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Supply and demand factors for REE products that could negatively impact REE prices include the
following, among other factors:
the potential for oversupply of certain REEs due to new production outside of China and/or increased
exports from China;
strong demand for selected REEs like magnet materials, driving overproduction of other co-product
REEs and creating oversupply conditions for the less desired REEs;
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;
continued low oil, gas and coal prices that could reduce the demand for technologies using REEs;
static or lower global economic growth, reducing overall demand growth for REEs; and
potential by-product production of REEs 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 exploration activities and any future
development and operating activities on the Bear Lodge Property. Snowfall in the winter may temporarily 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 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 professionals. As a result, we may have difficulty attracting or retaining key personnel or
securing outside technical resources.
In 2015, China accounted for an estimated 87% of global REE production and 66% of worldwide demand.
While REE projects exist outside of China, current non-Chinese production is relatively limited. Further, even
though one large mine outside of China is in production, it is likely that the Chinese will be able to dominate the
market for REEs for the foreseeable future. This gives the Chinese producers a competitive advantage in controlling
the supply and processing of REEs and an opportunity to reduce prices 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 business. 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, 2015, we had
filed six U.S. provisional patent applications relating to processing methods, including (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 an SX process. Two of these provisional applications were converted to
a single utility application and an application under the international Patent Cooperation Treaty (“PCT”). This PCT
application was nationalized in several foreign jurisdictions in 2015. Also during 2015, we converted another one of
these provisional applications into a single utility application and an application under the PCT, and combined