(Wyoming Business Report, April 24) – A company seeking to build a $500 million rare-earths mine in northeast Wyoming has scored a $3.4 million investment that will keep the ball rolling in the pre-build phase.
Lakewood, Colorado-based Rare Element Resources announced today that an unnamed institutional investor has bought 5.2 million shares of the company at 65 cents per share with the option to purchase another 2.6 million at 85 cents. If the option – issued as a warrant to purchase the second round of shares – is exercised, it would bring the investment total to more than $5.6 million.
The investor will have up to three years to make the second purchase, meaning if stock prices for Rare Elements go up in the meantime, the investor could have a bargain down the road. The closing for the transaction is expected to occur next week.
The 65-cent stock price for the investor represented a 15 percent discount from recent stock prices. The proceeds from the investment will go to pre-development of the Bear Lodge mine, which is within 25 miles of Devils Tower. The investment will help progress permitting, testing on rare earth element separation, engineering and optimization studies, a feasibility study and provide general working capital, among other uses.
In an email to the Business Report, a spokesman for the company said he couldn’t add much to the press release, but said the company is “pleased” with the transaction.
The new investment will help the company in its activities, but falls short of the $25-$50 million the company said it would need to support pre-mining activities in August 2014. The company said in federal documentation that it has been successful with past fundraising, but said that was no guarantee for the future.
Pre-exploration has shown a “world-class” resource, according to CEO Randy Scott. That is key in placing a mine that could ease the U.S. away from what is essentially a Chinese monopoly on rare earths that most Americans carry everywhere in the form of electronics.
Scott in June 2014 called the mine “a relatively small project” that will produce a lot of material for its size.
“We’re not talking $1 billion or $2 billion or $3 billion to get this project off the ground,” he said at the time. “Being able to hit a sweet spot on how much money you can raise we think is important.”