Rare earth elements have a variety of uses, with around 19% used as catalysts, mainly in crude oil refining. A further 27% have uses in the glass and ceramics industry while 18% are used in metallurgy as an alloying agent. Applications in batteries and permanent magnets are increasing rapidly with “super” magnets consuming 21%.
Rare Element Resources was formed to develop the Bear Lodge Property and retains a 100% interest in all minerals in the district. There are significant high grade rare earth elements as well as gold deposits. Newmont North America Exploration was previously working toward a 65% interest, but recently withdrew from the venture before earning any interest.
I had an opportunity to interview Donald Ranta, PhD, President and CEO of Rare Element Resources. According to Dr. Ranta, the company’s property location in Wyoming is significant. He says: “Wyoming happens to be one of the best jurisdictions for developing a mine. It’s ranked number two in the world right now, ahead of Nevada and just behind Quebec.”
Dr. Ranta is a very experienced and accomplished exploration and development mining executive. He has planned, implemented and directed successful exploration and acquisitions throughout North and South America and internationally. Don is also a former president and board member of SME and a former Vice President and board member of AIME. His efforts have resulted in the discovery, evaluation and/or acquisition of several major deposits including Montana's McDonald gold, Nevada’s Sleeper gold, and Mexico's Santa Gertrudis gold ore bodies. He serves as a director of Animas Resources Ltd. and Otis Gold Corp. and has been a Vice President of Exploration for Echo Bay Mines and Manager/Vice President for North American Exploration at Phelps Dodge Mining Company.
Drilling Program
There is currently much activity on the project; with a large drilling program last fall adding a further twenty holes. The expectation is that a new resource estimate will be produced very quickly (It was reported in a news release on May 26th). “In addition to that,” remarks Don, “we’re working on a scoping study / preliminary economic assessment that we expect to come out this summer. That should help define, in better detail, the operating and capital costs involved in putting a mine into production at Bear Lodge.”
Activity is split between gold (Sundance Project) and rare earth (Bear Lodge Project) drilling. For the former, the intention is to undertake a substantial drilling program during the summer of 2010, drilling about 30 holes to work at coming up with a NI 43-101 resource. Don comments: “We’ll probably try to get that done by the end of the year or in the first quarter of 2011.”
The rare earth side has an equally extensive drilling program of around 30 to 40 holes, with development drilling aimed at moving the resource from the inferred category to measured and indicated. Step-off drilling is also likely to expand the resource, and with a number of new targets to be tested, including some high grade zones with 5.5 to 7% REO.
“We have one target in particular, called Bull Hill Northwest, where we have an excellent drill hole,” says Donald. “We hit 216 feet of 5.5% rare earth oxide and that is a high grade hole offsetting other good holes. The target is wide open to the north and so we’re going to be doing a fair bit of drilling there. We think there could be a whole new deposit (as demonstrated by the recent resource defined there) and we’re not sure how much.
“Some of our better drill holes last year were on the margins of our drilling so our main deposit at Bull Hill Southwest is wide open and we’re planning to offset those holes too. It’s going to be a program that’s designed to get us more into the development phase.”
Bear Lodge contains mainly the light rare earth elements, as Don explains: “One of the key things is that we have a higher proportion of neodymium and praseodymium, the rare earths that are in magnets. These are priced at about $13.50 or $14 a pound right now, so they’re the most valuable of the lights and more valuable than some of the heavies.
“Most of what we’ve been finding is lanthanum and cerium. Lanthanum is used in nickel-metal-hydride batteries, which are in many hybrid automobiles, so it will be in great demand. Cerium is predicted to be over-supplied within a few years but they’re looking for lots of additional uses for it. It’s one of the principal components in catalysts for petroleum refining and also in metal alloys like steel and aluminum — you add a little rare earth and it imports some very good qualities to different products.
“Another interesting thing is that the growth rate expected for neodymium and praseodymium, because of the magnets, is probably going to be 10-13% per year. The growth rate for the metal alloys is predicted at between 15 and 20% per year.”
As regards gold exploration, Newmont has withdrawn from the joint venture since it is unlikely to provide the large deposit it wants in the time frame available. Nevertheless, Don is convinced there is a good medium-sized deposit and is keen to pursue the project: “We think we will be able to find a fairly sizeable deposit. I’m guessing that will be somewhere in the order of a million ounces or more.”
Investment Opportunity
For anyone considering investing in the company, Don reckons there are several reasons to be interested: “We have a high grade deposit of a substantial size — about 10 million tons of over 4% rare earth oxides right now and increasing with our new resource estimate. Also there are about 2 million tons of very high grade of nearly 7% REO and excellent opportunities to expand all grades of resources.”
A second reason is that excellent infrastructure exists, reducing development costs. Don says: “We have power close by and we have rail lines only 35 miles away. We have major four-lane highways just twelve miles away from the project and paved roads within two miles. Our power costs are going to be something like three cents a kilowatt hour — very low power costs.”
Metallurgy is progressing and has produced some good results, moving the company closer to a commercial process. “We’ve been able to produce concentrate grades with 90% recovery of 13-20% of rare earth oxide and that is a pretty substantial grade,” comments Donald. “It’s not as high as we’d like to get it but we’re working on that. The unique thing about the Bear Lodge oxide mineralization is that it is free of carbonate minerals, except for the rare earth minerals, and it may have a very low reagent consumption. ”
Initial studies have started on separating the individual rare earths into rare earth oxides particularly. Early successes indicate that a prefeasibility study into mine development might start this year. Don says: “We’ll probably do a bulk sample in 2011 and a pilot plant test to produce some product that we can then bring to potential buyers. With favorable metallurgical progress and a fast track in permitting we think that we can have a goal to be in production by 2015.”
Things are moving pretty quickly and Rare Element Resources is looking at acquisitions within the industry. Its position as a rare earth company means that it will eventually have to decide how to handle the gold deposit. After the 2010 drilling program and a resource estimate, one possibility is to bring in another partner while another is to split the company into two so that one concentrates on rare earth while the other is a gold company.
“We haven’t made that decision,” confirms Don. “Until we do, we’ll keep advancing. We’ll do some metallurgy testing and the NI 43-101 study. If we see some good opportunities, we’ll continue exploring it and adding value. It just depends on our success with this current drilling program.”
For more information:
http://www.rareelementresources.com
Rare Element Resources Ltd.
Suite 410 - 325 Howe Street
Vancouver, BC V6C 1Z7
Tel: 604.687.3520 EX 229
Fax: 604.688.3392
Symbol: TSX-V:RES
Contacts:
Donald E Ranta, President & CEO
(604) 687-3520
don@rareelementresources.com
Mark T. Brown, CFO
mbrown@rareelementresources.com