Pele Mountain Signs MOU with Top Chinese REE Mining Company

In what could amount to a controversial move Pele Mountain Resources Inc announced today that it has entered into a memorandum of understanding (MOU) with Sheng Kang Ning (Shanghai) Mining Investment Co. Ltd. of China (SKN) to jointly pursue the opportunity of developing rare earth element (REE) processing facilities at Pele's Eco Ridge property in Elliot Lake, Ontario.

Pele President Al Shefsky stated, "We are delighted to enter into this MOU with SKN. The MOU represents a strong endorsement for Pele's monazite processing strategy, and is an important first step to bringing the experience and expertise of a proven global leader in rare earth processing to our Project on in Elliott Lake."

The problem with the proposed MOU is that REE have been placed on a list of critical elements precisely because China has a commanding dominance in global supplies of the substance that is increasingly in demand for high tech products such as cell phones, fuel cells and green products.

According to 2013 statistics China controlled 97 percent of all Rare Earth Elements.

Left Peter Dimmel, Director, Pele Mountain Resources at PDAC 2015 in Toronto

Worries about China’s Monopoly

From the 1960s to 1980s, rare earths were supplied mainly from the US, mostly from the massive Mountain Pass mine in California, which was eventually mothballed in 2002.

China then took over the industry completely, producing more than 95% of the world's REEs centred in Inner Mongolia and also becoming the top consumer ahead of Japan and South Korea.

Worries about China's monopoly of production sent prices for all rare earths into the stratosphere from 2008 onwards with some REEs going up in price twenty-fold or more.

Secret Minister’s Briefing Notes Declare REE Critical to Canada’s Economy

Last year then Canadian Natural Resources Minister Joe Oliver, stated that “rare earth elements” used in new technology are “critical to Canada’s economy”.

The comments were contained in the minister’s briefing notes that were obtained by Postmedia News journalist Jason Fekete under access to information legislation, the briefing notes marked “Secret” says “Rare earth elements (REE) have been categorized by the government as being critical to Canada’s economy. Canada could become a significant producer of rare earths over the medium term.”

Committee on Natural Resources Hearings into Importance of REE

On February 25, 2014, the House of Commons Committee on Natural Resources released a report on its hearings into the importance of REE to Canada. Click on the following link to read the report

http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=6438964&Language=E&Mode=1

Sheng Kang Ning is Investment Arm of Shenghe Resources Holding Co.

According to Mines and Money Hong Kong, Sheng Kang Ning (Shanghai) Mining Investment Co., Ltd. is the investment platform of Shenghe, Resources Holding Co. Ltd. established in China (Shanghai) Pilot Free Trade Zone, focusing on global mining investment, consultancy, exploration and development.

According to Bloomberg News Shenghe Resources Holding Co. Ltd. researches, develops, manufactures, and distributes computers and assistant devices in China. The company also provides enterprise network and informationization, teaching equipment, middle and primary school informationization, transmitters, and monitoring systems, as well as technology development services and software. In addition, it is involved in the development and distribution of electronic devices, computer software systems, automation engineering, environment protection, and energy products. The company was founded in 1998 and is based in Chengdu, China.

SKN has expertise to build and operate REE processing facilities

Together SKN & Shenghe possess proprietary technologies for environmentally sustainable, low cost, rare earth processing and have the expertise and experience to design, build, and operate rare earth processing facilities.

CREEN

Last Year, a new cooperative network was formed in Canada with the hope fast tracking production of REE within five years. The Canadian Rare Earth Element Network (CREEN) wants Canadian producers and processors supplying at least 20 percent of anticipated global demand for the critical material by 2018.”

In a written submission to the House of Commons Standing Committee on Finance Pre-Budget Consultations 2014 October 7, 2014 CREEN stated: “With its well-known mining and processing expertise, Canada is currently in a strong position to capture and capitalize on the economic opportunities and strategic importance of the country’s unique rare earth element (REE or REEs) deposits. This would firmly establish Canada as a significant, secure, and sustainable supplier to the global REE supply chain.” For more information about CREEN follow the link.

http://www.cim.org/en/RareEarth/Home/TheElements.aspx

Longterm definitive agreement in the works

Under the MOU between Pele Mountain and Sheng Kang Ning, the Parties will negotiate a Definitive Agreement that incorporates the following proposed terms, among others:

• a stated purpose to maximize financial benefits to both Parties through the sustainable development of continuous, reliable rare earth processing operations;
• The JV is to be owned 50.1-percent by SKN and 49.9-percent by Pele;
• SKN will use its processing technologies for the JV to process monazite concentrate (subject to approval of Chinese authorities) and Pele will lease a portion of its lands to the JV for construction of the Project, both on a commercial basis;
• SKN (or qualified third parties nominated by SKN) shall be retained by the JV to design and construct the processing facilities.
• The Definitive Agreement will set out the duties of SKN as operator of the processing facilities;

The MOU remains non-binding other than the provisions relating to confidentiality, exclusivity, jurisdiction and certain other standard clauses, which are intended to be binding. Unless the Parties agree to extend the MOU, it will automatically expire in its entirety, if the Parties do not satisfy and waive their respective due diligence and other conditions and negotiate and execute the Definitive Agreement on or before September 30, 2015.

Pele Mountain Resources

Pele Mountain Resources is focused on the sustainable development of a low cost, early to market, critical rare earth supply by processing high-grade rare earth bearing monazite in Elliot Lake, Ontario, at the same location as its Eco Ridge Mine Rare Earth and Uranium Project. 

SKN & Shenghe

Sheng Kang Ning (Shanghai) Mining Investment Co., Ltd. ("SKN") is a mining investment company registered in China (Shanghai) Pilot Free Trade Zone focusing on worldwide mining investment and financing, mining consultancy, geological exploration and mining development. SKN is 90% held by Shenghe Resources Holding Co., Ltd. ("Shenghe"), serving as its investment platform and technical consulting center.