Mountain of Metals: Ucore searches Alaska for rare earthsBy: Tom Mason
For Halifax businessman Jim McKenzie, the formula for starting a successful mining business was simple: first buy the mineral rights to a mountain in Alaska, then form a company and assemble a first-class team of experts. A little luck doesn’t hurt, either.
Bokan Mountain is the claim in question. Situated near the end of the Alaska Panhandle, not far from the Canadian border, the mountain is underlain with minerals with names like dysprosium, yttrium, terbium and europium—rare earth elements that are as precious as gold in a world of hybrid cars, wind turbines and guided missiles.
McKenzie bought the rights to Bokan with hopes of opening a uranium mine on the mountain, something that eight previous mining companies had tried and failed to do. It was an ambitious goal. The Halifax entrepreneur had no experience in the mining business. Instead, McKenzie had built his success in another venue as the founder and president of Halifax communications technology company Mediapro. When he sold out to ATandT in 1999, he got involved in the mineral exploration business as a way of staving off the boredom of retirement—a hobby of sorts.
He joined forces with his friend, Wade Dawe, who ran a Halifax-based company called Birchpoint Capital that represented investors looking to get involved in the uranium mining business. It was in that capacity that geologist Harmen Keyser told him about Bokin Mountain.
McKenzie approached the prospector who owned the rights and strung together a deal worth just under $1 million and a partnership that included Birchpoint Capital and Keyser. McKenzie became CEO of the fledgling company that was called Ucore Rare Metals Inc. Today, the company is publicly traded on the Toronto Stock Venture Exchange.
Ucore’s first move was to conduct an extensive three-year survey of the 9,421-acre claim, a project that involved collecting nearly 9,000 metres of core samples from 143 holes. The survey concluded that the mountain contains 3.7 million tons of rare earth minerals. More significantly, 40 per cent of those are the rarer and more valuable heavy elements. “The lights are commodities,” says Mark MacDonald, Ucore’s vice president of business development. “The heavies are more of a precious metal.” Dysprosium, one of the metals in significant supply on Bokan, was trading in August of 2010 at $2,850 per kilogram on the world market. When the tests were completed, the company switched its focus from uranium to rare earths.
The 17 elements that make up the rare earth portion of the periodic table are a commodity that is still not well understood by the general public. Despite their name, they are relatively common elements in the earth’s crust. Their rarity comes from the fact that they are not commonly found in the kind of commercial concentrations that exist on Bokan Mountain. Once considered nothing more than atomic curiosities, they’ve taken on a new importance in the world of 21st century technology.
On display screens, yttrium, terbium and europium combine with everyday phosphorus to create the reds, greens, blues and reds that colour computer graphics. The engine of every Toyota Prius contains about two kilograms of neodymium and dysprosium; and every 100-meter tall wind turbine contains about $300,000 worth of the substances.
As vital components for guided missiles and other high tech weaponry, the fact that China currently controls 97 per cent of world’s supply of rare earth minerals makes NATO strategic planners nervous. It also give a major source of rare earths tucked safely within United States sovereign territory a tremendous appeal for both investors and major North American customers alike. It’s no wonder that the American government has been so positive about the Ucore project, says MacDonald. “Bokan is one of the most strategically important deposits in the world.”
When China announced in 2009 that it was cutting back on rare earth exports over the next six years, Ucore issued a press release announcing their mine. The company sold six million shares the day of the announcement.
Being the CEO of a mining company with the potential to earn billions of dollars is a heady perch for a Halifax entrepreneur with no experience in the mining industry, but McKenzie has compensated by recruiting some of the top mining operators in the world. That includes chief operating officer Ken Collison, a mining engineer who has a long track record in mining operations, most recently as COO at Blue Pearl Mining/Thompson Creek Metals. “Ken is extremely experienced in building mines,” says MacDonald. “This will be his fourth. To build one mine in a lifetime is a heck of a career.”
But the fact that McKenzie is a mining newbie might just be Ucore’s ace in the hole, says MacDonald. Because he’s not weighed down by preconceived notions on how to run a mine, the company is not afraid to innovate with new separation technologies that many companies balk at. “Jim is a very astute businessman,” says MacDonald. “He has built and sold six successful businesses. But he’s new to mining and he is far less stilted when it comes to trying new technology. That willingness to innovate is very important when you’re operating something like a rare earth mine.”
The next step is to get a mine in operation, something that Ucore projects will happen in the next three years. Alaska is an extremely mine-friendly jurisdiction, and thanks in part to some innovative technology, the Bokan mine could have one of the lowest environmental imprints of any mine on the planet, says MacDonald. “We’re looking at the possibility of a tailings-free mine. That’s unheard of.” With a customer base that includes hybrid auto makers, wind farms and other major players in the emerging greentech business, the low environmental imprint offers a green cachet that works well in a world of carbon offsets and ethical investing. “It’s important to our investors and our potential customers that we do this the right way.”