Rare High
Rare High
Rare Earth Metals Inc ready to capitalize on Chinese shortages with red wine rare earth project
Booth # 3233 • rareearthmetals.ca • 807.623.6840
Michael Stares
President & CEO
Reg Felix
Vice President of Exploration
With prospects in the Red Wine district that are geologically similar to well known Canadian rare earth projects, Rare Earth Metals Inc (TSXV:RA) is poised to capitalize on the supply shortage of rare earth metals following changes in Chinese export regulations. The company's President and CEO, Michael Stares and the Vice President of Exploration, Reg Felix speak with Resource Intelligence about their exciting prospects on the Red Wine Project in Labrador.
Resource Intelligence: Rare Earth Metals Inc. has both coal and rare earth metal, which one is the company's priority at this time?
Michael Stares & Reg Felix: Of course the main priority of the company is to find and drill off a rare earth deposit. The coal asset was inherited through the merger that was completed last year when the company was formed. We are currently trying to find a home for this project and in doing so adding as much shareholder value as possible.
RI: Which project are you most focused on?
MS & RF: We're focused on the Two Tom prospect on our Red Wine Project in Labrador.
RI: Could you tell us about the results you're getting from that project?
MS & RF: That's a very exciting project. In September we drilled 11 diamond drill holes on the Two Tom prospect. The prospect is drilled off on 200m centers for approximately 1.1km. From our drilling to date, it looks like the average thickness of that particular zone is 80m and the grade would about 1.18% total rare earth oxides.
RI: Are those heavy or light rare earths?
MS & RF: They are predominantly light rare earths. However, our other prospects called the Dory Pond occurrence and the South Playfair occurrences have a really good heavy rare earth oxide proportion of the total rare earth oxide content.
RI: What else is encouraging about Red Wine?
MS & RF: We're in a geological environment that is highly prospective for rare earth elements. We're dealing with alkaline intrusions and geologically these could probably be correlated to the type of environment that Quest is working with up in Strange Lake and Avalon is working with in Thor Lake. Secondly, we have five historic rare metal showings, which have been documented by the government. We've been able to outline mineralized zones in the Two Tom and the Mann#1 that have very exciting strike lengths to them. However, we also have in the southwest area of this large holding, highly prospective zones to explore. To date, through prospecting and sampling we've demonstrated heavy rare earth oxide compositions. We're going to focus on those to come up with some exciting zones of heavy rare earth in addition to the predominantly light rare earths we already have. So we probably have an underdeveloped, undervalued belt because we're probably the first people who have really looked at it for rare earth metal mineralization.
RI: As you know we are expecting a rare earth metal supply shortage because of Chinese export regulations. Could you comment on how that may affect your project?
MS & RF: It's going to be positive in every respect. When you look at what the Chinese have been doing in the last few months with their export restrictions, they are really telling the rest of the world that they have to find new deposits. 97% of the world's rare earths are developed in China and China currently consumes about 60% domestically, and they're telling us now that their domestic demands are going to increase. There has been speculation that within five years the Chinese themselves are going to be importing rare earth metals to feed its growing economy.
RI: Are you currently working on the Clay-Howells rare earth project in Ontario as well?
MS & RF: Yes, we're drilling on the Clay Howell project right now. With any luck we'll have some good news from that project and that will be good news for the company going forward as well.
RI: How well is Rare Earth Metals Inc financed to proceed with exploration plans?
MS & RF: Our company is well financed. We have just over $8 million in the treasury. We have a burn rate of about $80,000-$90,000 per month, and basically we have lots of money in the bank to fund both our projects.
RI: Do you believe you are currently getting shareholder value for your projects?
MS & RF: Our market cap today is $32 million. If you compare other rare earth companies in the sector with similar assets and share structures as Rare Earth Metals, we believe there is a lot of room to add shareholder value.
RI: What is the company doing to address shareholder value?
MS & RF: When we do outline a resource at the Two Tom and complete a 43-101, that will help our share price for sure.
RI: Any idea of the time frame for the 43-101?
MS & RF: We're probably looking at another 12 months. Realistically, it will probably be the first quarter 2012 before we see a 43-101.
RI: Is there anything else you'd like to add?
MS & RF: Our projects have great infrastructure and I believe this will have a very positive effect on the future of our potential deposits there.
Investor Highlights:
- Exploration on the Two Tom Prospect on the Red Wine Project continuing through 2011 with 43-101 planned for first quarter of 2012
- Recent sampling has shown heavy rare earth metals on the Red Wine Project to add to existing lights
- Company well financed to proceed with exploration with $8 million in the treasury
- Existing infrastructure in the Red Wine district will keep expenditures low
About the Author
What jobs with a high school diploma can give you consistent full time hours and are not rare?
literally not many in this economy.....
try macdonalds.....maybe you can work you way up into management and a good salary.....but, even they are requiring a hs diploma in my part of the country now just to flip burgers.....the job market is just that tight that they can be that picky
having said that, i entered air cargo with no diploma at all, went back to school full time and got it at the same time i was working my way up the corporate ladder full time and now am a senior manager with a six figure salary......anything is possible.....but it takes time......10 years in my case
but not likely.
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Quest Uranium Corp. Is In A "rare" Position Indeed
As its name indicates, Quest Uranium started out in the uranium exploration business and still holds properties with excellent potential for that resource, but in the past two years its focus has turned mainly to the development of what could turn out to be a hugely profitable rare earth element (REE) project in Quebec. The current price of Quest's stock certainly reflects the market's belief that this is a company with a bright future in the production of metals for which there is a rapidly growing demand in numerous high tech applications. We spoke with Peter Cashin, Quest's President & CEO, who clearly made a strong case for why his company was the best performing stock on the TSX-V Exchange in 2009, growing by over 5.530% during the year.
Resource Intelligence: Can you give us a brief rundown on how Quest got to be where it is at this point in time?
Peter Cashin: Well, Quest started as a spinoff from Freewest Resources and we had some 30 properties from the roll-in when I joined the company in 2007. That was way too many for a company our size to try to both hold and manage properly so we distilled that number down to six properties that we thought were worth concentrating our efforts on. Initially these were all uranium properties.
RI: How did you become a rare earth elements (REE) headliner?
PC: We were monitoring the status of claims around our Strange Lake holdings in the George River area of northeast Quebec and in the fall of 2007 we discovered that some claims adjoining ours on the Quebec side of the Labrador border were about to fall open and we immediately went in and restaked them for about $1,250 in staking costs. So we added about 600 hectares to our holdings of some 98,000 hectares in the area but those 600 may turn out to be some of the most valuable, at least at this point in time.
RI: And what do you have on this huge land package?
PC: On what we call the "A" Zone on the Strange Lake Property, we hold the Québec portion of the Strange Lake REE-Zr-Y-Nb-Beryllium (Be) deposit which was discovered by the Iron Ore Company of Canada in the late 1970's. A historical resource estimate, pre-NI 43-101 published by Venkatswaran in 1983 shows 52 million tonnes @ 3.25% ZrO2, 0.56% Nb2O5, 0.66% Y2O3, 0.12% BeO and 1.30% Total Rare Earth Oxides (TREO). On April 30, 2009, John Kaiser of Kaiser Bottom-Fishing Report put the in-ground gross value of the "A" Zone mineralization we currently control at about $4-billion. So, that was a great way to start out in the REE exploration space.
Then about 3 km NW of that we have a new discovery we call the "B" Zone which has a footprint about four times the size of the "A" Zone. We drilled that down to 150 m last fall and every single hole stopped in mineralization, so we don't yet know how big it could be but the potential appears to be huge. The drill results confirmed strong REE mineralization over 1.1 km of strike, over widths of at least 500 m and over vertical thicknesses of up to 135.2 m. Quest now has 100% control of all of the favourable REE geology in and adjacent to our Strange Lake deposit. Our surface sampling returned spectacular grades of up to 14.43% Total Rare Earth Oxides (TREO), with Heavy Rare Earth Elements (HREE) representing between 7% and 67% of the total TREO component. We later confirmed the importance of the surface grades with diamond drilling, returning multiple, high-grade vertical intersections of between 1.03% and 3.74% TREO over widths of 3.0 and 38.5 m, within a larger, 135.85 m-thick, mineralized envelope grading between 0.9%-1.0% TREO.
RI: For those readers who aren't familiar with them, what exactly are rare earth elements?
PC: The REEs are a series of 15 metals critical to the automotive, aerospace, high-tech, and nanotechnology industries. What are called the "light" REEs with atomic numbers 57 through 62 are: La=lanthanum Ce=cerium Pr = praseodymium, Nd = neodymium, Pr=promethium, Sm = samarium. The "heavy" REEs with numbers from 63 through 71 are: Eu=europium, Gd=gadolinium, Tb=terbium, Dy=dysprosium, Ho=holmium, Er=erbium, Tm=thulium, Yb=ytterbium Lu=lutetium. Currently, over 97% of the world's rare earth metals are produced in China. With their abundant resources and low production costs they have a virtual monopoly as a source for these metals. China has placed strict controls on REE mining, production and export in order to maximise its own use of the resources.
RI: So how did China end up in that position?
PC: Well, during the 1990s and early 2000s, significant production surpluses and the resulting low REE prices led most non-Chinese rare earth producers to cease their operations and users to rely almost exclusively on Chinese supplies. With a curbing of exports from China and continued growth demand elsewhere, the supply demand deficit is causing great concern to major REE consuming countries like Japan, Korea, Taiwan, United States, which are now anxious to identify new sources of rare earths. With excellent prospects for growth in the hybrid auto battery manufacturing, aerospace and electronics industries, there's a projected demand growth in REE of 8-11% per year and a very pressing need for new non-Chinese production capacity in the next three to five years.
If China sticks to its announced production and export limits, there's a real prospect that, within five to ten years, they will only produce enough material to satisfy their domestic consumption. So, to meet the estimated global demand of 180-190,000t rare earth oxides (REO) in 2010, around 60,000t of new capacity will be needed to meet the unfulfilled demand from outside China. On top of that, it's estimated that world demand could reach to 230,000 tonnes of REE per year by 2013, up from 135,000 tonnes in 2008. So it certainly appears that primary production is unlikely to keep up with the increasing demand.
RI: Tell us a little about the metallurgy and structure of the Strange Lake Property.
PC: We have Hazen Research in Denver doing metallurgy testing on a one-tonne bulk sample of ore and it appears that we will be able to get good recoveries using conventional methods. Work done by IOC when they had the basic property indicated recoveries in the 70%-80+% range and we appear to be getting similar results. From a mining aspect, there appears to be virtually no overburden on the mineralization so we should be able to mine by open pit methods using conventional milling and flotation and have an expected total cost in the range of $110 and $125/t. At four-year average metals prices, it appears that the higher-grade surface mineralization should run, according to John Kaiser, between $325 and $425/t in gross value, so there should be a very nice margin in there.
RI: Strange Lake isn't your only property with great potential. You recently announced some exciting news on your Misery Lake Property. Tell us about that.
PC: We are very excited about our Misery Lake property which lies approximately 120 km south of our Strange Lake project area. The rare earth potential of the Misery Lake area was first recognized by Quest exploration crews in August 2007 when they did reconnaissance bedrock sampling over a concentric magnetic feature which produced grab sample results of up to 27% Fe2O3, 1.2% P2O5, 1.5% TiO2 and 2.25% TREO including Yttrium. A total of 145 claims were staked to cover the anomalous feature in September 2007. The ring complex shows up as a 6-km diameter airborne magnetic anomaly and translates into a target feature that has a potential strike length continuation of approximately 20 km. We obtained grab samples from the "ring" which returned values of up to 8.56% Total Rare Earth Oxides, 42.3 % iron oxide, 7.12 % phosphate, 4.85 % titanium oxide, 3.05 % zirconium oxide, and 2.72 % niobium oxide. The geology is similar to the Lovozero Peralkaline Complex in Russia, which is their primary producing area for rare earths, niobium, tantalum, phosphate and zirconium. We recently identified new, high-priority REE targets to the south of the Misery Lake discovery which has led to the staking of 1,500 more mining claims covering approximately 60,000 hectares. So now the property consists of 1,776 claims, covering 794 km2 in Quebec and Labrador.
RI: It's probably premature to speculate at this point, but when do you think it would be possible to expect to see some production from your Strange Lake properties and what do you think it would cost to get into production?
PC: We'll definitely have a better idea when we have a feasibility study in hand but I personally think we could be breaking our first rock in about five years after a project Capex running in the order of $500 to $600 million.
RI: In closing, what points would you like investors to focus on in considering Quest as an attractive investment at this time?
PC: We believe that we have what it will take to make it all happen for our shareholders: the high-value REE resources in the ground, the potential for developing much more of them in the future, the financing we need at this time, and the experienced people to bring it all together.
Milestones:
* 43-101 resource estimate for the Main and B zones by early April
* A metallurgical study complete by Q2, 2010, followed by a Scoping Level Study
* $5.5 million exploration program in 2010
* Move tonnage from inferred into the indicated category for use in a Feasibility Study in 2011
* Production by 2015
About the Author
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