 Today, I have the pleasure of speaking with Dudley Kings North. How are you today, Dudley? I'm well. Thank you, Tracy. Good morning, good evening to you and all your clients. Well, Dudley, I'd love to start by just commenting on an email you sent me about the leveling the rare earth playing field written by Alistair Neal. You wrote to me by saying, I believe that we all have something to contribute. Rare earths are complex. I do not believe that there is a silver bullet or that one person has all the right ideas. Many are common to each of us, while some have a better understanding of a given issue or consideration. So I would just love to start with the leveling the field column and what you what you felt about that. Please Dudley. I thought it was a very good start. And as I said, when we look at any project, it's rare earth projects, it's like the industry itself. It's fairly complex. And there's many issues that need to be considered before one invests or considers promoting a rare earth project. And I think Alistair has given us a great start. And I look forward to identifying a few issues today that I see are important. And undoubtedly, you're going to have other people that are going to put other considerations forward to you. So I think before Christmas, we're going to have a very complete picture of how we should assess rare earth projects. Okay. Well, then let's just start right there. What issues would you like to bring up immediately? The issues that I would like to bring up immediately are mineralogy and the processing, capital costs, and the size of the project. Okay. Well, it's been way too long since you've spoken to us at Investor Intel. So we're delighted to have you. The resource market, of course, has been very challenged over the last year or two. Can you tell us about the state of the Union for rare earth? I was looking at your slide and you were saying that rare earth production was actually up for 2014. Can you give us a bit of an overview? Tracy, I've got a very long term positive view of the rare earth market. And I've got Gray here to prove it here. There is a slide that I've sent you which indicates that over the last 50 years, the rare earth industry has grown by a factor of 30, a growth of 30 over 50 years. Now that's very significant. And I think what we've got to be very careful of is not get bogged down by the present problems that we have. Look to the future. Think positive. So whereas today we're faced with very large amount of illegal production from China and very low prices. I do believe that we should soldier on and it won't be too long before there's some opportunities for many of those projects out there that are being evaluated at the moment. Well, and speaking of that, you have a forecast table for 2020 and 2025. Perhaps this is a good opportunity for you to talk to the future demand of rare earths. Yeah. Tracy, the rare earth market is going to be driven by the demand for the rare earths used in Magnus as they have done for the last 10 to 15 years. And I think that demand in that particular sector is going to grow something like 10 to 15%. And in actual fact, if we were able to bring on some more projects with more reliability in terms of stable price and supply, the growth could be greater than that. But nevertheless, the market as a whole is being driven by the demand for those magnetic rare earths. Overall growth is about 6 to 8% per annum, which means that every 10 years or so the size of the market doubles. And I have confidence in that in that my overall feeling is that the growth in the rare earths market grows at about three times gross domestic product on a global basis. And so whereas some people might consider that perhaps a little optimistic, I think we're in a technological age and that's how I justify that overall figure. Of course, you speak a lot about mineralogy and pilot plants. Perhaps you'd like to talk to us about some of the pilot plants that you've looked at or some feedback for the overall rare earth industry. One of the key considerations for any project is the mineralogy. And there have only been four minerals that have been processed over the last 50 years. So if we're going to look at processing a new mineral, there's a great deal of work involved in evaluating the mineral. How it's going to be separated, how we can separate the gang materials. A fine example is the work that Ian Chalmers has done at LKM where they've invested considerable amount of money over 10 or 11 years to develop that process for the Dubbo project. There are many other projects that we have at the moment and you've identified eight at your recent conference where people are working hard to develop new technologies. I'm very encouraged with this but my own view is I want to wait a little bit longer until some of these pilot plants have been running a little longer and producing material on a continuous basis. Probably something of the order of five to ten kilos minimum over a couple of days operation because that's what consumers are looking for before they're going to commit to the all important contract which is going to underwrite the funding of the project. Okay and let's talk about funding. Where do you see the funding coming from? I'm getting a lot of interesting emails from Jack Lifton of course and many other members of the industry. Do you have any comments that you'd like to make on this presently? I mean Jack and I were discussing earlier that the real sources of funding and interest for rears presently are not in North America but actually in Singapore and China. And Europe and Europe is very keen to develop its own sources of rare earths. It's never going to be totally self dependent but it does want to develop some alternative supplies. Investors are looking for some certainty. They recognize this risk but on the other hand they do want to see that people are going to buy what is being produced. So that's where the pilot plant comes in. It's produced product that the customer wants. The customer says right this company's demonstrated they can produce it. They've got a team of people there that can produce the product. They've run the pilot plant. They've got some confidence in their capital and operating costs. We're prepared to invest in it. And so the mineralogy is so important as I said. If you've got a new mineral like you dialyte like Ian Chalmers has taken 10 or 11 years. I don't want to be a pessimist. I think that what we're looking at now is a greater urgency to diversify our sources of supply. So I would hope that we'll see some new processes coming up and being put in place within a few years rather than that 10 or 11 years. The other factor that Jack has talked about and I've talked about with others is two other things we need to consider is the size of the project. And very often many of these projects are in a difficult position. They have to have a certain size of operate. They have to have a certain capacity. And then that could drive the cost down. But if the capacity is so high that they've got unrealistic expectations in terms of their market share it's not going to work. So that's very important. I think Jack Lifton refers to it as right sizing. And at the moment I see that any new project coming online it will be unrealistic to expect that they're going to be able to sell more than 10,000 tons worth of product a year. 5,000 is preferable. And that's the projects that I favor at the moment. They've all got a potential market share of something that's slightly less than the annual growth in the market, which I think is realistic expectation. The other consideration is capital cost. And the capital cost per unit of production I think is a good benchmark and that is one that I definitely like to see Alastair perhaps put an extra column on his tables because that is important. Darren Townsend at Peak Resources has taken that up and he's produced his own graph which depicts where he believes Peak Resources stands. But I think you've always been very fair to the people who subscribe to your investor Intel. And I would suggest if you put that column in you might actually ask those companies on that table to give you their estimate of the capital cost per unit of production. Capital cost in dollars per production of ARIA. Okay, well thank you for your feedback on that. We'll definitely ask them Dudley. Now the next question I have for you was a very heated debate here. We've had a number of companies, Ian Chalmers, Gavin Lockyer, Jack Lipton of course, and others all give us feedback to your presentation where you talk about the impact of Chinese illegal rare earths on the market. So let me ask you, what do you think is the impact on the market presently? And you have some pretty profound statements here and a need for action statement which I thought was fantastic. Can you give us a bit of an overview for our audience who may not be familiar with your position? Right. Now if you indulge me a little bit, Tracy, I'd just like to give people a little bit of background. China has undoubtedly some fantastic rare earth resources and they want to make the most of those that rich endowment for the people. And they're very proud of their industry. And in many ways it's like the French wine industry. France will sell you a bottle of wine but it won't sell you grapes to make you wine. China would prefer to sell you a hybrid vehicle or a TV, television or something like that rather than selling you rare earths. And that's what their goal is. Now just as the French believe they've all got a right to produce wine, but no French president would dare consider curtailing their ability to produce wine. In China, particularly since Deng Xiaoping in 1992 said the Middle East has oil and China has rare earths. In China, rare earths have a very special position. They have hundreds of people, technologists you understand and they have thousands of people who have expertise in them. And they're very proud of it. And I really don't think that China can stop a lot of this illegal production overnight. These people are proud of the industry. There's people with all that expertise. There's many of them that are supporting local manufacturing enterprises by producing magnets that are used in toys, magnets that are used in clasps, in handbags and things like that. And that's what's enabling many of those manufacturing companies to be competitive. Not only domestically as we've got a big increase in China's consumerism but also globally. So I believe that China recognizes that it can't stop the illegal production overnight. It's got to take a longer term view. So it will happen over time and it has to happen not too long otherwise China is going to have exhausted those great resources that it does have. These illegal miners don't recognize the need to preserve those resources for the long term. So very often what might be considered a 10-year resource is being worked out in a couple of years. And as you rightly say, I've said in my recent presentation, China is squandering the world's best, rarest resources. We have to look at planning for succession to those resources otherwise at some stage we're going to face a crisis. Further to your last comments, you have a couple of excellent slides on addressing illegal production and what you would recommend that we do for the benefit of the overall industry. Can you give us some of those talking points, please? Yeah. I've been pushing for a couple of years now and recently Dr Chen of the China Rare Earths Society and the Association of China Rare Earths Industry has published some tables where he's forecasting Chinese demand for the next five years. And that's really very interesting. They're talking about fairly good solid growth in the magnetic sector. But quite surprisingly, they're forecasting some growth of about 20% a year for hydrogen alloys. In other words, China sees the production of vehicles that run on hydrogen as something that we can look forward to, which I haven't seen outside China. That table that Dr Chen produced, I can make available to you so that you can put it on your website so people can see what China's forecasting. And when we match that up against my estimate and other estimates of global demand, that will enable us to more realistically identify the opportunities for companies outside China. I guess I've saved the best for last here Dudley. I'm dying to know which projects are your favorite for going into production. Now, just without recapping our discussion too much, if we look at the mineralogy, what's been processed before, we look at the project that's not too ambitious in terms of its market share. We look at the projects as well advanced in its pilot plan work and having identified customers and letters of intent in place. I believe there are four projects. And I would like to divide those into two parts, heavy rare earth projects and light rare earth projects. The heavy rare earth projects, I look at Alcain as probably having the best opportunity. It does have a wide Alcain, the double project is going to produce several products, not only rare earth. So there is less market risk, but there's a slightly increased process risk and Ian Chalmers worked hard on that with the pilot plan. The second heavy rare earth project that I've seen as being the most prospective is northern minerals. And that's because it is processing a mineral that's well understood, send a time and once again, their pilot plan studies are well advanced. In the light rare earth sector, there are two projects that stand out. Once again, they have minerals that are going to, we fully understand those. And that's the peak resources project in Tanzania and the rare earth elements project in Wyoming. Both of those have relatively high grade Basterzyte resources, which they can upgrade to a mineral concentrate of over 40% REO, which is very important in the light rare earth sector. And they were able to start up with a capacity of about 5 to 10,000 tons. There are other projects and I would look at those four as having the best chance before 2020. With all the work that's going on, there's several other projects that their time will come between 2020 and 2025. Maybe they can have a slightly increased capacity because the market will be larger, which will help them in terms of operating costs. But those are the four that I see having the best chance. And if you want to ask me comments about a couple of others, you may do so. And I'll comment as best I can. Well, Dudley, what we're going to do is we're going to try and get you to Toronto for the Clean Tech and Technology Metal Summit in May. And put you on a panel and ask you alongside Jack Lipton. Anyways, Dudley, thank you so much for joining us today. We really appreciate it. Thank you.