Ucore's rare earth separation plant draws new investor, US$5 million

Ucore Rare Metals Inc. Dec. 14 reported that a foreign investment fund has agreed to pay US$5 million (roughly C$6.9 million) in consideration for a royalty or profit share on the sale of products and services related to the processing of rare earth elements and other specialty metals using SuperLig® molecular recognition technology.

SuperLig is an innovative method of separating rare earths using resins designed to bind selectively with ions based on multiple parameters such as size, chemistry, and geometry.

In March, Ucore and Utah-based IBC Advanced Technologies formed a joint venture to develop the new method of separating rare earths into individual salts exceeding 99 percent purity.

Under the terms of the JV, Ucore holds a 60 percent interest while IBC retains 40 percent interest in exclusive rights to the SuperLig MRT platform developed by IBC. The unnamed foreign investor has agreed to pay Ucore US$2.5 million upon execution of the agreement and the remaining US$2.5 million by April 30. In exchange, the investor will receive a royalty from the production of Ucore's early-stage MRT installations.

The royalty will be comprised of two components: a 5 percent gross royalty from Ucore's first MRT installation or installations, payable until the recapture of the investment; and a royalty equal to 5 percent of Ucore's net profits from the installation.

The foreign fund has the option to increase its investment by up to US$1 million. Each US$500,000 tranche of additional investment will result in a 0.5 percent increase in the net profits royalty.

This marks the third investor Ucore has attracted to the SuperLig MRT technology.

"We're pleased to announce the agreement for yet another significant royalty financing," said Ucore President and CEO Jim McKenzie. "The obtainment of repeated financings during this challenging time in the resource sector is an exceptional achievement. Remarkably, this form of financing is prospectively non-dilutive, a substantial plus for new and existing Ucore shareholders. The company is excited to be pushing forward with the development of this promising MRT platform. This funding will contribute toward the completion of our MRT pilot plant, which we anticipate during Q1 of 2016."

The foreign investor has the right to convert the total amount of the investment, minus any royalty amounts already paid by Ucore, into common shares of Ucore. If the investor elects to convert such amount, then Ucore's royalty obligations shall cease and the conversion amount shall be converted into common shares at the greater of: The 30-day volume weighted average share price of Ucore's common shares, less a 20 percent discount; the market price of Ucore's common shares on the day immediately prior to the conversion date, less a 20 percent discount; or C20 cents per common share.

-SHANE LASLEY