North of 60 Mining News - The mining newspaper for Alaska and Canada's North

Ucore Rare Metals Inc. Nov. 7 said it plans to exercise its option to purchase IBC Advanced Technologies Inc., the Utah-based company that developed the molecular recognition technology used to separate rare earth elements from a solution derived from Ucore's Bokan Mountain project in Southeast Alaska.

This technology, also known as MRT, was proven to efficiently pull out individual high-purity rare earths with a pilot plant known as SuperLig-One and is being implemented into the Strategic Metals Complex, or SMC, a rare earth element separation facility that Ucore is planning to develop in Ketchikan, Alaska.

In 2015, Ucore entered into an agreement to acquire full ownership of IBC, an option that is open until March of next year.

Leadership of IBC has recently asked Ucore to drop the option.

Ucore, however plans to move ahead with the acquisition and plans to deliver a notice of commencement before the March 14 deadline, initiating a 60-day due diligence period.

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

"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," said Steve Izatt.

Ucore President and CEO Jim McKenzie said the applications of MRT to rare earth separation has vastly increased the potential of IBC, making the deal to buy the company more compelling.

"On a go forward basis, we look forward to working with the scientific and support team at IBC to further develop this exciting business opportunity," McKenzie said.

Under the 2015 agreement, Ucore must pay US$10 million in either cash or shares of Ucore, at the discretion of each IBC shareholder.

Depending on the preference of the diverse group of IBC shareholders, the actual cash requirement may be considerably less than US$10 million.

In addition, 4 million shares and 2 million purchase warrants will be issued to key people at IBC.

Ucore said no single IBC shareholder will acquire a control position in Ucore by opting to take payment in shares.

Once the deal is closed, IBC employees will split 7 percent of IBC's annual earnings before interest, taxes, depreciation, and amortization (EBITDA) for the first five years of operation, an incentive to maximize performance during this period.

Ucore's board of directors sees the acquisition of IBC and its molecular recognition technology as an opening to expand Ucore's business platform to a broad range of minerals critical to modern living.

"The opportunities to progress in the highly profitable metals extraction business are growing exponentially at a world level," said Pat Ryan, Chairman of Ucore. "They include not just rare earths, but technology metals such as lithium, cobalt, tungsten, and many more. Ucore has positioned itself very effectively, securing the opportunity to acquire an existing revenue generating business with excellent growth potential."

Major Ucore shareholders are strongly in support of the IBC acquisition, which should bode well for raising the funds needed to complete the transaction.

"The management of Ucore has done an outstanding job of securing this opportunity for Ucore shareholders," said Randy Johnson, who serves on the Ucore advisory board and is a managing member of Orca Holdings LLC. "Orca, as a major shareholder of Ucore, and indeed all shareholders of Ucore, stand to benefit substantially from the completion of this transaction. IBC has tremendous potential, with existing customers worldwide, and an operating base which will upon completion of the transaction transition Ucore immediately into status as a revenue bearing company, and a leader in nano technology for the mining business. Orca looks forward to supporting Ucore in any way we can, to secure this transaction and build upon this burgeoning opportunity."

Concept Capital Management Ltd., another significant holder of Ucore shares, agrees.

"We at Concept Capital are wholly in support of Ucore's initiative to complete the acquisition of IBC," said Frank Högel, who serves on the advisory boards of Ucore and Concept Capital. "As a major shareholder, we see excellent possibilities for Ucore to amplify this existing revenue-based business model, with the correct infusion of management acumen and capital. The vision for Ucore, leveraging resource supply chains in combination with promising technologies, fits well with our ongoing investment strategies."

–SHANE LASLEY