Ucore purchase of IBC erupts in legal row

A row that has erupted between IBC Advanced Technologies Inc. and Ucore Rare Metals Inc. threatens to delay, or even derail, the proposed Strategic Metals Complex, a rare earth element separation facility that Ucore is planning to develop near Ketchikan, Alaska.

The conflict has arisen since Ucore announced its plans to buy IBC, the Utah-based company that developed the molecular recognition technology the two companies have been collaborating on applying towards the separation of rare earth elements over the past several years.

Using a solution derived from Ucore's Bokan Mountain project in Southeast Alaska, the two companies demonstrated that this technology can efficiently pull out individual high-purity rare earths with a pilot plant known as SuperLig-One.

Now, Ucore plans to acquire IBC and scale up the MRT rare earth separation technology into the Strategic Metals Complex, a commercial scale processing facility that will separate individual REEs from feedstocks sourced from global locations outside of China.

The option for Ucore to acquire full ownership of IBC any time prior to March 16 of this year was detailed in an agreement entered into by the companies in 2015.

Last November, Ucore announced plans to exercise this option. Leadership of IBC, however, asked Ucore to drop the option.

Citing a divergence in corporate objectives, Reed Izatt, founder of IBC, and Steve Izatt, president and CEO of IBC, resigned from Ucore's advisory board at the time.

"Although we have enjoyed our association with the Ucore team over the past several years, it has become increasingly apparent that Ucore and IBC are on divergent paths and our continuation in an advisory role would no longer be beneficial," Steve said.

This divergence has widened as Ucore continues to move ahead with the IBC purchase option.

Last week, Ucore issued a notice of commencement to purchase IBC, which initiates a 60-day due-diligence period to allow Ucore the review of IBC's operations and financial records.

"With installations around the world and with an active revenue base, IBC offers an excellent platform for the provision of precision extraction methodologies to the mining industry. The value of IBC as a strategic asset speaks for itself. Ucore has positioned itself to absorb this asset, and financing discussions have commenced in contemplation of the acquisition expense," Ucore Metals President and CEO Jim McKenzie penned in a Feb. 14 statement.

IBC, however, asserts that Ucore breached the option agreement and has sent a letter stating the Utah-based company's intent to terminate the agreement.

The two companies have also filed competing lawsuits.

In December, Ucore filed a suit in Nova Scotia, Canada, in response to what it considers erroneous claims by IBC leadership.

IBC has responded with its own lawsuits filed this month in Utah, United States, that includes claims that Ucore misappropriated IBC trade secrets and misrepresented the company's intellectual property as Ucore's own, among other things.

IBC is seeking US$20 million in damages in one suit and US$40 million in the other.

"This is understandable and within the bounds of expectation," McKenzie said on Feb. 21. "A frequent strategy is to allege 'manufactured breaches' by the purchaser. In the case at hand, IBC has approached Ucore with a number of professed material breaches, all of which Ucore categorically denies and contrary to IBC's claims, have been adequately addressed. Further, the major financial backers of Ucore have reviewed the IBC agreements and concur that allegations of material breach are invented and without merit."

Ucore believes that the option agreement is in good standing and plans to move forward with the purchase of IBC.

"We believe IBC has materially appreciated in value since the execution of the option agreement. As with all assets experiencing appreciation, the vendor may be tempted to seek a progressively higher purchase price, or free agency, after a deal has already been fully secure," the Ucore Rare Metals CEO added.

The company said it has the right to arbitration under the agreement and intends to exercise this right to resolve the dispute, if necessary.

–SHANE LASLEY