TER: How does an investor who is not a geologist know they have a company that could viably bring rare earth production into reality?

CC: That is about the scariest question right there. I’ve been working full-time on this for several years. All I do is focus on rare earths and I still have yet to come up with a method that’s foolproof. It is so complex and I’ve worked with so many people in the industry to try to understand how the industry works and what it takes to get a mine to production. For the average investor I would say it’s incredibly complex—and dangerous.

There are literally hundreds of questions you can ask an exploration company. What is your distribution of the elements? What percent rare earth oxide (REO) do you have? What mineral do you have? But these are just the basics, and even these answers can mislead. I haven’t even learned to ask all the right questions and this is all I do. I’m still learning every week.

You’re really dealing with 15 to16 different markets and the most complex metallurgy I know of all at once. Plus , the majority of production and end users are overseas. So, unless you spend time with people in the industry there’s really no way to know what questions to ask. Like I said, I’m still trying to learn.

I don’t think there’s any way to do anything but speculate with the exception of a few companies that are actually making money in this industry that aren’t junior exploration companies, but they’re processors. With that exception, there are no non-speculative plays in this industry. I think it’s all speculative on the junior exploration side and I don’t know if anyone can dispute that. It’s so complex. So, a word of caution. Be careful. Do your research. Be very, very careful.

TER: Any newsletter writers you’d recommend who know the rare earth investment world?

CC: You can meet with folks and talk with them. Find out what they know about the market because there are some guys that are writing about this market that actually understand it fairly well. There’s some that don’t. I’m not going to differentiate between those in public. There’s always going to be speculators and people are always going to throw their money at stuff that they sometimes don’t fully understand. And, like I said, I include myself in that number. David Morgan really helped me get started in this business, so I write for him several times a year. But I’m still learning, so I invite investors to do their research and question all of us.

TER: Any final comments you have for investors who are beginning to look at the rare earth area?

CC: Just be very, very careful. It’s a fun industry; I love it. I find it extremely exciting. There’s tons of new stuff going on all the time. Somewhere around 25% of new technologies use rare earths, so it’s very exciting. No doubt about it. But be very, very careful and learn as best you can how to separate the hype from reality. I think that’s the key.

You just have to learn step by step. Where did past production come from? Mountain Pass in California used to be the largest rare earth mine in the world. A private company now owns it, but they used to dominate the market. So what caused the shift? How come China took over the rare earth market? What has happened in-between and who have the players been? If you do some research on the history, it becomes very interesting.

I’ll leave you with an anecdote. In 1966 Dr. Karl J. Strnat developed the samarium cobalt magnet and that changed the magnet industry and all of our lives forever. It changed the way things are done. And, of course, samarium became very much in demand.

Everything was great and everything was going fine for the samarium market until 1982 when two different teams developed the neodymium iron boron magnet—then the samarium market tanked, and neodymium became the dominant new hot item in the rare earth industry and it shifted the entire industry towards where it is now. So things can happen and change this market so quickly. Everyone is focused on certain elements today, but there might be a shift three or four years from now. You don’t know. So I would say that’s the thing. It changes on a dime; you have to be very alert and very clear minded about how you research this stuff in trying to understand it.

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