Edgar Filing: EMC METALS CORP.

EMC Metals Corp.: Form 10-Q - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from _________ to ___________

000-54416
(Commission File Number)

EMC METALS CORP.
(Exact name of registrant as specified in its charter)

British Columbia, Canada	98-1009717
(State or other jurisdiction	(IRS Employer
of incorporation or organization)	Identification No.)

1430 Greg Street, Suite 501, Sparks, Nevada 89431
(Address of principal executive offices) (Zip Code)

(775) 355-9500
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by sections 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filed [ ] Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company, as defined in Rule 12b-2 of the Exchange Act.
Yes [ ] No [X]

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:
As of May 1, 2012, the registrant’s outstanding common stock consisted of 150,678,713 shares.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

(An Exploration Stage Company)

UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

QUARTER ENDED MARCH 31, 2012

EMC Metals Corp.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS

(Expressed in Canadian Dollars) (Unaudited)

		March 31, 2012			December 31, 2011

ASSETS

Current
Cash	$	1,066,375		$	804,892
Investments in trading securities, at fair value (Note 3)		2,250			2,250
Prepaid expenses and receivables		201,666			192,158

Total Current Assets		1,270,291			999,300

Restricted cash (Note 4)		159,400			159,400
Property, plant and equipment (Note 5)		30,606,257			30,676,426
Mineral interests (Note 6)		2,288,479			679,711

Total Assets	$	34,324,427		$	32,514,837

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current
Accounts payable and accrued liabilities	$	443,323		$	550,081
Current portion of promissory notes payable (Note 9)		511,472			529,752

Total Current Liabilities		954,795			1,079,833

Convertible debenture (Note 10)		1,620,674			-
Promissory notes payable (Note 9)		4,646,121			3,813,750

Total Liabilities		7,221,590			4,893,583

Stockholders’ Equity
Capital stock (Note 11) (Authorized: Unlimited number of shares; Issued and outstanding: 150,678,713 (2011 – 150,678,713))		88,578,045			88,578,045
Treasury stock (Note 12)		(1,343,333	)		(1,343,333	)
Additional paid in capital (Note 11)		1,763,773			1,476,285
Deficit accumulated during the exploration stage		(61,895,648	)		(61,089,743	)

Total Stockholders’ Equity		27,102,837			27,621,254

Total Liabilities and Stockholders’ Equity	$	34,324,427		$	32,514,837

Nature and continuance of operations (Note 1)

Subsequent event (Note 15)

The accompanying notes are an integral part of these condensed consolidated financial statements.

EMC Metals Corp.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Expressed in Canadian Dollars) (Unaudited)

		Cumulative amounts
		from incorporation			Quarter ended			Quarter ended
		on July 17, 2006 to			March 31, 2012			March 31, 2011
		March 31, 2012

EXPENSES
Amortization	$	2,354,388		$	70,169		$	88,638
Consulting		2,286,946			14,705			81,299
Exploration		14,763,499			337,794			63,491
General and administrative		7,363,545			82,082			37,200
Insurance		970,675			12,797			12,367
Professional fees		3,135,237			84,221			22,336
Research and development		3,474,068			-			-
Salaries and benefits		6,871,651			162,462			150,655
Stock-based compensation (Note 11)		5,452,335			38,660			67,732
Travel and entertainment		1,640,304			30,337			58,879

Loss before other items		(48,312,648	)		(833,227	)		(582,597	)


OTHER ITEMS
Foreign exchange gain		636,918			111,281			77,646
Loss on transfer of marketable securities		(3,115,889	)		-			-
Gain on settlement of convertible debentures		1,449,948			-			-
Gain on sale of marketable securities		1,836,011			-			-
Write-off of mineral interests		(18,091,761	)		-			-
Write-off of land and water rights		(3,100,000	)		-			-
Gain on insurance proceeds		972,761			-			-
Interest income (expense)		163,259			(83,959	)		(71,240	)
Other income		502,965			-			-
Gain on disposition of assets		959,281			-			-
Change in fair value of derivative liability (Note 8)		485,358			-			228,741
Unrealized gain on marketable securities		53,830			-			-

		(17,247,319	)		27,322			235,147

Loss before income taxes		(65,559,967	)		(805,905	)		(347,450	)

Deferred income tax recovery		6,522,138			-			-

Loss and comprehensive loss for the period
	$	(59,037,829	)	$	(805,905	)	$	(347,450	)

Basic and diluted loss per common share					(0.01	)		(0.00	)

Weighted average number of common shares outstanding					150,678,713			149,863,023

The accompanying notes are an integral part of these condensed consolidated financial statements.

EMC Metals Corp.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in Canadian Dollars) (Unaudited)

		Cumulative
		amounts from
		incorporation on						Quarter ended
		July 17, 2006 to			Quarter ended			March 31,
		March 31, 2012			March 31, 2012			2011

CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period	$	(59,037,829	)	$	(805,905	)	$	(347,450	)
Items not affecting cash:
Amortization		2,354,388			70,169			88,638
Research and development		3,474,068			-			-
Consulting paid with common shares		10,711			-			-
Gain on disposal of assets		(959,281	)		-			-
Convertible debenture costs		(1,312,878	)		-			-
Unrealized foreign exchange		705,737			(81,375	)		(118,022	)
Stock-based compensation		5,452,335			38,660			67,732
Unrealized gain on marketable securities		(53,830	)		-			-
Realized gain on marketable securities		(1,836,011	)		-			-
Write-off of mineral properties		18,091,761			-			-
Write-off of land and water rights		3,100,000			-			-
Realized loss on transfer of marketable securities		3,115,889			-			-
Change in fair value of derivative liability		(485,358	)		-			(228,741	)
Deferred income tax recovery		(6,522,138	)		-			-
Accrued interest expense		12,722			(8,530	)		-
Accrued interest income		(2,809	)		-			-

		(33,892,523	)		(786,981	)		(537,843	)
Changes in non-cash working capital items:
Increase in prepaids and receivables		(135,116	)		(9,508	)		(142,315	)
Decrease in accounts payable and accrued liabilities		(619,586	)		(106,758	)		38,766
Increase in due to related parties		1,163,028			-			-
Asset retirement obligations		(1,065,891	)		-			-

		(34,550,088	)		(903,247	)		(641,392	)
CASH FLOWS FROM INVESTING ACTIVITIES
Cash acquired from subsidiary		4,857,012			-			-
Cash paid for Subsidiary		(11,359,511	)		-			-
Spin-out of Golden Predator Corp.		(76,388	)		-			-
Restricted cash		(159,400	)		-			-
Reclamation bonds		795,785			-			-
Proceeds from sale of marketable securities, net		(4,135,798	)		-			-
Proceeds from sale of property, plant and equipment		675,742			-			-
Purchase of property, plant and equipment		(21,255,448	)		-			(20,548	)
Proceeds from sale of mineral interests		500,000			-			-
Additions to unproven mineral interests		(4,782,286	)		(1,608,768	)		-

		(34,940,292	)		(1,608,768	)		(20,548	)

CASH FLOWS FROM FINANCING ACTIVITIES
Common shares issued		55,521,421			-			210,249
Share issuance costs		(1,277,713	)		-			-
Special warrants		13,000,000			-			-
Options exercised		384,900			-			43,000
Warrants exercised		11,164,849			-			267,625
Notes payable		(9,966,000	)		-			-
Receipt (payment) of promissory note		997,000			997,000			-
Convertible debenture		1,994,000			1,994,000			-
Debt issuance costs		(217,502	)		(217,502	)		-
Payment of promissory note		(1,260,700	)		-			-
Advances from related party		216,500			-			-
Loans advanced to Midway		(2,000,000	)		-			-
Loan repayment from Midway		2,000,000			-			-

		70,556,755			2,773,498			520,874

Change in cash during the period		1,066,375			261,483			(141,066	)
Cash, beginning of period		-			804,892			4,126,424

Cash, end of period	$	1,066,375		$	1,066,375		$	3,985,358

Supplemental disclosure with respect to cash flows (Note 14)

The accompanying notes are an integral part of these condensed consolidated financial statements.

EMC Metals Corp.

(An Exploration Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Expressed in Canadian Dollars) (Unaudited)

	Capital Stock
	Capital Stock							Deficit Accumulated
	Number of			Additional				During the
	Shares	Amount		Paid in Capital		Treasury		Exploration Stage		Total
		$		$		$		$		$
Balance, July 17, 2006	-	-		-		-		-		-
Private placements	5,000,000	3,500,000		-		-		-		3,500,000
Excess of exchange amount over carrying amount of						-
	-	-		-				(2,857,819	)	(2,857,819	)
Springer Mining Company
Loss for the period	-	-		-		-		(357,670	)	(357,670	)
Balance, December 31, 2006	5,000,000	3,500,000		-		-		(3,215,489	)	284,511
Private placements	17,577,500	35,155,000		-		-		-		35,155,000
Conversion of special warrants	5,390,000	5,390,000		-		-		-		5,390,000
Exercise of warrants	50,000	75,000		-		-		-		75,000
Share issuance costs – broker’s fees	-	(1,215,074	)	99,000		-		-		(1,116,074	)
Share issuance costs – shares issued	100,000	100,000		-		-		-		100,000
Shares issued for mineral properties	100,000	100,000		-		-		-		100,000
Stock-based compensation	40,000	40,000		489,562		-		-		529,562
Loss for the year	-	-		-		-		(6,128,912	)	(6,128,912	)
Balance, December 31, 2007	28,257,500	43,144,926		588,562		-		(9,344,401	)	34,389,087
Private placements	5,322,500	10,645,000		-		-		-		10,645,000
Conversion of special warrants	7,610,000	7,610,000		-		-		-		7,610,000
Share issuance costs – broker’s fees	-	(261,638	)	-		-		-		(261,638	)
Shares issued for mineral properties	110,000	210,000		-		-		-		210,000
Acquisition of Gold Standard Royalty Corp.	2,050,000	4,100,000		143,017		-		-		4,243,017
Acquisition of Great American Minerals Inc.	1,045,775	2,091,550		426,672		-		-		2,518,222
Acquisition of Fury Explorations Ltd.	10,595,814	13,774,558		7,787,783		(2,087,333	)	-		19,475,008
Exercise of stock options	6,637,224	10,027,915		(184,265	)	-		-		9,843,650
Shares issued for repayment of promissory note	4,728,000	2,364,000		-		-		-		2,364,000
Stock-based compensation	-	-		2,324,458		-		-		2,324,458
Loss for the year	-	-		-		-		(17,968,454	)	(17,968,454	)
Balance, December 31, 2008	66,356,813	93,706,311		11,086,227		(2,087,333	)	(27,312,855	)	75,392,350
Private placements	14,500,000	1,190,000		-		-		-		1,190,000
Exercise of stock options	101,000	126,186		(105,986	)	-		-		20,200
Shares issued for mineral properties	2,765,643	367,695		-		-		-		367,695
Settlement of convertible debentures	7,336,874	2,934,752		62,903		-		-		2,997,655
Shares issued for consulting	89,254	10,711		-		-		-		10,711
Shares issued for acquisition of TTS	19,037,386	2,094,112		-		-		-		2,094,112
Stock-based compensation before spin-out	-	-		836,240		-		-		836,240
Spin-out of GPD	-	(18,540,194	)	(11,879,384	)	-		-		(30,419,578	)
Stock-based compensation after spin-out	-	-		979,611		-		-		979,611
Loss for the year	-	-		-		-		(21,645,581	)	(21,645,581	)
Balance, December 31, 2009	110,186,970	81,889,573		979,611		(2,087,333	)	(48,958,436	)	31,823,415
Private placements	30,252,442	4,700,312		454,768		-		-		5,155,080
Exercise of stock options	1,320,000	456,602		(226,302	)	-		-		230,300
Exercise of warrants	7,300,000	1,092,000		-		-		-		1,092,000
Stock-based compensation	-	-		795,268		-		-		795,268
Loss for the year	-	-		-		-		(4,722,755	)	(4,722,755	)
Balance, December 31, 2010	149,059,412	88,138,487		2,003,345		(2,087,333	)	(53,681,191	)	34,373,308
Exercise of stock options	250,000	118,959		(75,959	)	-		-		43,000
Exercise/expiry of warrants	1,369,301	320,599		(744,000	)	744,000		-		320,599
Stock-based compensation	-	-		292,899		-		-		292,899
Loss for the year	-	-		-		-		(7,408,552	)	(7,408,552	)
Balance, December 31, 2011	150,678,713	88,578,045		1,476,285		(1,343,333	)	(61,089,743	)	27,621,254
Stock-based compensation				38,660						38,660
Issue of convertible debenture warrants				248,828						248,828
Loss for the period								(805,905	)	(805,905	)
Balance, March 31, 2012	150,678,713	88,578,045		1,763,773		(1,343,333	)	(61,895,648	)	27,102,837

The accompanying notes are an integral part of these condensed consolidated financial statements.

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

1.	NATURE AND CONTINUANCE OF OPERATIONS

	EMC Metals Corp. (the “Company”) is incorporated under the laws of the Province of British Columbia. The Company is focused on specialty metals exploration and production and has recently acquired various metallurgical technologies and licenses that it is utilizing to gain access to a number of specialty metals opportunities.

	The Company’s principal properties are located in the state of Nevada, Australia, and Norway. The Company’s principal asset, the

	Springer Tungsten mine and mill, is currently on care and maintenance pending a sustained improvement in tungsten prices. To March 31, 2012, the Company has not commenced production and has generated no revenue. The Company’s remaining properties are in the exploration or pre-exploration stage. As such, the Company is in the exploration stage and anticipates incurring significant expenditures prior to commencement of contract milling operations.

	These condensed consolidated financial statements have been prepared on a going concern basis that contemplates the realization of assets and discharge of liabilities at their carrying values in the normal course of business for the foreseeable future. These financial statements do not reflect any adjustments that may be necessary if the Company is unable to continue as a going concern.

	The Company currently earns no operating revenues and will require additional capital in order to refit its Springer tungsten mill and earn its 50% interest in the Nyngan property. The Company’s ability to continue as a going concern is uncertain and is dependent upon the generation of profits from mineral properties, obtaining additional financing or maintaining continued support from its shareholders and creditors. The Company is currently working on securing additional financing to meet its needs, including a US$500,000 payment due in June 2012; however there is no guarantee that these efforts will be successful. In the event that additional financial support is not received or operating profits are not generated, the carrying values of the Company’s ass ets may be adversely affected. The inability to raise additional financing may affect the future assessment of the Company as a going concern.

2.	BASIS OF PRESENTATION

	Basis of presentation

	The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim condensed consolidated financial statements include the consolidated accounts of EMC Metals Corp. (the “Company”) and its wholly-owned subsidiaries with all significant intercompany transactions eliminated. In the opinion of management, all adjustments necessary for a fair statement of the consolidated financial position, results of operations and cash flows for the interim periods have been made. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such SEC rules and regulations. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2011, in our Annual Report on Form 10-K filed with the SEC on February 14, 2012. Operating results for the three- month period ended March 31, 2012, are not necessarily indicative of the results for the year ending December 31, 2012.

	Use of estimates

	The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

	Fair value of financial assets and liabilities

	The Company measures the fair value of financial assets and liabilities based on US GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

	The Company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions which are accounted for at the transferor’s carrying amount or exchange amount.

	Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded in income.

	Financial instruments, including receivables, accounts payable and accrued liabilities, convertible debentures and promissory notes payable are carried at cost, which management believes approximates fair value due to the short term nature of these instruments. Investments in trading securities are classified as held for trading, with unrealized gains and losses being recognized in income.

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

2.	BASIS OF PRESENTATION (cont’d…)

	The following table presents information about the assets that are measured at fair value on a recurring basis as of March 31, 2012, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset:

Fair value of financial assets and liabilities
				Quoted Prices		Significant Other		Significant
		March 31,		in Active Markets		Observable Inputs		Unobservable Inputs
		2012		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash and restricted cash	$	1,225,775	$	1,225,775	$	—	$	—
Investments in trading securities	$	2,250	$	2,250	$	—	$	—

Total	$	1,228,025	$	1,228,025	$	—	$	—

	The fair values of cash, restricted cash and investments in trading securities are determined through market, observable and corroborated sources.

	Recently Adopted and Recently Issued Accounting Standards

	The Company reviewed significant newly issued accounting pronouncements and concluded that they are either not applicable to the

	Company’s business or that no material effect is expected on the consolidated financial statements as a result of future adoption.

3.	INVESTMENTS IN TRADING SECURITIES

	At March 31, 2012, the Company held investments classified as trading securities, which consisted of various equity securities. All trading securities are carried at fair value. As of March 31, 2012, the fair value of trading securities was $2,250 (December 31, 2011 - $2,250).

4.	RESTRICTED CASH

	The Company has a Bank of Montreal line of credit of up to $159,400 as a deposit on the Company’s Vancouver office lease and is secured by a short-term investment of $159,400 bearing interest at prime less 2.05% maturing on May 8, 2014.

5.	PROPERTY, PLANT AND EQUIPMENT

		March 31, 2012						December 31, 2011

				Accumulated		Net Book				Accumulated		Net Book
		Cost		Amortization		Value		Cost		Amortization		Value

Land and water rights	$	4,673,958	$	-	$	4,673,958	$	4,673,958	$	-	$	4,673,958
Plant and equipment		25,618,528		-		25,618,528		25,618,528		-		25,618,528
Cosgrave plant and equipment		375,763		322,096		53,667		375,763		303,308		72,455
Building		222,685		49,223		173,462		222,685		46,438		176,247
Automobiles		179,767		161,714		18,053		179,767		159,432		20,335
Computer equipment		364,697		364,004		693		364,697		363,888		809
Small tools and equipment		963,537		903,079		60,458		963,537		863,583		99,954
Office equipment		134,691		127,253		7,438		134,691		120,551		14,140

	$	32,533,626	$	1,927,369	$	30,606,257	$	32,533,626	$	1,857,200	$	30,676,426

Land and water rights are in respect of properties in Nevada. The plant and equipment is comprised of the Springer Plant and Mill in Nevada which is currently under care and maintenance.

Impairment of land and water rights

During the year ended December 31, 2011, the Company reviewed the carrying value of its land and water rights for impairment and compared the carrying value to the estimated recoverable amount and wrote down its land and water rights by $3,100,000.

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

6.	MINERAL INTERESTS

March 31, 2012		Other		Tungsten		Total

Acquisition costs
Balance, December 31, 2011	$	482,260	$	197,451	$	679,711
Additions		1,608,768		-		1,608,768
Sold		-		-		-
Balance, March 31, 2012	$	2,091,028	$	197,451	$	2,288,479

December 31, 2011		Other		Tungsten			Total

Acquisition costs
Balance, December 31, 2010	$	300,000	$	203,020		$	503,020
Additions		182,260		2,534			184,794
Sold		-		(8,103	)		(8,103	)
Balance, December 31, 2011	$	482,260	$	197,451		$	679,711

Title to mineral property interests involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral property interests. The Company has investigated title to all of its mineral property interests and, to the best of its knowledge, title to all of its properties is in good standing.

TUNGSTEN PROPERTY

Springer Property

On November 21, 2006, the Company acquired all outstanding and issued shares of Springer Mining Company (“Springer”).

Included in the assets of Springer and allocated to property, plant and equipment (Note 5) are the Springer Mine and Mill located in Pershing County, Nevada.

Fostung Property

The Company held a 100% interest certain mineral claims known as the Fostung Property, Ontario. During the year ended December 31, 2011, the Company sold these claims for $500,000 and recorded a gain on the sale of $491,897.

SCANDIUM PROPERTY

Nyngan, New South Wales Property

On February 5, 2010, the Company entered in to an agreement with Jervois Mining Limited (“Jervois”) whereby it would acquire a 50% interest in certain properties located in New South Wales, Australia. In order for the Company to earn its interest which is subject to a 2% Net Smelter Royalty (NSR), the Company paid the sum of $300,000 into escrow, that was released to Jervois upon satisfaction of certain conditions precedent, including verification of title to the Nyngan property and approval of the Toronto Stock Exchange, and must:

	a)	Incur exploration and metallurgical work of A$500,000 (CAD$466,000) within 180 business days of the conditions precedent being satisfied, or pay cash in lieu thereof. On September 29, 2010 the Company received a six month extension to complete its exploration commitment. In the event that the Company wishes to continue the joint venture, the Company must deliver a feasibility study within 480 (extended to February 28, 2012) business days of the conditions precedent being satisfied, failing which the agreement will terminate.

	b)	Upon delivering the feasibility study to Jervois, pay to Jervois an additional A$1,300,000 plus GST at which time it will be granted a 50% interest in the joint venture. The joint venture agreement provides for straight-line dilution, with interests diluted below 10% being converted into a 2% NSR royalty.

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

6.	MINERAL INTERESTS (cont’d…

	c)	On February 24, 2012, the Company delivered to Jervois the A$1.43 million cash payment and an independent NI 43-101 report entitled "*Technical Report on the Feasibility of the Nyngan Scandium Project*" dated February 23, 2012 (the "Report"), which was compiled by SNC-Lavalin. The Report was delivered to Jervois following an extensive discussion and presentation to the Jervois Board and management.

		On February 27, 2012 EMC, received written notice from Jervois rejecting the Report for the stated reason that the Report does not fall within the definition of "Feasibility Study" provided in the Agreement. The Company believes that it has fully met the conditions under the Agreement to earn its 50% joint venture interest in the Project and will take all lawful steps to secure its proprietary rights to the 50% joint venture interest.

		On March 23, 2012, the Company announced that, following discussions with Jervois, the parties have agreed to engage in further without prejudice communications in an attempt to resolve the dispute. If at any time it becomes apparent that a resolution satisfactory to both parties will not be reached, we will immediately continue formal steps under the dispute resolution provisions of the JV agreement.

	Tordal and Evje properties, Norway

	The Company has entered into an earn-in agreement with REE Mining AS (“REE”), whereby the Company has an option to earn up to a 100% interest in the Tordal and Evje properties. To earn its interest, the Company must pay REE US$630,000, including an initial cash payment of US$130,000 (paid) and issue 1,000,000 common shares.

	The Company is also required to incur US$250,000 of exploration work to be completed over 18 months from the date of closing in order to acquire its interest. The Company shall also issue 250,000 common shares upon releasing the second of two full feasibility studies on the two properties.

	Fairfield property, Utah

	The Company has entered into an earn-in agreement with Mineral Exploration Services LLC, whereby the Company has an option to earn a 100% interest in a patented mining claim and former scandium property known as The Little Green Monster near Fairfield, Utah.

	The Company is required to pay US$380,000 over a 3 year period from the date of closing in order to acquire its interest. Mineral Exploration Services LLC maintains a production right of US$5 per ton of resource mined up to US$500,000.

	Hogtuva property, Norway

	The Company has entered into an earn-in agreement with REE Mining AS (“REE”), whereby the Company has an option to earn a

	100% interest in three scandium and beryllium exploration sites in Norway. To earn 100% of the exploration rights, the Company must pay REE US$150,000 over 18 months, including an initial cash payment of US$50,000 (paid) and issue up to 200,000 common shares. In consideration for paying REE US$200,000, the Company may elect to accelerate its option to earn a 100% interest in the properties.

7.	RELATED PARTY TRANSACTIONS

	No related party transactions occurred during the quarter ended March 31, 2012 or during the year ended December 31, 2011.

8.	DERIVATIVE LIABILITY

	The Company evaluated the application of SFAS 133 and EITF 00-19 for the settlement of convertible debentures through the issuance of shares and warrants. Based on the guidance in SFAS 133 and EITF 00-19, the Company concluded that the warrants were required to be accounted for as derivatives. The warrants issued pursuant to the settlement were in a functional currency different than that of the Company and therefore met the attributes of a liability. The Company is required to record the fair value of these warrants on its balance sheet at fair value with changes in the values of these derivatives reflected in the statement of operations.

	The Company uses the Black-Scholes valuation model for calculation of the fair value of derivative liabilities. The Company uses volatility rates based upon the closing stock price of its common stock. The Company uses a risk-free interest rate which is the bank of Canada rate with a maturity that approximates the estimated expected life of a derivative. The Company uses the closing market price of the common stock on the date of issuance of a derivative or at the end of a quarter when a derivative is valued at fair value.

	The volatility was 100%, the risk-free interest rate was 1%, a dividend rate of 0%, and the expected life was 0.17 respectively, during the year ending December 31, 2010.

	During the year ended December 31, 2011, the warrants expired and the derivative liability was valued at $Nil resulting in a change in fair value of $228,741 realized through the statement of operations.

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

9.	PROMISSORY NOTES PAYABLE

		March 31,			December 31,
		2012			2011

Promissory note with a principal balance of US$500,000, bearing interest at prime per annum, maturing June 30, 2012 due to a director of the Company secured by the stock of a subsidiary company.	$	511,472		$	529,752

Promissory note with a principal balance of US$ 3,750,000, bearing interest at 6% per annum, maturing July 3, 2013 and secured by land and water rights. During fiscal 2008 the Company entered into a promissory note for US$6,750,000 as consideration for the acquisition of land and water rights. The Company subsequently made principal payments of US$3,000,000 consisting of a cash payment of US$1,000,000 and 4,728,000 units of the Company equity valued at US$2,000,000. Each unit consisted of one common share and one-half share purchase warrant exercisable at CDN$0.75 each and exercisable for a period of two years.		3,740,625			3,813,750

During the quarter ended March 31, 2012 the Company completed a USD$3,000,000 loan financing (note 11) which included a USD $1,000,000 note payable bearing interest at 7% per annum maturing August 15, 2013. Presented is this principle balance less financing and costs which are amortized over the term of the debt using the interest method. This resulted in a carrying amount of $905,496 upon deducting a debt discount of $92,004 from the principal balance of $997,500 (USD $1,000,000).		905,496

		5,157,593			4,343,502

Less: current portion		(511,472	)		(529,752	)

	$	4,646,121		$	3,813,750

10.	CONVERTIBLE DEBENTURE

	On February 17, 2012, the Company completed a USD $3,000,000 loan financing consisting of a term loan of USD $1,000,000 (Note 9), a convertible debenture of USD $2,000,000 and warrants to acquire 3,000,000 common shares. The convertible debenture has a maturity date of August 15, 2013 and bears interest at 7% per annum. The lender may convert a maximum of USD $2,000,000 of the principal amount of the loan into 10,000,000 common shares of the Company. There was no beneficial conversion feature associated with the conversion option. The warrants are exercisable at $0.20 per share expiring February 15, 2014. A relative fair value of $217,267 was assigned to the warrants and recorded in additional paid in capital. The Company paid financing cost of $149,550 and also issued 750,000 purchase warrants exercisable at $0.20 per share expiring February 15, 2014. These warrants were valued at $58,716 and recorded in additional paid in capital. The financing costs were allocated between debt and the equity components. This resulted in a carrying amount of $1,620,674 upon deducting a debt discount of $374,316 from the principal balance of $1,995,000 (USD $2,000,000).

11.	CAPITAL STOCK AND ADDITIONAL PAID IN CAPITAL

	On December 3, 2010, the Company issued 18,929,740 common shares at a value of $0.19 per common share for total proceeds of $3,596,651.A total of $210,249 was received during fiscal 2011.

	On November 25, 2010, the Company issued 6,100,000 units at a value of $0.10 per unit for total proceeds of $610,000. Each unit consisted of one common share and one-half of one share purchase warrant exercisable at $0.18 expiring on November 25, 2011. The warrants have a calculated total fair value of $142,358 using the Black-Scholes pricing model with a volatility of 142.52%, risk- free rate of 1.73%, expected life of 1 year, and a dividend rate of 0%.

	On June 30, 2010, the Company issued 2,947,702 units at a value of $0.10 per unit for total proceeds of $294,770. Each unit consisted of one common share and one-half of one share purchase warrant exercisable at $0.18 until June 30, 2011. The warrants have a calculated total fair value of $35,638 using the Black-Scholes pricing model with a volatility of 123.84%, risk-free rate of 1.39%, expected life of 1 year, and a dividend rate of 0%.

	On February 17, 2010, the Company issued 2,275,000 units at a value of $0.20 per unit for total proceeds of $455,000. Each unit consisted of one common share and one-half of one share purchase warrant exercisable at $0.25 until February 17, 2011. The warrants have a calculated total fair value of $78,113 using the Black-Scholes pricing model with a volatility of 131.19%, risk-free rate of 1.34%, expected life of 1 year, and a dividend rate of 0%. All of the warrants were exercised during fiscal 2011.

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

11.	CAPITAL STOCK AND ADDITIONAL PAID IN CAPITAL (cont’d…)

	On November 17, 2009, the Company issued 13,000,000 units at a value of $0.08 per unit for total proceeds of $1,040,000. Each unit consisted of one common share and one-half of one share purchase warrant. Each full warrant entitled the holder to purchase an additional share at $0.15 per share until November 17, 2010.

	On October 13, 2009, the Company issued 500,000 common shares at a value of $45,000 for the Fostung Tungsten project.

	On August 27, 2009, the Company issued 1,500,000 units at a value of $0.10 per unit, pursuant to a non-brokered private placement for proceeds of $150,000. Each unit consisted of one common share and one-half of one share purchase warrant. Each full warrant entitled the holder to purchase an additional share at $0.15 per share until August 27, 2010.

	On May 13, 2009, the Company issued 89,254 common shares at a value of $0.12 per share to a consultant for settlement of consulting fees for Fury Explorations Ltd. (“Fury”), a subsidiary of GPD, under the plan of Arrangement of spin-out. On April 21, 2009, the Company issued 51,859 common shares at a value of $0.10 per share for the Platte River property.

	On January 21, 2009, the Company issued 66,784 common shares at a value of $0.20 per share for the Guijoso property for Fury.

	On January 6, 2009, the Company issued 2,147,000 common shares at a value of US$250,000 for the Adelaide and Tuscarora projects for Golden Predator Mines US Inc., a wholly owned subsidiary of the Company prior to the spin-out.

	On November 17, 2008, the Company issued 76,274 common shares in connection with the acquisition of the subsidiary, Great American Minerals Inc.

	On October 18, 2008, the Company issued 4,728,000 units to Cosgrave for repayment of a promissory note at a value of US$2,000,000. Each unit consisted of one common share of the Company and one-half of one common share purchase warrant with a two year life and exercisable at $0.75.

	In July 2008, the Company completed a private placement consisting of 2,500,000 common shares at $2.00 per share for proceeds of $5,000,000. In connection with this private placement the Company paid a finder’s fee of $250,000.

	In January 2008, the Company completed a private placement consisting of 2,822,500 units at $2.00 per unit for gross proceeds of $5,645,000. Included in the proceeds was $3,620,000 received in advance as of December 31, 2007. Each unit consisted of one common share and one half of one share purchase warrant. Each whole warrant entitled the holder to acquire one additional common share at $3.00 for a period of 12 months.

	In November 2007, the Company completed private placements consisting of 17,577,500 units at $2.00 per unit for proceeds of $35,155,000. Each unit consisted of one common share and one half of one common share purchase warrant. Each whole warrant entitled the holder to acquire one additional common share at $3.00 for a period of 12 months following the closing of the placement.

	In December 2007, the Company issued 5,390,000 common shares pursuant to the conversion of special warrants. The Company paid $1,016,074 and issued 100,000 common share valued at $100,000 as issuance costs and finder’s fees. The Company also granted warrants to acquire 300,000 common shares exercisable at $1.50 expiring September 22, 2008. The warrants were valued at $99,000 with the Black-Scholes option pricing model using an expected volatility of 115%, life of one year, a risk free interest rate of 4% and a dividend yield of 0%.

	In December 2006, the Company issued 5,000,000 common shares at $0.70 per common share for gross proceeds of $3,500,000.

	Stock Options and Warrants

	The Company established a stock option plan (the “Plan”) under which it is authorized to grant options to executive officers and directors, employees and consultants and the number of options granted under the Plan shall not exceed 15% of the shares outstanding. Under the Plan, the exercise period of the options may not exceed five years from the date of grant and vesting is determined by the Board of Directors.

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

11.	CAPITAL STOCK AND ADDITIONAL PAID IN CAPITAL (cont’d…)

	Stock option and share purchase warrant transactions are summarized as follows:

	Warrants				Stock Options

				Weighted average				Weighted average
	Number			exercise price	Number			exercise price

Outstanding, December 31, 2010	23,792,485		$	1.82	11,473,750		$	0.18
Granted	-			-	1,470,000			0.28
Cancelled	(22,423,184	)		1.97	(845,000	)		0.22
Exercised	(1,369,301	)		0.24	(250,000	)		0.17

Outstanding, December 31, 2011	-			-	11,848,750			0.19
Granted	3,750,000			0.20	-			-
Cancelled	-			-	-			-
Exercised	-			-	-			-

Outstanding, March 31, 2012	3,750,000		$	0.20	11,848,750		$	0.19

Number currently exercisable	3,750,000		$	0.20	10,658,750		$	0.19

As at March 31, 2012, incentive stock options were outstanding as follows:

	Number of		Exercise
	options		Price	Expiry Date

Options	332,500	$	0.200	July 26, 2012
	5,000		1.000	July 26, 2012
	40,000		0.200	October 4, 2012
	15,000		1.000	October 4, 2012
	220,000		0.390	January 18, 2013
	152,500		0.200	February 25, 2013
	100,000		2.000	February 25, 2013
	100,000		0.200	March 4, 2013
	115,000		0.200	May 13, 2013
	5,000		2.150	May 13, 2013
	50,000		0.200	June 2, 2013
	30,000		0.200	August 20, 2013
	725,000		0.200	October 31, 2013
	997,500		0.300	January 23, 2014
	50,000		0.300	February 26, 2014
	1,395,000		0.160	June 16, 2014
	225,000		0.120	August 27, 2014
	50,000		0.160	December 14, 2014
	200,000		0.105	December 16, 2014
	1,071,250		0.250	January 4, 2015
	4,800,000		0.100	November 5, 2015
	120,000		0.310	April 27, 2013
	250,000		0.315	May 4, 2016
	500,000		0.250	May 16, 2016
	300,000		0.155	September 15, 2016

	11,848,750

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

11.

CAPITAL STOCK AND ADDITIONAL PAID IN CAPITAL (cont’d…)

As at March 31, 2012, warrants were outstanding as follows;

	Number of		Exercise
Warrants	Warrants		Price	Expiry Date

	3,750,000	$	0.200	February 15, 2014

Stock-based compensation

During the quarter ended March 31, 2012, the Company recognized stock-based compensation of $38,660 (March 31, 2011 - $67,732) in the statement of operations as a result of incentive stock options vested in the current quarter. There were no stock options issued during the quarter ended March 31, 2012.

The fair value of all compensatory options and warrants granted is estimated on grant date using the Black-Scholes option pricing model. The weighted average assumptions used in calculating the fair values are as follows:

	2012	2011

Risk-free interest rate	1.20%	2.33%
Expected life	2 years	4.39 years
Volatility	119.67%	126.61%
Forfeiture rate	0.00%	0.00%
Dividend rate	0.00%	0.00%

12.

TREASURY STOCK

	Number		Amount
Treasury shares, March 31, 2012	1,033,333	$	1,343,333
	1,033,333	$	1,343,333

	Treasury shares comprise shares of the Company which cannot be sold without the prior approval of the TSX.

13.	SEGMENTED INFORMATION

	The Company’s mineral properties are located in Norway, Australia, and the United States and its capital assets’ geographic information is as follows:

March 31,2012		Norway		Australia		United States		Total
Property, plant and equipment	$	-	$	-	$	30,606,257	$	30,606,257
Mineral properties		247,484		1,843,544		197,451		2,288,479
	$	247,484	$	1,843,544	$	30,803,708	$	32,894,736

December 31,2011		Norway		Australia		United States		Total
Property, plant and equipment	$	-	$	-	$	30,676,426	$	30,676,426
Mineral properties		182,260		300,000		197,451		679,711
	$	182,260	$	300,000	$	30,873,877	$	31,356,137

EMC Metals Corp.

(An Exploration Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Expressed in Canadian Dollars) (Unaudited)

14.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

		2012		2011
Cash paid during the quarter for interest	$	102,212	$	71,240
Cash paid during the year for income taxes	$	-	$	-

	Significant non-cash transactions for the period ended March 31, 2012 include the Company granting 750,000 share purchase warrants at a value of $58,510 as finder’s fees pursuant to the promissory note and convertible debenture financings.

	There were no significant non cash transactions for the quarter ended March 31, 2011.

15.	SUBSEQUENT EVENT

	Subsequent to March 31, 2012, the Company granted 2,335,000 stock options at an exercise price of $0.08 per share, exercisable until April 24, 2017.

Item 2. Management’s Discussion and Analysis or Plan of Operations

The following discussion of the operating results, corporate activities and financial condition of EMC Metals Corp. (hereinafter referred to as “EMC”, or the “Company”) and its subsidiaries provides an analysis of the operating and financial results between December 31, 2011 and March 31, 2012 and a comparison of the material changes in our results of operations and financial condition between the three-month period ended March 31, 2011 and the three-month period ended March 31, 2012. This discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2011.

The interim statements have been prepared in accordance with US Generally Accepted Accounting Principles (“US GAAP”) as the Company is a reporting issuer in accordance with U.S. Securities and Exchange Commission (“SEC”) regulations. The 2010 Annual Statements have been restated in accordance with US GAAP and have been filed on SEDAR. The reporting currency is the Canadian Dollar. The Company became a reporting issuer in July 2011.

The information contained within this report is current as of May 8, 2012 unless otherwise noted. Additional information relevant to the Company’s activities can be found on SEDAR at www.sedar.com.

Overview

EMC is a specialty metals and alloys company focusing on scandium, tungsten, molybdenum, vanadium, and other specialty metals. The Company intends to utilize its patented technologies and know-how to maximize opportunities in these and other specialty metals.

The Company was formed in 2006, under the name Golden Predator Mines Inc. As part of a reorganization and spin-out of the Company’s precious metals portfolio in March 2009, the Company changed its name to EMC Metals Corp. The Company currently trades on the Toronto Stock Exchange under the symbol “EMC”.

The Company’s most advanced asset is the Springer Tungsten Mine, a fully constructed mine and mill asset in Nevada, USA. The Springer mine is currently not operating, and the Company is now working to re-start mine operations.

The Company continues to hold a 50% interest earn-in right in the Nyngan scandium project in New South Wales, Australia although this interest is under dispute with our partner, Jervois Mining Limited. We also own the Carlin vanadium property in Nevada, USA and four other specialty metals properties: the Fairfield scandium property (Utah, USA), and Hogtuva beryllium property (central Norway) and two scandium plus specialty metals properties in southern Norway (Tordal and Evje-Iveland).

The Company acquired rights to metallurgical processing know-how as part of the acquisition of The Technology Store (“TTS”) during the prior year, which it is utilizing to gain access to a number of specialty metals opportunities.

The Company’s focus during the quarter regarding Springer Mine included maintaining that asset on standby mode, and organizing, planning and pursuing mine and mill re-start. A sale process on the Springer asset, underway since September 2010, was terminated in March 2012, after rising tungsten prices made a near-term restart much more attractive than at the time the asset was first offered for sale.

The Company also advanced the Nyngan scandium project through metallurgical work, process definition and optimization work. During February, 2012, the Company completed and presented to our joint venture partner a NI 43-101 report entitled ”Technical Report on the Feasibility of the Nyngan Scandium Project”. On February 27, 2012, we received written notice from our joint venture partner that we had failed to meet certain Agreement earn-in milestones. The Company believes that it has fully met the conditions under the Agreement to earn its 50% joint venture interest in the Project and will take all lawful steps to secure its proprietary rights to the 50% joint venture interest. Please see additional discussion in the following Principal Properties section.

Principal Properties Review

Springer Tungsten: The Springer Tungsten Mine (“Springer”), located in Pershing County in northwestern Nevada, was constructed by Utah International Inc. for the General Electric Company (“GE”), and was completed and commissioned in late 1981. The facility consists of a 1,000 ton per day (“tpd”) electro-pneumatic underground rail mine and a mill facility with crushing, grinding, flotation circuits and an APT (ammonium paratungstate) plant. Springer operated for less than a full year in 1982 before being put on care and maintenance by GE, due to low tungsten prices. Since acquiring Springer in 2006, EMC has spent approximately $38 million on the facility, specifically on rehabilitation, process improvements, resource exploration, process automation and a mill throughput expansion. The necessary federal, state and local permits are predominantly in place, along with an adequate industrial water resource, to re-start the facility.

The latest NI 43-101 resource technical report on the Springer property, independently prepared by Dr. Bart Stryhas of SRK Consulting Engineers and Scientists of Lakewood, Colorado, titled, “NI 43-101 Technical Report on Resources Springer Facility- Sutton Beds, Nevada, USA,” is dated May 15, 2009 and was filed on SEDAR on May 26, 2009 That resource estimate can be summarized as follows:

Springer Tungsten Project NI 43-101 Resource Estimation Stryhas (2010) of SRK Consulting
Resource Category	Cut-off % WO₃	Total (tonnes)	Average Grade % WO₃	Contained STU’s WO₃
Indicated	0.30	274,000	0.619	169,606
Inferred	0.30	1,097,000	0.562	616,514

Dr. Stryhas is a Principal Resource Geologist with SRK Consulting's Denver Mining Group and a Qualified Person as defined by NI 43-101. He is independent of EMC by all tests of NI 43-101.

Nyngan Scandium: In February of 2010, the Company entered into a joint venture agreement (the “JV”) with Jervois Mining Limited (“Jervois”) of Melbourne, Australia (ASX: JRV) to develop the Nyngan scandium property in New South Wales, Australia. The terms of the JV require EMC to earn in to a 50% position through a two stage work program.

the first stage required EMC to spend a minimum of A$500,000 on project exploration and metallurgical test work by mid December 2010, and
the second stage requires the delivery of a feasibility study in the first quarter of 2012.

The JV partners agreed to extend the stage I work timeframe into 2011 and those first stage requirements were met during the second quarter of 2011. Under the terms of the JV agreement, upon delivery of a feasibility study to Jervois, along with payment of an additional A$1,300,000 plus the applicable Goods and Services tax, EMC would earn in a 50% interest in the joint venture.

On February 24, 2012, the Company delivered to Jervois a A$1.43 million cash payment and an independent NI 43-101 report entitled "Technical Report on the Feasibility of the Nyngan Scandium Project" dated February 23, 2012 (the "Report"), which was compiled by SNC-Lavalin of Brisbane, Australia. The Report was delivered to Jervois following an extensive discussion and presentation to the Jervois Board and management.

On February 27, 2012 EMC received written notice from Jervois rejecting the Report for the stated reason that the Report does not fall within the definition of "Feasibility Study" provided in the Agreement.

The Company believes that it has fully met the conditions under the Agreement to earn its 50% joint venture interest in the Project and will take all lawful steps to secure its proprietary rights to the 50% joint venture interest.

On March 23, 2012, the Company announced that, following discussions with Jervois, the parties have agreed to engage in further without prejudice communications in an attempt to resolve the dispute. Those discussions are currently ongoing. If at any time it becomes apparent that a resolution satisfactory to both parties will not be reached, we will immediately continue formal steps under the dispute resolution provisions of the JV agreement. The NI 43-101 Technical Report has not been filed on SEDAR, and will not become a public document unless and until EMC achieves it’s project earn-in and the dispute between the parties is resolved.

In the meantime, EMC continues to maintain that it has met the conditions under the Agreement to earn EMC's 50% joint venture interest in the Project and, subject to satisfactory agreement, EMC will take all lawful steps to secure its proprietary rights to the 50% joint venture interest.

The Nyngan scandium resource is located approximately 500 kilometers northwest of Sydney, Australia. The property consists of two exploration licenses, controlled by Jervois, which encompass over 9,000 hectares. The scandium resource is hosted within a lateritic zone, locally up to 40 meters thick, and is layered with hematitic clay at the surface followed by limonitic clay, saprolitic clay, weathered bedrock and finally fresh bedrock. The scandium mineralization is concentrated within the hematitic, limonitic, and saprolitic zones with values up to 495 ppm scandium.

In March of 2010, EMC announced receipt of a NI 43-101 resource estimate on the Nyngan scandium property, the results of which were filed on SEDAR in April 2010. That resource estimate can be summarized as follows:

Nyngan Scandium Project NI 43-101 Resource Estimation Rangott, Pursell and Jannink (2010) of Jervois Mining
Resource Category	Tonnes	Grade (ppm Sc)	Overburden Ratio
Measured	2,718,000	274	0.81:1
Indicated	9,294,000	258	1.40:1
Total	12,012,000	261	1.10:1

Assumes 100 ppm scandium cutoff.

The first work phase of the JV development program consisted of detailed metallurgical bench scale testing, and was intended to refine and enhance the Company’s existing material process flow sheet to extract scandium from the resource material. This existing flow sheet, developed by Jervois and external consultants, formed the basis of a preliminary, conceptual engineering study for the processing elements of the project, (press release dated July, 2010), completed by Roberts & Schaefer of Salt Lake City, Utah.

The Roberts & Schaefer report included preliminary capital and operating cost estimates, based on process flow sheets and technical reports done for Jervois or EMC on various metallurgical aspects of the resource. These technical/process reports were done by METCON Laboratories of Sydney, Australia, the Commonwealth Scientific and Industrial Organization (CSIRO), Australia’s national science agency, or by other research work, proprietary to or sourced by Jervois or EMC. The bulk of the process applied by Roberts & Schaefer in the Report was defined by bench-scale as well as small scale pilot plant work results compiled by others, and a preliminary flow sheet complied by the CSIRO.

In January 2011, EMC announced results of initial bench-scale test work, independently prepared by Hazen Research, Inc., of Golden, Colorado, USA. These bench-scale results were based on conventional contained acid leach systems, and suggested recoveries from resource of up to 75%. No secondary recoveries were considered in these initial bench-scale tests.

The second phase of the Hazen test work program continued through November 2011, and was based on batch pilot plant scale testing of acid leach systems, solvent extraction systems and product finish systems, consistent with the earlier bench-scale (baseline) work done by Hazen.. The overall objectives of the larger scale test work program were to define and optimize a process or series of processes that achieved an 80% scandium recovery, lowest possible capital and operating costs, and most benign environmental impact, using standard and accepted processes. In February, 2011 EMC announced results of a series of laboratory-scale tests investigating the production of scandium-aluminum (“Sc-Al”) alloys directly from aluminum oxide and scandium oxide feed materials, prepared by the CSIRO. The overall objective of this research is to demonstrate and commercialize the production of Sc-Al master alloy using impure scandium oxide as the scandium source, potentially significantly improving the economics of scandium aluminum master alloy production.

In April, 2011 EMC announced the initiation of key environmental work on the Nyngan project, outlining a series of environmental work steps designed to advance the Environmental Impact Study (“EIS”). .

In June, 2011 EMC announced that SNC-Lavalin Pty Ltd (“SNC”) had been selected as the independent engineering firm to develop the NI 43-101 Technical Report (feasibility study) on the Nyngan Scandium Project in New South Wales, Australia.

In January, 2012 EMC announced that that key elements of environmental site work on the Nyngan Scandium Project had been completed and a Conceptual Project Development Plan (CPDP) submitted to the NSW, Australia state regulators. The CPDP submission forms the basis for an Environmental Impact Study ("EIS"), the foundation environmental document required for a mining permit in the state. This environmental work, coordinated by R. W. Corkery & Co. (Orange, NSW, Australia), and specifically contained the results of assessment work done by independent experts on ground water and surface water issues, soils studies, Aboriginal heritage studies, flora and fauna studies, and traffic, noise and air quality monitoring.

Also in January, 2012 EMC announced that it had received the final independent metallurgical test-work results from Hazen Research estimating overall recoveries and grades of scandium oxide product.

Highlights of the 2011 Hazen semi-continuous pilot plant test-work are as follows:

Results of conventional contained sulfuric acid bake and water leach systems, at atmospheric pressure, demonstrated scandium recoveries averaging 75%,
Results of conventional solvent extraction ("SX") on the pregnant leach solution, demonstrated scandium recoveries exceeding 99%,
Results on final stage precipitation of scandium oxide, focused on highest combined purity and recovery, demonstrated scandium recoveries of 97.5%, at purity levels of 97.5% Sc2O3,
Overall recovery results were 70% to 80%, based on ore type (limonite or saprolite), and
All process assumptions were based on standard and accepted techniques for ore preparation, leaching, solvent extraction and final product preparation.

The overall results of the metallurgical test work from Hazen Research, the environmental work coordinated from R. W. Corkery & Co., along with other work from other independent engineering groups was consolidated into an independent NI 43-101 report entitled, “Technical Report on the Feasibility of the Nyngan Scandium Project”, by SNC-Lavalin of Brisbane, Australia. This Technical Report remains under discussion between the joint venture partners, has not been filed on SEDAR, and will not be made public unless and until the joint venture partners resolve the earn-in dispute.

Currently there are no primary producers of scandium oxide products. The world supply of scandium is produced solely from tailings piles formed by prior mining operations, or as byproducts from other process streams, mainly from uranium, tungsten, tin and titanium production. The United States Geological Survey in its latest report (January, 2010) quotes a price of US$1,400 per kilogram of Sc₂O₃ (scandium oxide) for the four previous years, although current indications suggest higher prices are prevalent in the market, and the material is available only in small quantities.

Carlin Vanadium: The Carlin vanadium project consists of 72 unpatented mineral claims covering approximately 578 hectares, located along the western flank of the Piñon Range near the town of Carlin, Nevada.

The Carlin resource was discovered in the 1960s by Union Carbide Corp. (“UCC”) when significantly anomalous vanadium was found in samples collected by UCC Geologists (Galli, 1968, Morgan, 1968). During 1967 and 1968 UCC conducted exploration work including geological mapping, ~15,000 feet of trenching, and ~36,500 feet of drilling in 112 holes, outlining a zone of vanadium mineralization within the current claim boundary.

The vanadium mineralization is hosted within a 15-metre (50-foot) thick horizon of black shales within the Devonian Woodruff Formation, which consists of dark grey to black siliceous mudstones, and chert with lesser amounts of shale, siltstone, dolomitic siltstone, and calcareous sandstone. The Woodruff formation is unconformably overlain by shallow dipping Permian-Pennsylvanian siltstones, shales, conglomerates, and carbonates of the Chainman and Diamond Peak Formations.

Historical metallurgical test work from the Carlin vanadium project, completed by the U.S. Department of Mines (Brooks and Potter, 1974), showed that up to 69% of the vanadium could be recovered from weathered dolomitic shales containing 1% V₂O₅ (vanadium oxide). Preliminary test work on fresh black shales shows similar recoveries using a salt roast and acid leaching.

In April, 2010, EMC announced receipt of an NI 43-101 compliant technical report and resource estimation for the Carlin vanadium project, located approximately 40 kilometers south of Elko, Nevada, USA. The Technical Report, titled, “NI 43-101 Technical Report on Resources, EMC Metals Corp., Carlin Vanadium Project. Carlin, Nevada”, prepared by SRK Consulting US, was subsequently filed on SEDAR in May, 2010. The technical report outlines a NI 43-101 compliant inferred resource of 25.4 million tonnes grading 0.5% V₂O₅for a total of 289 million pounds of total contained V₂O₅, as outlined below.

Carlin Vanadium Project NI 43-101 Resource Estimation Stryhas (2010) of SRK Consulting
Resource Category	Cut-off V₂O₅(%)	Total (tonnes)	Grade V₂O₅(%)	Contained V₂O₅ (pounds)
Inferred	0.30	25,400,000	0.51	289,000,000

Exploration Properties Review

Norwegian Properties: In April of 2011, the Company acquired 100% option rights to the Tørdal property in Telemark county, Southern Norway. The property, originally encompassing a 40 sq. km area, has since been increased to 140 sq. km. As part of the same agreement, we also acquired 100% option rights to the Evje-Iveland, property, located west of the Tørdal property in Aust-Agder county, also in Southern Norway. The Evje-Iveland property originally encompassed an 80 sq km area, but has been subsequently been increased in size to 150 sq. km. Both Tørdal and Evje-Iveland contain pegmatite formations, prospective for scandium and REE's, while Evje-Iveland is also prospective for certain base metals, notably nickel.

In September, 2011 EMC entered into an option agreement to earn a 100% interest in the exploration rights to a beryllium exploration site in Central Norway, known as the Hogtuva property. To earn 100% of the exploration rights, we must pay a total of $150,000 over 18 months (including $50,000 paid on the agreement date) and up to 200,000 shares of EMC common stock. The three exploration sites cover a total of approximately 80 square kilometers prospective for scandium, beryllium and other specialty metals.

Exploration work done to date has focused on the Tørdal pegmatites. In July, we announced encouraging assay results from a surface soil sampling program conducted in June on a 3.75 sq. km portion at Tørdal.

Highlights of Initial Surface Soil Sample Program:

The best sample assay returned a 217 ppm scandium value,
Eleven soil samples contained +50 ppm scandium, of which five samples exceeded 85 ppm and three exceeded 150 ppm,
The eleven soil samples were clustered within an area measuring 700 x 100 meters, or approximately 35% of the total sample area,
A total of 131 soil samples were collected at 100-metre spacing intervals, in more accessible areas that avoided steep terrain,
The total sample area represented a zone of about 1,500 x 2,500 meters within the Heftetjern pegmatite field, and
Many previously unmapped pegmatite dykes were noted in the areas traversed, some traceable on surface for several hundred meters.

The results of this initial soil sampling program are, by their nature, preliminary, and not conclusive evidence of the likelihood of a mineral resource.

The soil sampling program focused on a 3.75 sq km area, northwest of the town of Bø, in an area between the communities of Høydalen and Skardsfjell. Known as the Heftetjern region, this location exhibits numerous known pegmatite occurrences, including a locally famous pegmatite quarry associated with several unique scandium, tin, and beryllium mineral types. Steep slopes were generally avoided and sampling was carried out in the most accessible locations. The sampling program of 131 samples was based on soil sampling of 100 x 100 metre grids and covered somewhat less than half of the target area due to terrain impediments. The most promising scandium-bearing zone was observed at the north end of the tested area, and remains open to the north.

Fairfield Scandium Exploration Property: In September 2011 EMC Metals Corp. announced that it entered into an option agreement with Mineral Exploration Services LLC of Reno, Nevada, pursuant to which EMC has an option to earn a 100% interest in a patented mining claim and former scandium property, known as The Little Green Monster, near the town of Fairfield, Utah. The property represents a high-grade scandium phosphate exploration target, is the site of a historical small underground scandium mining operation, and has been a popular collecting site with hobbyists seeking rare and semi-precious phosphate minerals, including the scandium phosphate mineral kolbeckite [ScPO4·2H2O], for over a century.

Other Developments

On February 15, 2012 the Company entered into USD$3,000,000 loan financing. The loan has a maturity date of 18 months from February 15, 2012 and interest is payable monthly in arrears at a rate of 7% per annum. The lender may convert a maximum of USD$2,000,000 of the principal amount of the loan into 10,000,000 common shares of the Company. In connection with the loan, the Company issued 3,000,000 warrants to the lender, each warrant exercisable into one common share of the Company at an exercise price of CAD$0.20 per share for a period of 24 months from the closing date. The Company will use commercially reasonable efforts to file a registration statement in the United States, qualifying any common shares issuable for resale.

The Company paid a cash commission of USD$150,000 and issued 750,000 agent's warrants to the agent. Each agent's warrant is exercisable into one common share of the Company at an exercise price of CAD$0.20 per share for a period of 24 months from the closing date.

The loan is secured by an interest in the assets of the Company's subsidiary, Springer Mining Company. The Company intends to use the loan to fund the advancement of the Company's metal and mineral properties and for general working capital purposes.

On April 24, 2012 the Company issued 2,335,000 stock options with an exercise price of $0.08 per share, exercisable until April 24, 2017 to directors, officers, employees and other service providers of the Company.

EMC Metals Corp. is now a US Filer on EDGAR

On January 1, 2011, the Company was deemed to be a US Domestic Issuer as a result of having lost its’ Foreign Private Issuer (“FPI”) status during 2010. The Company lost FPI status inter-alia as a result of having over 50% of common shareholders identified as US citizens. The Company applied for registration as a US reporting issuer in May 2011, and became effective July 23, 2011.

Qualified Person

Technical information in this MD&A has been reviewed by Willem Duyvesteyn, a Qualified Person as defined by National Instrument 43-101. Mr. Duyvesteyn is employed by EMC Metals.

Operating results-Revenues and Expenses

The Company continued its tight cost management at the Springer facility. The Company has continued to fulfill its commitments in respect of the Nyngan Joint Venture with Jervois Mining Limited, with most of the development expenditure in the quarter on this project.

Summary of quarterly results

	2012	2011				2010
	Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2
Net Sales	-	-	-	-	-	-	-	-
Net Income (Loss)	(805,905)	(5,312,937)	(1,158,143)	(590,022)	(347,450)	(1,341,524)	(1,514,237)	(1,148,938)
Basic and diluted Net Income (Loss) per share	(0.01)	(0.03)	(0.01)	(0.01)	(0.00)	(0.01)	(0.01)	(0.01)

Results of Operations for the three months ended March 31, 2012

The net loss for the quarter increased by $458,455 to $805,905 from $347,450 in the prior year, mainly as a result of increased exploration, general and administrative, professional fees and salary charges. Individual items contributing to this increase are as follows:

Q1 2012 vs. Q1 2011 - Variance Analysis
Item	Variance Favourable / (Unfavourable)	Explanation
Exploration	($274,303)	Increased exploration and test work expenditure at the Nyngan Project in Q1 of the current year accounted for the unfavorable variance when compared to the corresponding quarter of the prior year.

Change in fair value of derivative liability	($228,741)	A one-time (non-cash) valuation recognition event was taken in Q1 of 2011 and will not recur,. resulting in the negative variance to Q1 2011

Professional fees	($61,885)	Higher audit, legal and professional costs associated with the Nyngan project

General and administrative	($44,882)	The Company incurred significant fees for commissions on the issuance of the convertible debenture, along with higher TSX fees ($23,594) and overall increased activity levels.

Salaries and benefits	($11,807)	During the first quarter of 2011 EMC contracted for a significant portion of its administrative services During the second half of 2011, the Company replaced contract expenses with direct office and staff expenses.

Interest expense	($12,719)	Monthly interest due on the new convertible debt resulted in a higher cost for these charges than was incurred in the corresponding quarter of last year.

Amortization	$18,469	Certain assets were fully amortized in the year ending December 31, 2011.

Travel and entertainment	$28,542	Lower travel costs incurred in Q1 2012.

Stock-based compensation	$29,072	The favorable variance results mainly from lower expensing required for options issued in the first half of last year. Option expensing is heaviest in the first 6 months of an option’s life. No options were issued in the current quarter.

Foreign exchange	$33,635	The Canadian dollar gained strength against its US counterpart resulting in lower amounts due for US dollar liabilities

Consulting	$66,594	In-house staff in Q1 2012 replaced administrative consulting costs in Q1 2011.

Cash flow discussion for the three months ended March 31, 2012 compared to March 31, 2011

The cash outflow for operating activities increased by $261,855 to $903,247 (March 31, 2011 – $641,392) due to increased activity levels, principally related to the Nyngan project.

Cash outflows for investing activities increased by $1,588,220 to $1,608,768 (March 31, 2011 – ($20,548)) due mainly to the payment of the AUD$1,430,000 due at the end of February as part of the earn-in on the Nyngan project.

Cash inflows from financing activities increased by $2,252,624 to $2,773,498 (March 31, 2011 - $520,874), reflecting issuance of the convertible debenture.

Financial Position

Cash

The Company’s cash position improved during the quarter by $261,483, to $1,066,375 (December 31, 2011 -$804,892) primarily due to the issuance of a convertible debenture for US$3,000,000.00 which was offset by the payment required as part of the Nyngan project earn-in requirement of AUD$1,430,000.00.

Marketable securities

Marketable securities is unchanged at $2,250 (December 31, 2011 - $2,250).

Property, plant and equipment

Property plant and equipment consists of land and water rights in Nevada, the Springer plant and equipment, and various other items of property plant and equipment. The decrease of $70,169 to $30,606,257 (December 2011 -$30,676,426) is due to amortization net fixed assets.

Mineral interests

Mineral interests increased by $1,608,768 to $2,288,479 (December 31, 2011 - $679,711) because of the Nyngan project earn-in requirement and a progress payment on the Hogtuva property in Norway.

Accounts Payable

Accounts Payable has decreased by $106,758 to $443,323 (December 2011 – $550,081) due to a general decrease in activity from the year-end.

Convertible Debenture

During the current quarter a debenture of US$3,000,000 was issued. The amount shown here is the convertible portion less legal and commission fees paid to acquire the debenture.

Promissory note payable – current portion

The current promissory note payable decreased by $18,280 to $511,472 (December 31, 2011 - $529,752) which is attributable to a change in foreign exchange on conversion of the USD designated promissory notes to CAD for reporting purposes.

Promissory note payable – long-term portion

The long-term promissory note payable increased by $832,371 to $4,646,121 (December 31, 2011 - $3,813,750) due to the inclusion of the non-convertible portion of the loan financing taken out in Q1 of this year, less associated legal and commission costs paid, offset by a change in foreign exchange on conversion of the USD designated promissory notes to CAD for reporting purposes.

Capital Stock

Capital stock did not change and remained at $88,578,045 (December 31, 2011 - $88,578,045).

Additional paid-in capital increased by $287,488, to $1,763,773 (December 31, 2011 - $1,476,285) as a result of the warrants issued in association with the convertible debt financing and the expensing of stock options.

Liquidity and Capital Resources

At March 31, 2012, the Company had a working capital of $315,496 including cash of $1,066,375 as compared to a working capital of ($80,533) including cash of $804,892 at December 31, 2011. Also included in working capital, at March 31, 2012, were marketable securities with a market value of $2,250 (December 31, 2011 - $2,250).

During the three month period ended March 31, 2012, the Company received cash of $Nil (2011 - $520,874) for stock issuances. At March 31, 2012, the Company had 3,750,000 share purchase warrants exercisable at $0.20 per share which have the potential upon exercise to convert to approximately $750,000 in cash over the next two years. Further, a total of 11,848,750 stock options exercisable between $0.10 and $2.15 have the potential upon exercise to generate a total of $2,254,262.50 in cash over the next four and a half years. There is no assurance that these securities will be exercised.

Our major capital requirements in the next 12 months relate mainly regarding our projects in Norway.

We are also obligated to repay a US$500,000 promissory note in Q3, 2012 issued to the vendors of TTS in connection with the acquisition of TTS. Also we have a long-term commitment for approximately $3,740,625 and it is expected that this commitment will be funded from available cash when the note is due in 2013. Also in the current quarter loan financing of USD$3,000,000 was arranged of which $2,000,000 is convertible, at the lender’s discretion, to shares of the Company and USD$1,000,000 is to be paid in August of 2013. It is expected that this commitment will be paid from available cash when due in 2013.

The Company will need additional funding to meet the commitments shown above and will seek to raise additional equity financing in the short term.

The Company’s continued development is contingent upon its ability to raise sufficient financing both in the short and long term. There are no guarantees that additional sources of funding will be available to the Company; however, management is committed to pursuing all possible sources of financing in order to execute its business plan. The Company continues its cost cutting measures to conserve cash to meet its operational obligations.

Outstanding share data

At the date of this report the Company has 150,678,713 issued and outstanding common shares, 14,183,750 outstanding stock options currently outstanding at a weighted average exercise price of $0.17, and 3,750,000 outstanding warrants at a weighted average exercise price of $0.20.

Off-balance sheet arrangements

At March 31, 2012, the Company had no material off-balance sheet arrangements such as guarantee contracts, contingent interest in assets transferred to an entity, derivative instruments obligations or any obligations that trigger financing, liquidity, market or credit risk to the Company.

Transactions with Related Parties

There were no related party transactions in the quarter ended March 31, 2012.

Proposed Transactions

There are no proposed transactions outstanding other than what has been disclosed.

Critical Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting policies requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on past experience, industry trends and known commitments and events. By their nature, these estimates are subject to measurement uncertainty and the effects on the financial statements of changes in such estimates in future periods could be significant. Actual results will likely differ from those estimates.

Stock-based compensation

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock options and compensatory warrants granted. This model is subject to various assumptions. The assumptions the Company makes will likely change from time to time. At the time the fair value is determined; the methodology the Company uses is based on historical information, as well as anticipated future events. The assumptions with the greatest impact on fair value are those for estimated stock volatility and for the expected life of the instrument.

Future income taxes

The Company accounts for tax consequences of the differences in the carrying amounts of assets and liabilities and their tax bases using tax rates expected to apply when these temporary differences are expected to be settled. When the future realization of income tax assets does not meet the test of being more likely than not to occur, a valuation allowance in the amount of the potential future benefit is taken and no future income tax asset is recognized. The Company has taken a valuation allowance against all such potential tax assets.

Mineral properties and exploration and development costs

We capitalize the costs of acquiring mineral rights at the date of acquisition. After acquisition, various factors can affect the recoverability of the capitalized costs. Our recoverability evaluation of our mineral properties and equipment is based on market conditions for minerals, underlying mineral resources associated with the assets and future costs that may be required for ultimate realization through mining operations or by sale. We are in an industry that is exposed to a number of risks and uncertainties, including exploration risk, development risk, commodity price risk, operating risk, ownership and political risk, funding and currency risk, as well as environmental risk. Bearing these risks in mind, we have assumed recent world commodity prices will be achievable. We have considered the mineral resource reports by independent engineers on the Springer and Nyngan projects in considering the recoverability of the carrying costs of the mineral properties. All of these assumptions are potentially subject to change, out of our control, however such changes are not determinable. Accordingly, there is always the potential for a material adjustment to the value assigned to mineral properties and equipment.

Recent Accounting Pronouncements

In April 2010, the Financial Accounting Standards Board (“FASB”) issued ASU 2010-13, Compensation – Stock Compensation (Topic 718), amending ASC 718. ASU 2010-13 clarifies that a stock-based payment award with an exercise price denominated in the currency of a market in which the entity’s equity securities trade should not be classified as a liability if it otherwise qualifies as equity. ASU 2010-13 also improves US GAAP by improving consistency in financial reporting by eliminating diversity in practice. ASU 2010-13 is effective for interim and annual reporting periods beginning after December 15, 2010 (January 1, 2011 for the Company). The Company is currently evaluating the impact of ASU 2010-09, but does not expect its adoption to have a material impact on the Company’s financial reporting disclosures.

In December 2010, the FASB issued ASU 2010-29, which contains updated accounting guidance to clarify the acquisition date that should be used for reporting pro forma financial information when comparative financial statements are issued. This update requires that a company should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This update also requires disclosure of the nature and amount of material, nonrecurring pro forma adjustments. The provisions of this update, which are to be applied prospectively, are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted. The impact of this update on the Company’s consolidated financial statements will depend on the size and nature of future business combinations.

Financial instruments and other risks

The Company’s financial instruments consist of cash, investments in trading securities, subscriptions receivable, receivables, accounts payable and accrued liabilities, due to related parties, and promissory notes payable. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its financial instruments. The fair values of these financial instruments approximate their carrying values unless otherwise noted. The Company has its cash primarily in one commercial bank in Vancouver, British Columbia, Canada.

Risk Factors

Prior to making an investment decision investors should consider the investment risks set out below and those described elsewhere in this document, which are in addition to the usual risks associated with an investment in a business at an early stage of development. The directors of the Company consider the risks set out below to be the most significant to potential investors in the Company, but are not all of the risks associated with an investment in securities of the Company. If any of these risks materialize into actual events or circumstances or other possible additional risks and uncertainties of which the Directors are currently unaware, or which they consider not to be material in relation to the Group's business, actually occur, the Group's assets, liabilities, financial condition, results of operations (including future results of operations), business and business prospects, are likely to be materially and adversely affected. In such circumstances, the price of the Company’s securities could decline and investors may lose all or part of their investment.

EMC Will Require Significant Amounts of Additional Capital in the Future

The Company has limited financial resources. The Company will continue to make substantial capital expenditures related to exploration, development and production. In particular the Company will have further capital requirements as it proceeds to expand its present exploration activities at its mineral projects, or to take advantage of opportunities for acquisitions, joint ventures or other business opportunities that may be presented to it.

In addition, the Company may incur major unanticipated liabilities or expenses. There can be no assurance that the Company will be able to obtain necessary financing in a timely manner on commercially acceptable terms, if at all.

Volatile demand for tungsten and other metals and the volatile prices for tungsten and other metalsmay make it difficult or impossible for the Company to obtain debt financing or equity financing on commercially acceptable terms or at all. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development of its tungsten and other mineral projects with the possible loss of the rights to such properties. If exploration or the development of any mine is delayed, such delay would have a material and adverse effect on the Company’s business, financial condition and results of operation.

Stage of Development

The Company’s properties are in the exploration stage and the Company does not have an operating history. Exploration and development of mineral resources involves a high degree of risk and few properties which are explored are ultimately developed into producing properties. The amounts attributed to the Company’s interest in its properties as reflected in its financial statements represent acquisition and exploration expenses and should not be taken to represent realizable value. There is no assurance that the Company’s exploration and development activities will result in any discoveries of commercial bodies of ore. The long-term profitability of the Company’s operations will be in part directly related to the cost and success of its exploration programs, which may be affected by a number of factors such as unusual or unexpected geological formations, and other conditions. As a result of the Company’s lack of operating history, it also faces many of the risks inherent in starting a new business.

Profitability of Operations

The Company is not currently operating profitably and it should be anticipated that it will operate at a loss at least until such time as production is achieved from one of the Company’s properties, if production is, in fact, ever achieved. The Company has never earned a profit. Investors also cannot expect to receive any dividends on their investment in the foreseeable future.

Tungsten and other mineral Industries Competition is Significant

The international tungsten and other mineral industries are highly competitive. The Company will be competing against competitors that may be larger and better capitalized, have state support, have access to more efficient technology, and have access to reserves of tungsten and other mineral that are cheaper to extract and process. As such, no assurance can be given that the Company will be able to compete successfully with its industry competitors.

Fluctuations in Metal Prices

Although the Company does not hold any known mineral reserves of any kind, its future revenues, if any, are expected to be in large part derived from the future mining and sale of tungsten and other metals or interests related thereto. The prices of these commodities have fluctuated widely, particularly in recent years, and are affected by numerous factors beyond the Company’s control including international economic and political conditions, expectations of inflation, international currency exchange rates, interest rates, global or regional consumption patterns, speculative activities, levels of supply and demand, increased production due to new mine developments and improved mining and production methods, availability and costs of metal substitutes, metal stock levels maintained by producers and others and inventory carrying costs. The effect of these factors on the prices of tungsten and other metals, and therefore the economic viability of the Company’s operations, cannot be accurately predicted.

Depending on the price obtained for any minerals produced, the Company may determine that it is impractical to commence or continue commercial production.

EMC Metals Corp.’s Operations are Subject to Operational Risks and Hazards Inherent in the Mining Industry

The Company’s business is subject to a number of inherent risks and hazards, including environmental pollution; accidents; industrial and transportation accidents, which may involve hazardous materials; labor disputes; power disruptions; catastrophic accidents; failure of plant and equipment to function correctly; the inability to obtain suitable or adequate equipment; fires; blockades or other acts of social activism; changes in the regulatory environment; impact of non-compliance with laws and regulations; natural phenomena, such as inclement weather conditions, underground floods, earthquakes, pit wall failures, ground movements, tailings, pipeline and dam failures and cave-ins; and encountering unusual or unexpected geological conditions and technical failure of mining methods.

There is no assurance that the foregoing risks and hazards will not result in damage to, or destruction of, the Company’s tungsten and other mineral properties, personal injury or death, environmental damage, delays in the Company’s exploration or development activities, costs, monetary losses and potential legal liability and adverse governmental action, all of which could have a material and adverse effect on the Company’s future cash flows, earnings, results of operations and financial condition.

Mineral Reserve and Resource Estimates are Only Estimates and May Not Reflect the Actual Deposits or the Economic Viability of Tungsten, Scandium and/or Gold Extraction

Reserve and resource figures included for tungsten and other minerals are estimates only and no assurances can be given that the estimated levels of tungsten and other minerals will actually be produced or that the Company will receive the tungsten and other metal prices assumed in determining its reserves. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling and exploration results and industry practices. Estimates made at any given time may significantly change when new information becomes available or when parameters that were used for such estimates change. While the Company believes that the reserve and resource estimates included are well established and reflect management's best estimates, by their nature reserve and resource estimates are imprecise and depend, to a certain extent, upon statistical inferences which may ultimately prove unreliable. Furthermore, market price fluctuations in tungsten and other metals, as well as increased capital or production costs or reduced recovery rates, may render ore reserves containing lower grades of mineralization uneconomic and may ultimately result in a restatement of reserves. The extent to which resources may ultimately be reclassified as proven or probable reserves is dependent upon the demonstration of their profitable recovery. The evaluation of reserves or resources is always influenced by economic and technological factors, which may change over time.

Exploration, Development and Operating Risk

The exploration for and development of tungsten and other mineral properties involves significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices, which are highly cyclical, drilling and other related costs which appear to be rising; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital.

Currency Risk

The Company maintains accounts in Canadian and American currency. The Company’s equity financings are sourced in Canadian dollars but for the most part it incurs its expenditures in local currencies or in US dollars. The Company’s operations are subject to foreign currency fluctuations and such fluctuations may materially affect the Company’s financial position and results. The Company does not engage in currency hedging activities.

Environmental Risks and Hazards

All phases of the Company’s operations are subject to environmental regulation in the jurisdictions in which it operates. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the general, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations. Environmental hazards may exist on the properties which are unknown to the Company at present and which have been caused by previous or existing owners or operators of the properties. Reclamation costs are uncertain and planned expenditures estimated by management may differ from the actual expenditures required.

Government Regulation

The Company’s mineral exploration and planned development activities are subject to various laws governing prospecting, mining, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people and other matters. Although the Company believes its exploration and development activities are currently carried out in accordance with all applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail production or development.

Many of the mineral rights and interests of the Company are subject to government approvals, licenses and permits. Such approvals, licenses and permits are, as a practical matter, subject to the discretion of applicable governments or governmental officials. No assurance can be given that the Company will be successful in maintaining any or all of the various approvals, licenses and permits in full force and effect without modification or revocation. To the extent such approvals are required and not obtained, the Company may be curtailed or prohibited from continuing or proceeding with planned exploration or development of mineral properties. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions. Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations or applicable laws or regulations.

Amendments to current laws and regulation governing operations or more stringent implementation thereof could have a substantial impact on the Company and cause increases in exploration expenses, capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.

EMC has no History of Mineral Production or Mining Operations

The Company has never had tungsten and other mineral producing properties. There is no assurance that commercial quantities of tungsten and other minerals will be discovered at the Properties or other future properties nor is there any assurance that the Company’s exploration program thereon will yield positive results. Even if commercial quantities of tungsten and other minerals are discovered, there can be no assurance that any property of the Company will ever be brought to a stage where tungsten and other mineral resources can profitably be produced therefrom. Factors which may limit the ability of the Company to produce tungsten and other mineral resources from its properties include, but are not limited to, the spot prices of tungsten and other metals, availability of additional capital and financing and the nature of any mineral deposits.

The Company does not have a history of mining operations and there is no assurance that it will produce revenue, operate profitably or provide a return on investment in the future.

Future Sales of Common Shares by Existing Shareholders

Sales of a large number of Common Shares in the public markets, or the potential for such sales, could decrease the trading price of the Common Shares and could impair the Company’s ability to raise capital through future sales of Common Shares. Substantially all of the Common Shares can be resold without material restriction in Canada.

No Assurance of Titles or Borders

The acquisition of the right to exploit mineral properties is a very detailed and time consuming process. There can be no guarantee that the Company has acquired title to any such surface or mineral rights or that such rights will be obtained in the future. To the extent they are obtained, titles to the Company’s surface or mineral properties may be challenged or impugned and title insurance is generally not available. The Company’s surface or mineral properties may be subject to prior unregistered agreements, transfers or claims and title may be affected by, among other things, undetected defects. Such third party claims could have a material adverse impact on the Company’s operations.

Information Regarding Forward-Looking Statements

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Forward-looking statements include but are not limited to those with respect to the prices of tungsten and other metals, the estimation of mineral resources and reserves, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, requirements for additional capital, Government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes” or variations of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of EMC to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the actual results of current exploration activities, conclusions or economic evaluations, changes in project parameters as plans continue to be refined, possible variations in grade and or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labor disputes or other risks of the mining industry, delays in obtaining government approvals or financing or incompletion of development or construction activities, risks relating to the integration of acquisitions, to international operations, and to the prices of tungsten and other metals. While EMC has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. EMC expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

At the end of the period covered by this Quarterly Report on Form 10-Q for the three months ended March 31, 2012, an evaluation was carried out under the supervision of and with the participation of the Company's management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act).

The Company took into consideration the following three characteristics common to companies of a similar size:

The limited number of personnel in smaller companies, which constrains the Company’s ability to fully segregate conflicting duties;
The Company relies on an active Board and management with open lines of communication to maintain the effectiveness of the Company’s disclosure controls and procedures.
The dynamic and evolving nature of smaller companies, which limits their ability to have static processes that are well-documented.

In addition, management has relied upon certain informal procedures and communication, and upon “hands-on” knowledge of senior management to maintain the effectiveness of disclosure controls and procedures.

Based on that evaluation the CEO and the CFO have concluded that as of the end of the period covered by this report, the Company's disclosure controls and procedures are effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the period covered by this report, there were no changes to internal control over financial reporting that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 6. Exhibits

31.1	Certification of the Principal Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934.

31.2	Certification of the Principal Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the U.S. Securities Exchange Act of 1934.

32.1	Section 1350 Certification of the Principal Executive Officer.

32.2	Section 1350 Certification of the Principal Financial Officer.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 11, 2012

	EMC METALS CORP.
	(Registrant)


	By:	/s/ George Putnam
		George Putnam
		Principal Executive Officer


	By:	/s/ Edward Dickinson
		Edward Dickinson
		Principal Financial Officer