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CANADA RARE EARTH FORMS JOINT VENTURE FOR BRAZILIAN PROJECT

 

February 24, 2014

 

Canada Rare Earth Corp. ("CREC" or the "Company") is pleased to announce that it has entered into a letter of intent ("LOI") with Mineracao Mata Azul S.A. ("Mata Azul"), a private Brazilian company to form a joint venture (the "Joint Venture") for the development of an integrated rare earth business in Brazil ( the "Project").  CREC will have an initial 47.5%Joint Venture interest but will have 50% of the Joint Venture voting rights.  The Joint Venture will involve the exploration of Mata Azul's rare earth property in Tocantins, Brazil, Brazil (the "Property") and, if warranted the development of a rare earth concentration facility and refinery for the production of rare earth oxides for sale to end user customers.   

The Property has been the subject of several exploration programs including sampling, regional mapping, drilling wells, trenching, auger drilling, chemical and petrographic analyzes, mineralogy and beneficiation tests.  Mata Azul holds the mineral rights to the Property which consists of approximately 100 square kilometres.   

Under the Joint Venture, CREC will be primarily responsible for raising the required funds for exploration and development, mining, building the concentration facility and constructing a refinery.  The Joint Venture participants will coordinate their collective efforts to arrange financing for the Project from third parties through debt and/or equity participation at the Project level as well as through product off take agreements with rare earth end users.    

Mata Azul will, under the direction of a management committee, be primarily responsible for overseeing the exploration, preparation of a JORC compliant feasibility study, development and mining initiatives of the Project as well as being responsible for overseeing the construction of a concentration facility.  A preliminary cost estimate of US$90 million has been budgeted for those facets of the Project that Mata Azul will be overseeing with financial penalties to be assessed against Mata Azul's interest in the Joint Venture if costs exceed the budgeted amounts.  CREC will, under the direction of a separate management committee, be primarily responsible for the design and build of a 6,000 metric ton per annum refinery and for arranging for on-going operational logistics.  CREC will also be primarily responsible for arranging for end use customers for the refinery products.  A preliminary cost estimate of US$500 million has been budgeted for those facets of the Project that CREC is responsible for with financial penalties to be assessed against CREC's interest in the Joint Venture if costs exceed the budgeted amount.    

The Joint Venture provides for Mata Azul to receive up to $100 million of preferential payments from available distributable cash from production revenue otherwise payable to CREC from the refinery during the first four years following the commencement of commercial production, subject to CREC retaining the first $5 million annually from its share and subject to a maximum of $25 million per annum going to Mata Azul under the preferential payment arrangement.

The proposed Joint Venture and the Definitive Agreement are subject to certain conditions precedent including the completion by CREC of satisfactory due diligence on the Property, on Mata Azul and the receipt of any required regulatory approvals.    

Tracy A. Moore, CEO and President of CREC commented: "We are very pleased to have entered into the LOI with Mata Azul. The Property has excellent potential to host significant quantities of critical rare earth elements within hosting mineralogy that we have experience with.  We are also impressed with the experienced Mata Azul team and the accommodating mining and processing jurisdiction in Brazil.  The Property has the potential to support a strong stand alone business while being complementary with our global business strategy of forming a vertically integrated business. We have been in discussions with principals of Mata Azul for over six months to assure that the Property and our refining capabilities are compatible as is our common vision and joint efforts to finance, advance exploration, and to establish mining, refining and selling operations".    

Additionally, Mr. Moore added: "We are very pleased to have the exclusive right and responsibility to sell rare earth concentrate to our contacts from the concentration facility during construction and commissioning of the refinery and then oxides from the refinery once it is operational".    

CREC cautions investors that the proposed Project is in the conceptual stage and there is no assurance that results of exploration of the Property will be successful enough to warrant development or that the Joint Venture will be successful in raising funds to advance the Project.  Further, even if the Property is developed and goes into commercial production there is no assurance that there will be sufficient concentrate produced to warrant a 6,000 ton per annum refinery.   

Westwood Mining Group was instrumental in arranging the transaction between Canada Rare Earth Corp. and Mata Azul and will continue in an advisory role with the joint venture.    

ABOUT CANADA RARE EARTH CORPORATION    

Canada Rare Earth Corporation is developing a vertically integrated business within the global rare earth industry in conjunction with CEC Rare Earth Corporation ("REC").  The relationship with REC provides the Company with access to REC's experienced personnel as well as its business model which includes a full spectrum of the rare earth industry including the designing, building and establishment of operations for rare earth?refineries outside of China as well as the ongoing sales and marketing of refined rare earths.  In addition to its relationship with REC, the Company presently has several rare earth properties exhibiting multi element potential (rare earths, niobium, beryllium, zirconium and iron ore). Additional information concerning the Company is contained in documents filed by the Company with securities regulators, available under the Company's profile at www.sedar.com. For more information, please visit the Canada Rare Earth Corporation web site at www.canadarareearth.com.

ON BEHALF OF THE BOARD OF DIRECTORS OF CANADA RARE EARTH CORP:

Tracy A. Moore, CEO & President

 "Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release." The information contained herein contains "forward-looking statements" within the meaning of applicable securities legislation. Forward-looking statements relate to information that is based on assumptions of management, forecasts of future results, and estimates of amounts not yet determinable. Any statements that express predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance are not statements of historical fact and may be "forward-looking statements."  Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation: risks related to failure to obtain adequate financing on a timely basis and on acceptable terms; risks related to the outcome of legal proceedings; political and regulatory risks associated with mining, exploration and operations; risks related to the maintenance of stock exchange listings; risks related to environmental regulation and liability; the potential for delays in exploration or development activities or the completion of feasibility studies; the uncertainty of profitability; risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits; risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses; results of prefeasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with the Company's expectations; risks related to gold price and other commodity price fluctuations; and other risks and uncertainties related to the Company's prospects, properties and business detailed elsewhere in the Company's disclosure record. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Investors are cautioned against attributing undue certainty to forward-looking statements.  These forward looking statements are made as?of the date hereof and the Company does not assume any obligation to update or revise them to reflect new events or circumstances.  Actual events or results could differ materially from the Company's expectations or projections

For more information on the Company, Investors should review the Company's filings that are available at www.sedar.com.

 

FOR FURTHER INFORMATION PLEASE CONTACT:

 

Tracy A. Moore

CEO & President

(604) 638-8886


 
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