Quest Rare Minerals Ltd. company history: the story so far

History

Quest Rare Minerals spent 2012 to 2014 turning its Strange Lake rare earth deposit into a costed mining and processing plan, still unfunded and without a binding sale agreement.

2012-2013: Sizing the deposit and seeking partners

Quest Rare Minerals set out to develop the Strange Lake B-Zone in Québec, a deposit of rare earth metals. In October 2012 it reported a revised estimate by Micon International: 278.1 million tonnes Indicated at 0.93% total rare earth oxides plus yttrium, and 214.4 million tonnes Inferred at 0.85%. Quest said this was more than double its April 2011 estimate to a depth of 150 m. It also hired Gunter Thase as Manager, Metals & Marketing, to find off-take (buyers) and strategic partners.

That search produced a first result in July 2013: a non-binding letter of intent with TAM Ceramics Group of NY, LLC to buy up to 24,000 tonnes a year of zirconia, all of Quest's expected zirconia output. A definitive agreement, including price, was still to be negotiated by December 31, 2014.

The same month Quest closed a private placement raising $2,741,948 gross, its first new equity since October 2010. It sold flow-through shares (money for Québec exploration) and units with half-warrants (money for working capital). Shares outstanding rose to 67,237,044.

2013-2014: Studies, a plant site and a redesign

In October 2013 Quest released a pre-feasibility study, which it called positive. Initial capital was $2.565 billion, with a post-tax return of 21.2%, a post-tax net present value of $1.8 billion, a 30-year mine life and a 3.5-year payback. The filings did not say how the build would be financed, and the project was not yet funded or committed.

In November 2013 Quest chose Bécancour Industrial Park for its $1.3 billion processing plant, with construction planned for 2016 and first product in 2018. It said it would voluntarily submit the project to Québec's environmental review and set up a community monitoring committee.

On April 9, 2014, Quest released a revised preliminary economic assessment it called substantially improved. The excerpt did not show the new figures, but its contents listed a flotation step and a separation plant, suggesting a changed process design. The resource estimate behind it was still the August 2012 one. At that date, the TAM agreement remained non-binding and the large capital cost remained unaddressed.

Written from the 6 story beats below (2012 to 9 Apr 2014), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

2014

9 Apr
Quest released a revised preliminary economic assessment (PEA) for Strange Lake, filing a technical report dated April 9, 2014; its press release calls the plan 'substantially-improved'. The visible excerpt is the cover and table of contents, so the new economics are not shown. The contents list a flotation step (concentrating the ore before processing) and a separation plant, which suggests a changed process design compared with the October 2013 pre-feasibility study (inference from the headings). The resource estimate behind it is still the August 31, 2012 one.
resource reserve update

2013

5 Nov
Quest said it has chosen Bécancour Industrial Park in Québec as the site for its planned hydrometallurgical (rare earth processing) plant, a complex it puts at $1.3 billion, with construction scheduled to start in 2016 and the plant running in 2017, first product the following year. This turns the 'plant in southern Québec' assumed in the October 2013 pre-feasibility study into a named location; the filing does not say how the cost would be funded. Quest also says it will voluntarily submit the project to Québec's BAPE environmental review and set up a community monitoring committee.
regulatory community update
23 Oct
Quest released the Strange Lake pre-feasibility study, which it calls positive: initial capital of $2.565 billion, pre-tax IRR of 25.6% and post-tax 21.2%, post-tax NPV of $1.8 billion at a 10% discount rate, revenue averaging $1.047 billion a year over a 30-year mine life, and a 3.5-year payback (Canadian dollars). The study assumes a processing plant in southern Québec. The company says basic engineering is under way, a full pilot plant is planned for early 2014, and talks continue with potential off-take and strategic partners. The financing for the $2.57 billion build is not addressed in the excerpt, and the Strange Lake project is not yet funded or committed.
resource reserve update
26 July
Quest closed a fully subscribed private placement raising $2,741,948 gross: 4,065,360 flow-through shares at $0.55 ($2,235,948) and 1,012,000 units at $0.50 ($506,000). Each unit has one share and a half warrant, each full warrant buying a share at $0.80 until January 25, 2015. The flow-through money is for Québec exploration and the unit money for working capital; Quest now has 67,237,044 shares outstanding. This is the first new equity raised since the October 2010 financing cited earlier in the company's history (the earlier annual report said no new money was raised in fiscal 2011).
capital raising announcement
9 July
Quest signed a non-binding letter of intent with TAM Ceramics Group of NY, LLC for TAM to buy up to 24,000 tonnes a year of zirconia that Quest expects to mine at Strange Lake, which is 100% of its anticipated zirconia output. A definitive agreement, including price, is still needed and is to be negotiated by December 31, 2014 at the latest; the proposed term is five years with five possible five-year renewals (30 years in total). This is the first off-take deal from the search for partners that began with the October 2012 hire of a metals and marketing manager, but nothing is binding yet.
asset acquisition disposition

2012

31 Oct
Quest reported a revised resource estimate for the Strange Lake B-Zone, prepared by Micon International with an effective date of August 31, 2012: 278.1 million tonnes Indicated at 0.93% TREO+Y plus 214.4 million tonnes Inferred at 0.85%. It says this is more than double the April 2011 estimate to a vertical depth of 150 m, and it hired Gunter Thase as Manager, Metals & Marketing to find off-take and strategic partners. This builds on the pre-feasibility study under way.
resource reserve update