high purity re carbonate production, page-8

Hi all,

Firstly, Ltl, I'm glad your taking an interest in CUX which is understandable considering your other investments.

The price of any commodity is a measure in a currency e.g. $US of the attractiveness of that commodity to a buyer from a seller. This of course is a problem with rare earths because there is normally a basket of up to 17 elements which a buyer purchases and they may not need all of them. This is the advantage of a central market where a purchaser can cherry pick what they wish to purchase and only purchase the products they want. By having to buy a basket a purchaser may have to off load the rare earths they don't require. Therefore, it is easy to see why prices of rare earths are all over the place.

There may also be a problem with a purchaser buys who buys directly from a producer with questionable mining or management practices. This allows the purchaser to be tied directly with possible questionable practices of the supplier, whether political or environmental.

Therefore a rare earth resource that isn't percieved to be used as a political weapon and is seen to be mined environmentally sustainable should attract a premium. Further, if it can easily be seperated and transported without controversy it will also attract a premium.

The size of the resource and the stability of the country where the resource is mined, whether economically of politically, is also import because purchasers IMHO need security of getting the product they need for their production.

So would a company take into account when purchasing rare earths where the resource comes from, the size of the resource, how it is mined, its mix and how it is refined in determining the price it is willing to pay? May I suggest you bet! Let me suggest that Japanese and USA manufacturers will be willing to pay a premium to get rare earth resources from non-Chinese companies not only for political reasons but also for percieved environmental reasons. I'm sure US military suppliers will pay a premium to be supplied with rare earths onshore and if that is not available from a resource contained within the lands of an ally.

So when Ltl you ask what's the price? That has to be percieved taking into account the mix, the purity, the size, the ownership, method of extraction and location. I believe on these criteria CUX scores exceptionally well, especially for Japanese and US companies. This should be reflected in the price or demand CUX recieves for their rare earths.

Of course demand is also reflected in the price of a commodity but if the features mentioned above are more favourable for product A than product B then even if the price of the two are the same demand will be greater for product A. Of course I haven't mentioned all the features that may make rare earths more attractive from one source to another but I think all will get the idea.

Therefore, the questions you pose ltl are far to simplistic, without a central market for rare earths. I think a central market if it existed would at a minimum require certian environmental standards to be met by suppliers to be viable because purchasers would demand it.

Let's examine the CUX position:

1. It knows it has a hugh resource.

2. The resource is contained within favourable materials i.e. Monazite and Xenotime.

3. The resource is in a stable country Australia which would seem important for USA and Japanese purchases of rare earths.

4. The resource contains both heavy and critical rare earths.

5. The major shareholders are Australian management.

6. As the resource is an alluvial fan environmental remediation should be cheap and effective.

7. Transport and use of a high purity RE carbonate will be attractive to overseas purchasers.

The only real question is costs. Though management has stated the costs to exploit the resource will be very competitive I believe the market will and need to be assured of this fact with the independent studies due at the end of February and with the production of high purity RE carbonate I believe in the first quarter of 2013.

I think once the cost question is answered by independent consultants that will make the resource more attractive to purchasers as it will be understood that CUX's resource will be able to become a reality. Purchasers will then be able to source their rare earths from a reliable resource that will be able to provide a supply for decades at least. It will be seen to be environmentally mined and refined, and it is sourced in an economically stable western economy.

When all of the features of CUX's resources are realised by purchasers and take-off partners, they should appreciate the advantages of the obtaining their rare earth requirements from Charlie Creek.

Roll on the next couple of months.

Personally, though I believe the quality of the resource and the management will be realised by potential customers and the market alike.

For you ltl, with the falling aside of potential RE producers through the cost to bring their products to market or size of their resource and questionable management decisions will only highlight the benefits of CUX.

Cheers

Stoops