Report.
PATENTS, TRADEMARKS AND LICENSES
We rely on a combination of trade secret protection, nondisclosure and licensing agreements, and patents and
trademarks to establish and protect our proprietary intellectual property rights. We utilize trade secret protection and
nondisclosure agreements to protect our proprietary rare earth technology. As of December 31, 2014, we had filed
five U.S. provisional patent applications relating to (1) selective recovery of REEs from mixed chloride leach
solutions using oxalic acid, (2) thorium extraction process technology and (3) separation of cerium from bulk REEs
in a single-contact solvent extraction (SX) process. On January 18, 2014, we combined two provisional patent
applications into a single utility patent application filing with the U.S. Patent Office and initiated a Patent
Cooperation Treaty Application claiming priority to the U.S. Provisional Applications. If allowed, a patent granted
from the utility patent application would have a term of twenty years measured from the filing date of the utility
patent application. See “Item 1A. Risk Factors” of this Annual Report.
