 Ladies and gentlemen, Professor Dudley Kings North. My presentation today I will be fairly brief, outlining a number of highlights of my view of the rare earth industry to allow some time for questions. I am an independent consultant, I'm not retained by any company on the basis of reward for my efforts. I provide advice on the basis of a fee. And I don't have any shares or any shares in any rare earth companies. Presentation today I'll talk about the brief history of the industry, forecast demand and supply, China's beleaguered, in fact it's beleaguered by legal production and some conclusions. Over the last 50 years the rare earth industry has grown in volume by a factor of about 30. That's quite outstanding, there are not very many commodities in which we've seen such a growth in demand. And that growth in demand has been driven by the development essentially of new technologies. And over the last 20 to 30 years that's largely been based upon the use of neodymium, prasodymium and dysprosium in the production of rare earth magnets, which is we're all aware of very powerful magnets. On the other hand, technology has led to some changes in demand for rare earths. The development of LEDs to replace fluorescent lights has reduced the demand for rare earths in those lighting applications to about 10 to 15 percent of the demand for a fluorescent light. Now fluorescent lights will continue to be manufactured, but that is having a big impact on the demand for phosphorus. That's a brief history of demand recently as we're all aware in 2010 China suspended shipments of rare earths to Japan and at the same time reduced its export quotas. As a result we saw a significant increase in prices in 2011 which led to a fall in demand in 2011-12. It's taken about five years for that demand to recover. In the last two years 2014-2015 we've seen demand grow at about five to seven percent per annum, which I see continuing maybe strengthening in the coming years. So future demand and supply. Well the situation today is that we total demand, estimated demand is about 140, 150 tons per annum, rare earth oxide. The global, the value of that production is about two to four billion. Rare earth is the dominant force in the industry of which we're all aware, producing about 80 to 90 percent of the world's rare earths and consuming about 60 to 70 percent. Outside China Linus has taken a long time to start up and last year did actually achieve a production on a positive cash flow basis. Unfortunately in the first quarter of this year we've continued falling of prices in rare earths. They actually made a loss in the first quarter this year. That just shows how tough it is for companies outside China to start new projects given the impact of the illegal mining in China, but more of that later. So that's global rare earth demand in 2015. I don't intend to go into any great detail except to point out the demand for the magnet sector is about 45,000 tons a year and demand for the metal alloys primarily that's used in batteries is about 25,000 tons. And those are the two areas that are going to grow significantly over the next few years and as I've said I don't see this changing much. Forecast growth over the next few years, in catalysts we'll probably see demand increased by about 4% to 6% per random glass that could grow at 4% to 6% but maybe more. There's a huge surplus of cerium at the moment and I do believe with the increasing surplus of cerium and reduced prices we could see a return to the use of cerium as a decolorant in many more applications rather than just high-tech applications. Metal alloys, I've mentioned that briefly, we'll come back to this later but China is forecasting quite a significant increase in demand for the metal alloys. Magnets talked about that, phosphorus. So overall the growth in demand over the next 5 to 10 years I believe is going to be in a range of about 6 to 8% per annum. What does that mean? demand increases from an estimated 45,000 tons this year to about 65,000 tons in 2020. China. China has taken a long-term view towards the development of its rare earth resources and we're all aware that in 1992 Deng Xiaoping said the Middle East has oil and China has rare earths and what's that meant, what that has meant over the past 50 years is that China has gradually moved downstream. Their goal is to maximize the benefit to the Chinese people of their abundant resources and great resources of rare earths. It's been very gradual but they're very patient people. Now this has been achieved, they've assisted that by placing export taxes on rare earths and also export quotas and that was a key driver of the shift of downstream manufacturing of rare earths in the 1990s and early 2000s. Fortunately in 2012 Japan, the EU and the US challenged these taxes and quotas as not according with good trade practice and in 2014 China was forced to remove those taxes and quotas. So from the 1st of January last year the export quotas removed at the time it didn't make much difference because China wasn't selling as much as its quotas but from the 1st of May last year the export taxes were reduced. Now what that meant was if you're for instance a phosphor manufacturer in Japan the cost of the rare earths in producing a phosphor for your lighting is about 50%. Europium is key to that. The export tax on the phosphors was 25%. In addition the exports of unimproved rare earths do not get the VAT or GST refunded and the VAT is about 16%. So a phosphor producer in Japan is effectively playing 41% more for their raw materials than their competitor in China. Those rare earths constitute 50% of the cost of producing a phosphor. That's just one example and that's why they had to be eliminated. Nevertheless what has happened is that as a result of those measures China has dominated and produces about 80-90% of the world's rare earths and through the downstream activities it produces about 80-90% of the world's magnets and other things. Professor Bogart two years ago put this graph up and said well this is the impact and this is gradually China is gradually moving downstream and all the jobs associated with the production of these components and these original pieces of equipment are drifting to China. When you put the graph up you actually only put the red and purple lines up and these were dotted so I have to take responsibility for that but that just shows the impact of China's policies in ensuring that the value add takes place in China. So this move downstream as I said has been extraordinarily successful and it's not only the taxes China invests significantly in R&D and technology and education of individuals. Outside China there's relatively few people who have expertise in their earths in the science and technology of operating expertise and that's been a big problem for Linus in starting up in employing staff and training them, educating them to operate a fairly sophisticated plant. The measures that were put in place as I said have now been discontinued. The analogy they'll like to use is that you can buy a bottle of wine from France that's great but they won't sell you grapes to produce your own wine. It's taken US, Australia, Canada, South Africa 20 to 30 years to develop a wine industry that's starting to be comparable with France and that's the issue that we face in the rest of the world. We've got to commit to developing processes and educating engineers, scientists and operators so that we can develop and operate rare earth operations that can compete with those in China. So what's their agenda? China's agenda, it hasn't actually increased production quotas. It has production quotas in place and the idea is that by having these production quotas and awarding them to the six major companies that have been charged with driving the industry forward that they will control production. But unfortunately the production quotas themselves are insufficient to meet Chinese demand which effectively means that China is mandating illegal production. They're trying to eliminate illegal production but it's very difficult and it's only partially successful. We continue with the analogy with France and the wine industry in China. The rare earth industry is well known throughout the country as something that they're very good at and there's a whole lot of small operations which the government is taking a very long time to control and I believe it's going to be many years before it is eradicated. Talk briefly about industry consolidation. China has charged six companies with carrying the industry forward. Environmental legislation. They have introduced new environmental standards and they are funding the implementation of those standards at an operational level but nevertheless in China social harmony takes precedence over everything else and if implementation of environmental legislation destroys too many jobs the whole process is slowed down. So that's why it's taking a while to enforce those environmental standards. They're said to be introducing a rare earth certification system. To me I'm somewhat cynical about that it's just another piece of paper that's open to be forged so I don't see a lot of benefit from that. They did propose the establishment of some international standards for rare earths and I believe that's an opportunity for the rest of the world to work with China to establish some standards which can really have an impact on reducing environmental impact of the illegal production in China. China has also introduced a resources tax or has intended announced it will introduce a resources tax which will be about 7 to 12 percent on light rare earths and 27 percent on heavy rare earths. The problem is that they don't quite, the idea is they're going to put this tax in place on concentrates but if you do that by the time you go from the concentrates to the end product there's only about 65 percent is produced, separated rare earths are produced. Not everything you produce is sold. So the rare earth companies are saying well this is totally inappropriate. If you allow for less than 100 percent we'd allow for 65 percent recovery and you allow for the fact you're not going to sell everything you produce. The tax rates resource tax is about twice what they're talking about. So although they talked about introducing these resource taxes about this time last year they're still talking about it and I think it's going to be a while before they're introduced. They have announced they hope to have some measures in place by the end of this year. I think that's a possibility and that's why I'm forecasting some increase in prices towards the end of this year. That's China's forecast of rare earths demand. It's interesting that they're forecasting a growth in demand for the hydrogen alloys of 20 percent per annum. In other words they see a big increase in demand for hydrogen vehicles. And only recently we've seen announcements by BMW and Toyota that they're looking at developing some of these hydrogen vehicles. And Iwatani in Japan has a number of these hydrogen stations where if you have a hydrogen vehicle you can go and recharge it with hydrogen. So that's going to be very interesting to see how that plays out. The magnitude of the illegal problem was identified by Dr. Chen. Dr. Chen is deputy director general of this Chinese rare earth society and he's also deputy secretary of the Association of Chinese Rare Earth Industry. 2014 he noted that the demand for the demands for neodymium prazodymium to meet the magnet production in China was about 30,000 tons. And yet if you look at the production quotas that would only generate 21,000 tons. So the difference is made up by illegal mining. And it's quite astounding that China will acknowledge that at one level but on another level wants to eliminate illegal mining. It can't possibly be eliminated totally until such time as they adjust the production quotas. And that's illustrated here. These are Chinese figures quite clearly in 2014 and situations got worse and then their demand for neodymium and prazodymium was greater than the supply generated by their own production quotas. In other words the left hand doesn't really know what the right hand's doing. The production quotas are issued by the Ministry for Resources and Land and Resources and the magnet production is sort of overseen by the Ministry of Industry and Information Technology. The result of this is that in 2014, 2015, the Chinese industry, the major producers have collectively lost money. Disillegal production is not only preventing projects outside China, it's starting to really hurt in China. And they're really, from where I stand, I really don't think they know how they're actually going to solve it. Because they don't want to destroy a whole lot of jobs, on the other hand they realise it's causing huge problems, particularly environmentally, and driving the cost of the materials down which is making the large companies unprofitable. Now the impact of these illegal mining is best demonstrated here by the change in prices. And we can see there's been a steady fall in prices over the last 18 months. It's unsustainable. So the situation today, collectively the Chinese rare earth companies lost money as I said last year and the year before. Today they're mining probably 300,000 to 400,000 tons of rare earths a year to achieve, to meet demand. It could well be more than that. And I know Jack Lifton is going to talk about that later. He thinks my figures there are a little bit conservative, and I'm quite prepared to acknowledge that and talk to him. That would be a good topic for discussion and how it could be addressed. I've talked several times about the magnitude industry, the driver of the industry, and that's the driver primarily of the illegal production of rare earths in China. So how can we address this issue? I think China can't solve it itself. The rest of the world has to assist China and for our own benefit, we really must work with China on this. And I'm speaking in China in a couple of months, and I've decided I'm going to take a fairly forthright view. I don't know whether I'll be invited back again to tell them that they've got to get their house in order, but the rest of the world needs to play a part as well. They need to increase their production quotas. They need to make greater efforts to close down the illegal operations. And they need to work with the rest of the world to develop rare earth standards, particularly with reference to occupational health and safety. If we have standards there, then we go to help to outlaw the illegal production. For the rest of the world, we need to make better efforts to ensure the magnets and the rare earth products that we buy are produced from a legal certificate, a legal production. I do know that's difficult. Production certificates can be purchased and forged, but we just need to make, in a long-term interest, the better efforts to ensure that that's what we do. And we need to work with China on these international standards. So finally, by failing to eliminate the illegal mining and production of rare earth in a reasonable timeframe, China and the major consumers are squandering the best rare earth resources on planet earth. We must plan for the future and succession. We can't just stand here and accept that prices of rare earths are very low because it's not going to continue. I was speaking to a conference in Europe last year and I got a whole lot of blank faces looking at me and I said, well, it's a little bit like putting Dracula in charge of the world's blood banks. We probably won't notice much for five to 10 years, but ultimately we're going to get to a stage where it's going to impact upon supply. And the first thing that'll happen will be that China will cease exporting. So that's the situation. It's very serious. Thank you.