Accept No Substitutes

Peter Cashin, president and CEO of Quest Rare Minerals, outlines the market for specialty mineral deposits

The West got a wake-up call when China, which produces 97 percent of the world’s rare earth mineral supply, announced that it would run out of surplus to export by 2015. Today, mining companies are on the hunt for these minerals elsewhere because they are essential to many modern technologies, including cell phones, computers, TVs, and the like. Quest Rare Minerals Ltd. is leading the charge to locate new deposits. Here, president and CEO Peter Cashin details the firm’s recent discovery of a promising site in northeastern Québec and why it’s so important.

Advantage: What are rare earth deposits?
Peter Cashin: Rare earths are a fairly recent development as a commodity of interest. There’s a lot of hype surrounding them, and a lot of people view them as speculative, but they’re actually important components of many things we take for granted every day—laptops, flat-screen TVs, smartphones. They are also used in wind turbines, solar panels, and hybrid motors, which are important because people are looking for these alternative-energy sources, given the high price of oil. And they’re used in defense technologies—laser-guidance systems for smart bombs, radar systems, and rechargeable batteries that go into drones.

Would we have heard of any of these elements?
The more common rare earth mineral, used in high-tech magnets, is called neodymium. They all still have their Latin names from the periodic table; they haven’t developed colloquial names, like gold, which is aurum, and copper, which is cuprum.

What’s driving demand?
Rare earths are critical components of high-tech applications, and there are no substitutes. Historically, the Chinese have produced 97 percent of the world’s rare earth supply. In 2009, however, they cut way back on exports to the West and proclaimed that by 2015 they would run out of surplus production to provide to Western consumers. There was a big run-up in prices. It was a call to the West to start looking for alternative sources of rare earth minerals.

It sounds like Quest was uniquely positioned to take advantage of this situation.
At the time, Quest was already undertaking exploration at a [site] we [discovered] in 2009. Currently, we’re in the development stage of what is considered to be the world’s largest rare earth deposit outside of China. We’re doing preparatory work for a production decision, [including] environmental testing, engineering, and cash-flow modeling.

Peter Cashin’s
Career Milestones

2005
Serves as manager of investor and corporate affairs for Alexis Minerals Corporation

2008
Becomes president and CEO of Quest Rare Minerals;
Quest shares begin trading on the TSX Venture Exchange

2009
Quest completes a $6.3 million private placement

2010
The company receives the results of a preliminary economic assessment and completes a $51.75 million public offering

2011
Quest shares begin trading on the New York Stock Exchange

2012
Quest graduates to the TSX main board, signs a letter of intent for the sale of 100 percent of its expected zirconia production, and
announces a revised resource estimate with double the tonnage

What made you want to launch a company in this field?
I’m a geologist by training, and I’ve been in mineral exploration since the mid-1970s. I’ve worked for the likes of Inco, Getty Mining, Chevron, and Gulf Minerals at various levels of responsibility. I was asked to run [Quest] by some good friends who had a mining company with uranium assets they weren’t getting value from. They decided to spin out those assets into a newco and render it public. That newco was Quest Uranium, and we went public in January of 2008. We made the discovery of the new deposit in 2009 and rebranded to Quest Rare Minerals. The rest is history.

Where are your development sites?
The Strange Lake and Misery Lake sites are located in northeastern Québec, one of the most mining-friendly jurisdictions in the world. They’re big deposits. The first covers an area of 54,000 hectares; the second, 79,407 hectares. We’ve identified enough potential for 150 years of mining at the Strange Lake project.

Do you own your development sites, or do you lease them?
In Canada, you stake claims on crown lands. In return, you have an obligation to undertake work to develop the resource opportunity on the property. You also have to file technical reports of your activities. But the government is very enthused. Canada is looking to ensure its northern sovereignty because as the Northwest Passage across the Arctic ice cap opens up, there will be all sorts of petroleum potential. We’ll also create hundreds to thousands of long-term high-technology and manufacturing jobs.

What’s the potential for growth in the rare earth market?
I think the potential for consumption growth is absolutely huge. This isn’t a traditional commodity; it’s a commodity for what I consider to be the new technological economy, for use in platforms developed over the past 25 years—platforms we really need. Do you remember the big power failure in the Northeast about 10 years ago? I remember driving home from work with the car running on empty because the gas station needed electricity for its pumps. My electric garage door wouldn’t open, there were no lights, and I couldn’t make a phone call or use my computer to access the Internet. I realized then how dependent we are on these new technologies.