Interview with Robert Mackay, President & CEO of Stans Energy Corp.
On January 13th, 2011 Stans Energy Corp. announced the acquisition of a Heavy Rare Earth (HRE) processing complex, including a private rail terminal near their Rare Earth (RE) open pit mine in Kyrgyzstan. Kidela contacted Robert Mackay, President & CEO of the company and asked him a few questions related to this purchase. Here is what Robert Mackay told us...
Kidela: Stans Energy has just announced a major development in the International Rare Earth space with the announcement that the company is buying a Rare Earth (RE) processing facility in Central Asia — the Kyrgyz Chemical-Metallurgical Plant or KCMP, in Kyrgyzstan, in addition to its own private rail terminal. What’s the significance of this news?
Robert: We believe that with this purchase we have added significant value for our shareholders at a fraction of cost that other RE companies have budgeted for the construction of a RE processing facility. This acquisition enables us to process the concentrate from our RE mine, Kutessay II, at Stans Energy’s own processing plant, which is only 40 km away and transport it via rail to our buyers. KCMP helps Stans gain a first-mover advantage among future RE producers – specifically Heavy RE producers. We are very confident that in the coming years the separation of final Heavy Rare Earth Oxides and Metals is where the real value will be created in this sector.
Kidela: The plant seems to be a rarity in the Rare Earth field, as you’ve said that it is the only one of its kind outside of China which is primarily focused on processing the more precious Heavy Rare Earths. Please elaborate on why your focus will be on the processing of HREEs as opposed to LREEs.
Robert: KCMP is the only plant in the world outside of China I am aware of that has processed every HREE into oxides, metals and alloys. This plant also had a very successful track record of producing these high quality products for a variety of Soviet industries over a span of 30 years. With this purchase, we now have access to the important and valuable data records that were compiled during the decades that the plant was in operation. These records significantly decreases the technology risk associated with producing final high quality RE products. Given the sensitivity of the HREE production process, we recognize that many control mechanisms are necessary and without these historical records the level of testing that would need to be carried out to perfect the new processes within the plant would be very time consuming and expensive. So, by making this acquisition we believe that we have saved our company a great deal of time and money – which are two very precious commodities in the RE race. One last point . . . although there have been improvements in some technology and equipment designs since the plant was in production, much of the equipment on site still applies to modern day best practises. We are very confident that by focusing our efforts to refurbish KCMP, we can effectively accelerate our strategic business development plans to secure buyers of our final REE products.
Kidela: The facility and your mine are in the former Soviet republic of Kyrgyzstan. We understand a prominent Russian Metallurgical Institute will be involved in helping with the retrofit of the facility – could you elaborate?
Robert: Yes, you are correct in that we have a consulting agreement with the Leading Russian Research Institute of Chemical Technology (Russian acronym – VNIIHT). VNIIHT is an extremely well respected Chemical and Metallurgical organization. This state owned institute works with mining companies to assist them through all stages of their mining and processing development. We are extremely pleased to be working with the VNIIHT experts to help rebuild a new rare earth supply chain. We have received excellent input on how we can enhance the efficiencies of the metallurgical process and ramp up our output. Additionally, we will be consulting with the other Russian Institutes who designed the original expansion of the facilities.
Kidela: Can you tell us a bit about this facility, and the long history of Rare Earth mining in the area?
Robert: This facility is part of a complex that spans close to one million sq. ft. of space. The size and scope of this complex provides us with a number of production options going forward. With this purchase, Stans Energy will benefit from the Soviet practice of overbuilding their technological facilities. Just prior to the close of the mine, the Soviets built an extension to Plant 3 and brought in new equipment that was never installed and has been kept in storage ever since.
Kidela: Can you tell us about a few of the advantages you see in re-opening the plant in the area?
Robert: Yes, two significant advantages come to mind. The first is the people – fortunately, there hasn’t been excessive out migration of the population in that area. Many of the local residents either worked in the Kutessay II mine or at the REE processing facility. As a matter of fact, the former head of technology is the person who took us on our last tour of the facility. We are very excited to provide future opportunities to several former workers, many of whom have a tremendous base of education and experience with chemical technologies. The second reason would have to be the infrastructure. There is power, paved roads, additional buildings, a rail terminal, cranes, you name it.
Kidela: You say processing Rare Earths is very difficult and time consuming and can involve hundreds of complex steps. What can you tell us about your plans related to the equipment and the technological processes that will be used at the KCMP plant?
Robert: I’m not a RE technology expert and that is why upon the completion of this acquisition, we will be bringing in qualified consultants who are. One of our advisors, Dr. Valery Kosynkin, is one of the few people in this world who have designed and built an operational RE mine and final process. Valery will be directly involved in making sure we have the best equipment and solvents available in order to be successful. We are confident that our ability to master the complexity of REE extraction will be one of our competitive strengths. I’m not minimizing the difficulty, it is just that I am confident in our team’s ability to attract those who really understand this process – both from a practical and theoretical viewpoint. I believe Stans will be able to address any bottlenecks while also enhancing the efficiencies of extraction and I am eager to put this plan into action.
Kidela: What’s the timeline for getting the facility up and running?
Robert: We will have a better idea of that after our next trip. I leave for that trip this weekend.
Kidela: Now that you have acquired this facility and you get it functional again, what’s next for Stans Energy?
Robert: We have had an aggressive development schedule and looking forward that schedule doesn’t ease off. All I can tell you is that we know exactly where we are headed and we are confident that acquiring this processing facility now – just a little over one year from the day we bought the Kuttesay II mine – will demonstrate to our shareholders that we can, and are executing on our strategic plans.
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