Asian Metal: Patrick, thank you for agreeing to the interview. I am happy to hear more about IMC developments. Recently your company announced a site in which you plan to build a rare earth separation facility.

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What were the criteria that you used to evaluate potential sites for your separation facility?

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Patrick: We looked at a number of sites in North America and with the help of our engineering company, Genivar, we developed a site selection criteria that had 22 key elements to it. Things like availability of electricity, process water, proximity to emergency services, road infrastructure and reagent providers. We rated and scored each criteria to the site location and Becancour stood out as the logical choice to build a heavy rare earth separation plant of our size and scope.

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Asian Metal: Why Quebec, and how have your plans to build such a facility in the province been received by the government?

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Patrick: Quebec was a logical place for us to choose as it is in one of the highest concentration of rare earth deposits in the world, has good infrastructure, access to low cost power. We have had a great response from the government and we are dealing directly with Invest Quebec who is interested in promoting Quebec as an excellent jurisdiction to do business.

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Asian Metal: Having a shared separation facility is a new concept to the rare earth industry, specifically outside of China where many exploration companies view each other as fierce competitors. How can miners and consumers collaborate so that each party derives the most value from this project?

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Patrick: Unfortunately, we will only look to extend our tolling services to 4-5 companies who will benefit greatly from reduced capital expenditure and higher returns as the tolling fee is far less than their cost of capital. This will launch the four or five companies right to the front of the line and get them access to end users where we will also help to structure long term off-take contracts. End Users want to see the final product, they aren’t interested in buying mines and they view the concept of a centralized facility favorably because it also reduces single source supply risk and it consolidates product into a point where quality control will be consistent and to their standards.

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Asian Metal: What are the next steps in developing this facility? Have you secured any binding agreements with either consumers or potential mining companies?

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Patrick: We are on schedule with the development of our business plan. Our first goal was to prove that centralizing feedstock is feasible and we have done that. Our next step was to choose an ideal location that would maximize the benefits of a centralized facility to both mining companies and the end users; we have done that. The next step will be to complete our study of the top candidates in the industry and choose those who we feel have the best shot at making it to market and producing a mixed RE carbonate with no material amounts of thorium or uranium, by 2016. We will be sending out LOI’s over the next few weeks and hope to have our producer consortium set in a few months. The next step after that will be to go over the calculations and create a proper document for end-users outlining what the products will be, how much and how the transparent auction system works

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Asian Metal: Presently, the Chinese government is developing an invoice system for its rare earth materials to better control the flow of discounted, non-quota material outside of the country. In addition, there are talks over a new value-added tax and potential stockpiling efforts in order to exert upward pressure on falling rates. How urgent is the development of a supply-chain outside of China, and how do you feel your facility will best meet the raw material needs of consumers, specifically in North America?

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Patrick: The invoice system is a good attempt at trying to control the flow of non-quota material but attempts at controlling non-quota production is also important. If production increases and continuously exceeds demand, material will find its way out and affect pricing. That being said, there’s a lot of misinformation out there and how China would like portray this industry is not always consistent with the facts. Stockpiling non-strategic material is merely an attempt at controlling prices and may work when you control over 95% of the market but this strategy will not bode well if other producers come to market. The overhang of inventory in the system will keep prices low and turn end users away from China. Price control is not a good long term strategy, these industrial metals are not like other broader base metals where volumes are high, prices are transparent and there is a relatively efficient forward market.

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Even if you believe in some of the forecasts out there that call for huge shortages of rare earths, it is imperative that this analysis be done on an element by element basis and it never takes into account the growth in inventory that is accumulating during the years that it takes for demand to cross over supply. This significant inventory growth may stave off that cross over point for many years. I think it is definitely urgent that the supply chain develop outside of China, but more for other reasons, like ensuring that the market is not dependent on a single supplier and because more participants foster a better environment that promises transparency, more efficient markets and eventually the development of a futures market which, is important to end-users who have long dated product development periods.

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Asian Metal: How do you plan to keep your operating and processing costs among the lowest in the world? What types of individuals and companies will collaborate on the facility to make it a reality and truly realize these cost savings?

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Patrick: IMC does not directly benefit from our efforts in making sure our operating costs are amongst the lowest in the world. We pass this all to our Producers and eventually that gets to End Users. Choosing the right site goes a long way towards achieving this goal of having low operating costs and Quebec is perfectly suited because of the low cost of stability of power. We plan on making metals as well as oxides and a large cost component in making metals is in the consumption of electricity. Regenerating acid also consumes large amounts of power and it is our goal to be as ‘closed-looped’ and ‘green’ as possible having very little waste. The culture of cost savings and having a low operating base stems from IMC itself and we do not raise capital without a good use of proceeds and limit our expenses. Both Gareth Hatch and I could be doing something else that pays us better but we’re here for the long term and we are confident that what we are building will result in a healthier industry that can compete with China and serve the needs of a truly critical materials market. We are talking with partners that have interesting processing technology, with reagent suppliers, with equipment vendors etc. all in the attempts to maintain the lowest operating costs while never sacrificing when it comes to ensuring very high quality standards.

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Asian Metal: Your company has mentioned that it intends to create a consortium. Can you expand upon these details and what you envision this will do for the industry? What is its ideal role within the industry?

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Patrick: Well, call it what you may, but what we are basically doing is inviting a small group of producers to come and toll through our facility. Unfortunately, that number will likely be 4-5 given their production estimates and the capacity of our refinery. This will be one side of the equation. On the other side will be the end-users who want to secure their long term supply of critical materials on behalf of their supply chain. I cannot stress enough how important this is, especially if you think of what a competitor may be doing. If you try and design-out rare earths you could be designing yourself right out of the market if a competitor has instead focused on getting supply to rare earths and making a better product. The end-users will be surprised at how inexpensive it will be to ensure a long term supply of rare earths, especially given the amount of investment dollars that go into things like product development and overall end product manufacturing costs. When end-users buy refining capacity, they are buying an asset for life that can be traded and has real value.

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Asian Metal: Thank you, Patrick. We all look forward to further updates and best of luck.

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