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The Bear Lodge Property is located in central Crook County, northeast Wyoming, and is approximately 19
kilometers northwest of Sundance, Wyoming. The Bear Lodge Property is accessible by paved and well-maintained
gravel roads. The Bear Lodge Property lies within the Black Hills National Forest along the crest of the northern
part of the Bear Lodge Mountains, a narrow northwest-trending range. Physiographically, it is the northwest
extension of the Black Hills in western South Dakota and is characterized by rolling grass and pine-covered
mountains that reach elevations of 1,950 meters within the Bear Lodge Property. The mountains have moderate
slopes covered by western yellow pine forest interspersed with dense thickets of brush. Narrow grassy meadows
cover the upper reaches of seasonal drainages. The lowest point within the Bear Lodge Property is about 1,768
meters in elevation. The climate during the summer is warm and relatively dry, followed by cold winters with
variable amounts of snow.
We control 100% of the mineral rights at the Bear Lodge Property, consisting of both unpatented mining claims and
adjacent property owned in fee by the Company. We hold 499 unpatented mining claims located on land
administered by the USFS and 257 hectares (634 acres) of owned property for a total of approximately 3,642
hectares (9,000 acres). The Bear Lodge Property is located within parts of Sections 5, 7 through 9, Sections 14
through 23 and Sections 26 through 35 in Township 52 North and Range 63 West, Sixth Principal Meridian, Crook
County, Wyoming. All of the public property mining claims are unpatented, such that the paramount title of the land
is held by the United States of America. Claim maintenance payments must be timely paid on an annual basis and
related documents must be filed annually with the Wyoming State Office of the U.S. Bureau of Land Management
and recorded with the Crook County, Wyoming Clerk and Recorder to keep the claims from terminating by
operation of law, and the claims can be maintained in good standing so long as those requirements are met. All of
our Mineral Resources are located on mining claims that we hold.
Our 100% interest in the 499 unpatented mining claims was, in part, acquired from Phelps Dodge Exploration
Company (now a subsidiary of Freeport-McMoRan Copper and Gold Inc. (“Freeport”)) by way of a Mineral Lease
and Option for Deed in 2000, and 404 claims were transferred from Newmont Mining Corporation (“Newmont”) to
us in May 2010. A portion of the Newmont-transferred claims had been held in a joint venture between Newmont
and the Company since 2006 until such joint venture was terminated in May 2010. A portion of the Newmont-
transferred claims (approximately 327) are subject to a perpetual 0.5% production Net Smelter Return (“NSR”)
royalty on minerals except for rare earth minerals, which are excluded from any royalty obligation. The Newmont
transferred claims are further subject to a right of first refusal granted to Newmont for any sale or disposition of the
claims to third parties. This right of first refusal applies only to parties or partners for non-rare earth extraction and
terminates on May 14, 2015. In addition and in connection with the Newmont joint venture termination, we
assumed all obligations of Newmont under a consulting agreement with Bronco Creek Exploration and Mining, Inc.
(“Bronco Creek”) requiring us 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 Bronco Creek consulting agreement, which are
located outside of the rare earth deposits, are further subject to a 0.25% NSR royalty with a cap of $3,000,000. We
located additional unpatented mining claims in 2011 and 2012, and now have a 100% interest in 499 total
unpatented mining claims.
Some of our mining claims and a portion of a defined area of influence surrounding the claims were previously
subject to a production royalty of 2% of NSR royalty payable to Freeport, but the royalty was purchased by us in
March 2009. As a result of the agreements above, we hold an unencumbered rare earth project, including all 499
unpatented mining claims, free of third-party royalties for rare earth production.
The Company acquired 257 hectares (634 acres) in 2013 through a land exchange with the state of Wyoming, State
Board of Land Commissioners within the Bear Lodge Project area and now owns that land in fee (the “Land
Exchange Property”). The Wyoming patent to the land issued by the State Board of Land Commissioners provides
for a production royalty retained by the state of Wyoming for any minerals produced from the Land Exchange
Property, at a rate to be determined by the parties commensurate with likely situated mineral royalties in the state of
Wyoming at the time of production. Notwithstanding the above, the Land Exchange Property was acquired for
ancillary facilities in support of the actual mining operation on adjacent land, and we do not intend at this time to
extract minerals therefrom. The Wyoming patent states that the mineral estate of the Land Exchange Property will
revert to Wyoming state ownership at the conclusion of mining and termination of the Company’s mining permit.
