Asian Metal: Al, thank you very much for participating in this interview with Asian Metal. I am very excited to hear more about the Elliot Lake rare earth and uranium deposit.

Rare earth prices have taken a new negative turn in late Q4, 2012 as many producers and traders looked to shed excess inventory before year-end. Meanwhile, most separation facilities have ceased operations in an effort to eliminate a lot of material currently in the supply-chain. What is your prognosis for the near future in this market, and what can other participants expect for the long-term growth of this industry?

Shefsky: We expect to see continued volatility in rare earth prices as China continues its struggle to consolidate the industry and crack down on unauthorized Chinese rare earths that still enter the markets. China’s domination of the rare earth market, controlling strategic supplies and keeping their prices high, have provided them with considerable economic advantages, so we believe they will continue to pursue this policy. The lengthy process to start up a heavy rare earth operation clearly works to their benefit.

Asian Metal: How is your Eco Ridge Mine Rare earth & uranium project being received, and what are some of the key advantages of developing a new mine in Elliot Lake, Ontario?

Shefsky: Elliot Lake is a proven mining camp in a politically stable, pro-mining jurisdiction outside of China. We think the market is incorrectly skeptical about our prospects for developing Eco Ridge and how supportive and enthusiastic the local community is toward our project. The city of Elliot Lake clearly wants the Eco Ridge Mine to be developed and have said so publicly. [This location] is the best place in the world to develop and operate a new uranium and rare earth mine.

Asian Metal: Elliot Lake has a long mining history. Why is this an ideal location for an REE and uranium mine?

Shefsky: Elliot Lake is one of the great Canadian mining camps. Its 12 historic mines produced more than 300 million pounds of uranium oxide and it is actually the only mining camp in Canada to ever produce rare earths commercially. It was once the major source of heavy rare earths and yttrium in North America. So many technical aspects at [the deposit] are well-understood – geology, mineralogy, metallurgy – plus the mineralized reefs cover vast areas with consistent thickness and grade. The regional infrastructure is outstanding with roads, rail, power and a deep-water port nearby.

Our Eco Ridge project may have one of the clearest pathways to production in the sector today, with so many of the technical and logistical hurdles already cleared. Pele has assembled a world class team to advance mine development at Eco Ridge. The team is led by Pele’s Executive Vice President Roger Payne, a Professional Engineer with over 45 years of international experience including 20 years in the Elliot Lake mining camp. The permitting efforts are being led by SENES Consultants Limited and Golder Associates Ltd., both of which have comprehensive knowledge and experience regarding the regulatory processes pertinent to licensing, operating, and decommissioning mines in Elliot Lake. Our NI 43-101 Preliminary Economic Assessment (“PEA”) highlights the progress we have made at Eco Ridge.

Asian Metal: Some mining projects around the world have received backlash or opposition because of uranium and thorium contents of their deposits. What is your position on this matter?

Shefsky: This is an important point and, we believe, another competitive advantage for Pele. Dealing with the radioactive component of a rare earth deposit is essential and has the potential to delay or derail otherwise viable projects. Clearly, we are dealing with this issue upfront with plans to go through the regulatory and licensing process with the Canadian Nuclear Safety Commission (CNSC) as would any primary uranium operation.

The key here is that the uranium at Eco Ridge constitutes a primary revenue source and, as such, is a great diversification to hedge against a seemingly unpredictable rare earth market. In pursuing long-term uranium off-take agreements, we could essentially pay the vast majority of our operating costs with uranium revenue and thus insulate the project from periods of weak rare earth prices. This is a sharp contrast to some of our competitors that must ultimately address the handling of radioactive material that is not a revenue source, but is potentially a challenging waste product.

Asian Metal: You mention long-term off-take agreements. Identifying and securing strategic partnerships, for many projects, has been paramount to fast-tracking a rare earth and other mineral deposits. What has been your progress in regard to this, and what has your strategy been?

Shefsky: With the completion of our PEA last summer, we entered into discussions with end users of uranium and rare earths, pursuing long-term off-take agreements and other strategic partnerships that will support sustainable development at Eco Ridge. We are pleased with the international interest we have received from potential strategic partners who require secure and reliable rare earth and uranium supplies.

Our PEA is based on average annual production of 2.7 million pounds of uranium oxide and more than 4,000 tonnes of rare earth oxides, all of which is sensitive to higher uranium and rare earth prices. So we believe that we provide an attractive target for end users who wish to lock up secure long-term supplies, as well as to investors who believe in the future of uranium and rare earths and seek leverage to higher prices over the longer term.

Asian Metal: With the pro-nuclear Liberal Democratic Party coming to power in Japan and several other nuclear plants in the works around the world, how do you anticipate Elliott Lake playing a role in the supply of uranium, and specifically how does this help its development in regard to potential rare earth output?

Shefsky: On the demand side, the recent election of a pro-nuclear government in Japan is likely to bring 35 to 40 reactors back into operation this year and there are also more than 60 nuclear reactors currently under construction elsewhere in the world. On the supply side, about 25 million pounds per year of Russian uranium oxide will be withdrawn from the market at year-end. Based on these fundamentals, we believe that uranium prices should recover close to pre-Fukushima levels in 2013 and then move significantly higher in the longer term. The bullish fundamentals for uranium are very supportive for the development of Pele Mountain’s Eco Ridge Mine Rare Earth and Uranium Project in Elliot Lake.

Asian Metal: Thank you, Al. I am sure Asian Metal readers will be eager to hear more and be vigilant of additional company news in the near future.