Mr. Jaye Pickarts reports
RARE ELEMENT ANNOUNCES REVISED AND IMPROVED ECONOMIC RESULTS FROM PRE-FEASIBILITY STUDY AT BEAR LODGE
Rare Element Resources Ltd. has released the revised results of the previously announced positive preliminary feasibility study for the Bear Lodge rare-earth project, Wyoming. This revision supersedes the previous announcement made March 1, 2012. After consultation with Roche Engineering Inc., the independent engineering company that completed the PFS on behalf of Rare Element, several changes were made, including revised and improved estimates of both capital and operating costs. The revised and improved estimates are now based on an optimally sized hydrometallurgical plant, and the recalibrated upside production sensitivity case is now based on 150 per cent of the production rate of the base case. Sensitivity analyses are also presented utilizing a lower long-term price assumption. The PFS was commissioned to provide a technical report with the following: the mineral reserve and resource model, the technical activities of the rare-earth exploration program, an open pit mine plan, a detailed description of mineral concentration and hydrometallurgical processing plans, and an economic analysis of the rare-earth project. The revised results of the PFS indicate that the Bear Lodge project is technologically feasible with robust returns on invested capital.
Highlights of the PFS:
- Net present value at a 10-per-cent discount rate of $1,271-million after
state taxes but before federal income taxes;
- Internal rate of return of 47.8 per cent with two-year payback of initial
capital;
- Robust economics at the 25-per-cent lower price assumptions (10-per-cent NPV of $790-million);
- Average annual production rate of 20,962 metric tonnes (23,111 tons)
bulk mixed rare-earth carbonate concentrates containing 9,433 tonnes
(10,400 tons) total rare earth oxide;
- Nineteen-year mine life based on minable mineral reserves of 5.7 million
tonnes at an average grade of 3.6 per cent TREO;
- Average metallurgical recovery rate of 81.4 per cent;
- Initial capital cost of $334-million and life-of-mine capital of $404-million;
- Average price of $17.36 per kilogram of concentrates based on three-year
trailing-average basket price FOB China, 45-per-cent concentrate grade and 40-per-cent
discount;
- Average annual operating cost of $61.8-million and operating costs of
$194 per tonne mined and $2.94 per kilogram of bulk mixed RE carbonate concentrate;
- Substantial upside potential to increase reserves and resources as
exploration continues at Bull Hill, Whitetail Ridge, East Taylor and
Carbon areas;
- Exploration potential in the district to delineate resources of
heavy rare earth elements;
- Definitive feasibility study is starting in the second quarter of 2012
with a midyear 2013 planned completion date.
Randall Scott, president and chief executive officer, stated: "We are very encouraged with these revised results. The PFS was designed to provide a preliminary engineering and economic assessment of the viability of the Bear Lodge project and, more specifically, the Bull Hill rare-earth-element open pit mine, and these revised results continue to demonstrate the strong economics of this project to produce a bulk mixed RE carbonate concentrate. Our recent announcement of plans to develop and test a process to produce separated rare-earth products from concentrates and our metallurgical testing of drill core samples from the three target areas enriched in HREEs peripheral to the main deposit give the project the potential to substantially improve the economics in the future. Commercial discussions are under way with several companies regarding strategic partnerships and off-take agreements. We will finalize a National Instrument 43-101 technical report in the near term, and that report will be filed with regulatory agencies. The NI 43-101 technical report will include updated mineral reserve and resource estimates that will encompass those drill assay results from the 2011 exploration season received by the end of the year."
BEAR LODGE PROJECT FINANCIAL SUMMARY
Lower price
Base case sensitivity (3)
REE concentrate price ($/kg) $17.36/kg $13.02/kg
NPV at 10% discount rate (4) $1,271-M $790-M
IRR 47.8% 36.0%
Annual cash flow $234-M $156-M
Project payback after start-up 2.1 yr 2.7 yr
Initial capital expenditure (1) $334-M $334-M
LOM capital expenditure (2) $404-M $404-M
Estimated annual cash operating cost $62-M $62-M
(1) Plant capacity has been designed, and capital costs estimated, for
variable production approaching 19,000 metric tonnes (21,000 short tons)
per year total rare earth oxides depending on market conditions and
successful mine management of ore types. While this design capacity is
200 per cent of the base-case production rate and could require additional
capital, a conservative upside production sensitivity case based on 150
per cent of the base-case production rate is shown herein, which is
estimated not to require additional capital.
(2) Initial capital includes a contingency of $66.8-million, and total
life-of-mine capital includes a contingency of 25 per cent or
$80.8-million.
(3) Lower price sensitivity assumes a 25 per cent lower concentrate price
and base-case production.
(4) Net present value, internal rate of return and annual cash flow are
before federal income taxes but include Wyoming state taxes.
Bear Lodge background
Rare Element is developing the Bear Lodge project in northeastern Wyoming. The subject of the PFS is the Bull Hill deposit, which is the most advanced resource and will be developed first. Several other deposits and targets, including Whitetail, Carbon and East Taylor, located to the west and north of Bull Hill, are likely to be developed sequentially, assuming resource and reserve definition. Exploration to define the other potential resources, some of which are enriched in the more valuable heavy rare earths, will continue for several years. The rare-earth-element district is still open in two directions and could eventually prove to be much larger than currently delineated.
Metallurgical testing; PUG and hydromet pilot plant testwork and results; and plant engineering have progressed sufficiently for the process design to be reported in the PFS. Studies have also now begun on the separation of the mixed RE concentrate to be produced from Bull Hill into certain individual RE oxides or small groups of mixed REO products.
Wyoming has been identified among the best mining jurisdictions in the world, according to the Fraser Institute's 2012 report. Infrastructure in the Bear Lodge area is exceptionally good, including rail transportation, low-cost utilities, good road access, skilled labour and ready access to consumables, including sulphuric acid and sodium carbonate.
Following the completion of the PFS, the company will commence more detailed metallurgical design, additional pilot plant testing to optimize future plant performance and engineering studies to be reported in a definitive feasibility study that the company believes will further establish the economic viability of the Bear Lodge project.
Preliminary feasibility study
The scope of the development of the Bear Lodge project is planned to consist of three principal components: (1) the open pit mine operation at Bull Hill and associated support facilities, located approximately 19 kilometres (12 miles) by road north of Sundance, Wyo.; (2) a physical upgrading plant for mineral preconcentration located adjacent to the mine; and (3) a hydromet plant for further concentration of the rare-earth elements into a rare-earth carbonate concentrate product at Upton, Wyo.
KEY OPERATING ASSUMPTIONS
Base case and
price sensitivity cases
Annual ore production (tonnes) 318,226
Average strip ratio (1) 8.7
Annual production
Concentrate (tonnes) 20,962
TREO (tonnes) 9,433
Average REO grade 3.6% (yr 1 to 17)
LOM 19 yr
Mining dilution 5%
Mining recovery rate 95%
Metallurgical recovery rate 81.4%
Production start-up Q4 2015
Ramp-up to full production 1 yr
(1) Stockwork above a 0.9-per-cent-cut-off grade is mined
and stockpiled near the PUG plant. In the base case, the
stockpiled material is not reclaimed and processed.
Upton, the planned site of the hydromet plant located approximately 64 kilometres (40 miles) south from the Bull Hill mine site, is adjacent to an active railway line. The rare-earth-element mineral preconcentrate will be transported by truck to the hydromet plant. The hydromet plant will use hydrochloric acid leaching to produce a bulk mixed rare-earth carbonate concentrate, which represents the initial saleable product for the mining operation.
Mineral reserves and resources
The Bull Hill mine is planned as a conventional truck-and-shovel open pit operation that will extract near-surface proven and probable mineral reserves, consisting of a diluted 5.7 million tonnes (6.3 million tons) averaging 3.6 per cent rare earth oxide, plus 1.45 million tonnes (1.6 million tons) of lower-grade stockwork material averaging 1.1 per cent rare earth oxides. The mineral reserve is derived from a measured and indicated mineral resource of 6.2 million tonnes (6.8 million tons) averaging 3.75 per cent REO. Located within the pit is another 4.1 million tonnes (4.5 million tons) of high-grade oxide inferred mineral resource that will be the subject of further drilling in 2012, with a goal to upgrade the resource category. An additional 10.9 million tonnes (12 million tons) of near-surface high-grade inferred resources occur outside the pit area, and there is considerable exploration potential in the district for more of the heavy-rare-earth-element-enriched oxidized types of resources.
MINERAL RESERVES AND MINERAL RESOURCES SUMMARY
Average Contained
Tonnes grade TREO
(M) (% TREO) (tonnes)
Proven and probable reserves
Oxide + oxide carbonate
(1.5% cut-off) 5.7 3.6 207,856
Oxide stockwork (0.9% cut-off) 1.4 1.1 15,927
Low-grade stockwork (0.5% cut-off) 7.7 0.7 54,030
Waste 55.1
Measured and indicated resource
Oxide + OxCa 6.2 3.75 231,285
Inferred resource
Oxide + OxCa 15.0 2.76 413,048
Rare earth oxides include Ce2O3, La2O3, Nd2O3, Pr2O3, Sm2O3, Gd2O3,
Y2O3, Eu2O3, Dy2O3 and Tb2O3, listed in relative order of decreasing
abundance in the deposits, plus minor quantities of other REO.
Proven and probable reserves were determined by Boyd as part of the Bull
Hill mine design. Waste material includes inferred resources occurring
within the open pit.
The resource estimate is classified as measured, indicated and inferred
mineral resources as defined by Canadian Institute of Mining, Metallurgy
and Petroleum and referenced in NI 43-101.
A range of 1.0- to 2.5-per-cent-rare-earth-oxide-cut-off grade is
considered to be reasonable in the estimation of potentially economic
resources. A cut-off grade of 1.5 per cent REO was selected as the base
case during resource estimation; a cut-off grade of 0.9 per cent REO is
used for the minable reserve in the prefeasibility study.
The prefeasibility study is focused on the oxidized (oxide and oxide
carbonate) mineralization at approximately 1.5-per-cent-cut-off grade.
The mineral resources for the Bear Lodge project were estimated by Alan C. Noble, PE, of Ore Reserves Engineering, an independent qualified person as defined by NI 43-101, and were reported in a news release dated Jan. 4, 2012, but are summarized herein for convenience. Readers should review that news release for additional information, including the contribution of each deposit to the overall mineral resource, the mineral resource estimates at different cut-off grades, the parameters used in the estimate and the required NI 43-101 disclosure. Minable reserves are calculated from an open pit mine plan prepared by Michael P. Richardson, PE, of John T. Boyd Company, an independent qualified person as defined by NI 43-101. The minable reserves reported in the PFS are derived from the measured and indicated resources. Proven and probable reserves are estimated in compliance with NI 43-101 and are also compliant with U.S. Securities Exchange Commission industry guide 7. The mineral resource estimate, which is the basis for the engineering studies that estimate reserves, is compliant with NI 43-101. SEC industry guide 7 does not address reporting of mineral resource estimates.
Mineral resources that are not mineral reserves do not have demonstrated economic viability. Mineral resource estimates do not account for minability, selectivity, mining loss and dilution. The mineral resource estimates include inferred mineral resources that are normally considered too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves. There is also no certainty that these inferred mineral resources will be converted to measured and indicated categories through further drilling, or into mineral reserves, once economic considerations are applied.
DISTRIBUTION BY REE IN MEASURED AND INDICATED RESOURCE OF BULL HILL
Absolute
RE oxide + Relative grade in
OxCa distribution resource
Lanthanum La2O3 28.0% 1.05%
Cerium Ce2O3 43.5% 1.63%
Praseodymium Pr2O3 5.0% 0.187%
Neodymium Nd2O3 17.6% 0.66%
Samarium Sm2O3 2.7% 0.102%
Europium Eu2O3 0.6% 0.021%
Gadolinium Gd2O3 1.3% 0.049%
Terbium Tb2O3 0.1% 0.0038%
Dysprosium Dy2O3 0.28% 0.0106%
Holmium Ho2O3 0.031% --
Erbium Er2O3 0.064% --
Thulium Tm2O3 0.005% --
Ytterbium Yb2O3 0.040% --
Lutetium Lu2O3 0.005% --
Yttrium Y2O3 0.8% 0.030%
Total 100% 3.75%
Mine design and mine operations
The development model utilized by Boyd and its associates for the PFS contemplates conventional truck-and-shovel open pit mine production from the near-surface oxidized measured and indicated mineral resources in the Bull Hill deposit. A large portion of the measured and indicated resources form the minable reserves, which provide an initial mine life of 19 years. Drilling has intersected REE outside the known M&I resources, and studies are now under way to determine whether they may support an eventual increase of mine life beyond that contemplated in the PFS.
PUG plant
The PUG plant is designed to maximize concentration of the REE minerals and produce a preconcentrate using a screening and washing process. The PUG plant is designed to process up to 907 tonnes (1,000 tons) per day of high-grade oxide ore and up to 907 tonnes (1,000 tons) per day of high-grade oxide carbonate ore or lower-grade stockwork material, which will be blended to meet mine pit production plans and market demands. The PUG process employs a series of crushing, attritioning, washing and screening methods to reduce the physical mass and concentrate the rare-earth-bearing fines. Harder oxide carbonate and stockwork ores will be used as the attritioning media to break up the clay-like oxide ores. The Bull Hill deposit contains variable proportions of weathered high-grade oxide and oxide carbonate ores, along with variable grades of stockwork mineralization adjacent to the higher-grade ores. Each of these ore types has a different upgrade percentage and mass reduction in the PUG circuit. These product streams will combine to produce a preconcentrate with the overall processing strategy to maximize the RE grade and recovery and minimize the tonnage of preconcentrate transported to the hydromet plant.
Hydrometallurgical plant
The hydromet plant has been designed with two parallel circuits to process the mineral preconcentrate from the PUG plant. The nominal REE production rate is anticipated to be 21,000 tonnes (23,111 tons) of bulk mixed RE carbonate concentrate containing 9,400 tonnes (10,400 tons) of REO per year, but the plant should have sufficient flexibility to produce higher tonnages of RE concentrate and contained REO with some modifications and optimization of operating limits. The hydrometallurgical process will use a 20-per-cent-hydrochloric-acid solution, heated to 90 C to leach the REE from the preconcentrate. Iron is then precipitated from the solution, and calcium and manganese are extracted using an ion exchange process. The REE is precipitated as carbonates through neutralization of the acidic solution with sodium carbonate. The bulk mixed RE carbonate concentrate will contain approximately 45 per cent REO.
Upton, Wyo., has many attributes that make it an advantageous site for the hydromet plant, including being:
- Private land;
- Adjacent to an existing railway;
- Near an industrial park, where there is sufficient infrastructure, water
and low-cost utilities;
- Located in a region where there are relatively inexpensive sources of
consumables, such as sulphuric acid and sodium carbonate that can be
delivered by rail.
Capital expenditures
The initial start-up capital expenditures are estimated at $334.1-million. The life-of-mine capital cost for the project, including sustaining capital, later phases of tailings construction and closure costs, is estimated at $404.2-million, which includes the initial start-up capital and a 25-per-cent total capital cost contingency of $80.8-million.
CAPITAL EXPENDITURES
(in $ millions)
Capital cost
Mine $55.7
PUG plant $64.6
Hydromet plant + first-phase tailings disposal $108.3
Infrastructure (such as roads and power) $19.9
Owners costs, including first fills and spares $36.3
Engineering and commissioning $38.6
Contingency (25%) $80.8
LOM capital expenditures $404.2
Sustaining capital, including replacement, phased
tailings and closure $70.1
Start-up capital expenditures $334.1
(1) Capital expenditures for the plus-50-per-cent production
sensitivity case are the same as the base case because of the
additional capacity designed into the PUG and hydromet
facilities. The mine is assumed to add additional shifts and
operating hours as required at minimal additional capital cost.
Infrastructure
The project area is located 11 kilometres (seven miles) by air or 19 km (12 miles) by road northwest of the town of Sundance, Wyo., which is located along U.S. Interstate Highway 90, 35 kilometres (22 miles) by air west of the South Dakota state line.
The REE preconcentrate will be trucked from the mine approximately 64 km (40 miles) south along gravel and paved roads and then State Highway 116 to Upton, Wyo. Tailings generated from beneficiation are expected to be disposed of on private land in close proximity to the plant.
All necessary infrastructure, including housing, food, fuel, skilled labour and mining supplies, would be available in the nearby towns or farther to the west in Gillette or to the southeast in Newcastle. Water rights at the mine site are available through permits by the Wyoming State Engineer's Office. The water supply at the hydromet plant is available from Upton. At the mine site, a power line runs to within a mile of the project area and is expected to be upgraded. Electrical power would be supplied by the Powder River Energy Corp., and published power costs are reported to be some of the lowest in the United States. Power for the hydrometallurgical site will be fed from a substation at the nearby industrial park.
Supplies can be trucked to the site 100 km (60 miles) from Gillette, which is located on both I-90 and rail lines. A Burlington Northern Santa Fe rail line serves Moorcroft, 54 kilometres (34 miles) west of Sundance, and Upton, 48 kilometres (30 miles) south of Sundance. The Powder River basin is one of the world's major coal-mining regions and contains multiple coal-fired power plants. Gillette, the largest city in the basin, would be a major logistics centre for any development at the Bull Hill mine. The size of the mine property at approximately 39 square kilometres (15 square miles) is sufficiently large to support a mining operation, with no foreseeable obstacles regarding expansion. The hydrometallurgical site is located on approximately 160 hectares (400 acres) of private land, west of the city of Upton.
Operating costs
The average total annual operating cost is estimated at $61.8-million assuming a nominal production rate of 907 tonnes (1000 tons) per day of high-grade feed to the PUG plant producing 21,000 tonnes (23,100 tons) of bulk mixed RE concentrate containing 9,400 tonnes (10,400 tons) per year TREO. Wyoming state property and severance taxes are not included in the operating costs but have been included in the economic analysis.
OPERATING COSTS
Cost/kg Cost/kg
Cost/tonne mixed TREO
ore concentrate (45% grade)
Mining and PUG $50.12 $0.76 $1.70
Hydromet plant $123.23 $1.87 $4.17
G&A including Wyoming taxes $20.75 $0.31 $0.70
Total costs $194.10 $2.94 $6.57
Increased production case plus 50 per cent higher than base case
The design of the PUG and hydromet plants has been sized to treat multiple ore types, and, depending on the mine sequence, blending requirements and market demand, production could approach 175 per cent to 200 per cent of the base-case production scenario. The PFS includes a sensitivity case at a production rate 50 per cent higher than the base case. Additional capital expenditures are not anticipated for the plants. The mine would be supplemented with additional and extended operating shifts as required.
This case depicts excellent economic results with a net present value of $1,747-million and an internal rate of return of 65.1 per cent.
PLUS-50-PER-CENT PRODUCTION SENSITIVITY CASE AT $17.36/KG PRICE
Annual production
Ore 477,442 tonnes
Concentrate 31,443 tonnes
TREO 14,059 tonnes
LOM 15 years
NPV at 10% discount rate $1,747-M
IRR 65.1%
Annual cash flow $348-M
Estimated annual cash operating cost $89.90-M
Project payback after start-up 1.5 years
Initial capital expenditure $334.1-M
LOM capital expenditure $404.2-M
Environmental and permitting
Mining activity at the Bull Hill mine and associated processing facilities and operation of the hydromet plant at Upton will affect the human and natural environment. Various governmental approvals and permits will be required for the development of these facilities. The company will be required to obtain permits to operate the Bull Hill mine and the Upton plant and tailings storage facility from the U.S. Forest Service and the Wyoming Department of Environmental Quality. In accordance with Rare Element's environmental, health and safety policy, it will comply with applicable federal and state environmental statutes, standards, regulations, and guidelines in the permitting of the mine, plant and tailings storage facility. Environmental baseline studies are under way at both the mine and plant locations to meet the federal and state permit requirements. To date, no fatal flaws associated with environmental permitting, legal issues, title, taxation or socio-economic impacts have been identified.
Markets, pricing and commercial agreements
The PFS assumes an average price of $17.36 per kilogram of bulk mixed RE concentrates with an average grade of 45 per cent TREO. This price was derived from the three-year (2009 to 2011) trailing average of separated individual REO prices, FOB China, from the Metal-Pages subscription service. Recognizing that the output of concentrate produced from the Bull Hill mine is a basket mix of individual rare earths as carbonates, a discount of 40 per cent was assumed for the concentrate pricing in the economic models. As additional detail is added to the mine schedule in the definitive feasibility study, concentrate pricing may vary depending on the mix of RE in the concentrates during any one mining period (year). The PFS assumes an average price in all years. A sensitivity case that assumes a 25 per cent lower price for the concentrate ($13.02 per kilogram) demonstrates the economic feasibility of the project at substantially lower long-term price forecasts.
Metal-Pages also reports prices for RE carbonate concentrate, containing 42 to 45 per cent TREO, FOB China. A three-year trailing average of RE carbonate concentrate prices from Metal-Pages is $19.69 per kilogram, and a four-year trailing average of RE concentrate prices is $15.92 per kilogram. The assumed price of $17.36 per kilogram is believed to be a reasonable figure that falls between these two average prices. Because the volatility of the RE markets has distorted the normal market pricing over the past 20 months, a sensitivity case is presented that uses a lower concentrate price of $13.02 per kilogram. The current RE carbonate concentrate price, FOB China, is listed in Metal-Pages, and this price has stayed constant at $38 per kilogram for 18 months since October, 2010, while individual REO prices have risen substantially and decreased during this same time period.
Rare Element is engaged in discussions with potential alliance partners. Off-take discussions are also under way with potential customers, and samples of bulk concentrates from the recently completed successful pilot plant campaigns have been shared with interested parties.
Risks:
-
Mineral markets are volatile; thus, currently unforeseen price level
changes are possible and could have a significant impact on the
financial results of the project. The company currently does not have
off-take agreements for the sale of the REO carbonate concentrate.
Several rare-earth separation facilities have been identified as
potential customers.
- The company intends to advance this project to a definitive feasibility
stage in 2013, and several test programs need to be conducted. These
include mine variability testing, development of a grade and ore
blending plan, optimization of RE upgrading and reagent consumption,
development of a cost-effective manganese removal process, and
development of a comprehensive environmental procedures and control
plan. Additional metallurgical and pilot plant testwork is planned to
optimize PUG and hydromet plant performance. The future outcome of this
testwork may impact the technical and economic results of the project.
- The procedures for obtaining a mining permit from the WDEQ are well
established. A major project milestone was achieved this
year when the company received a decision from the WDEQ that both the
Bull Hill mine site and the Upton hydrometallurgical facility could be
permitted in a single permit under the land quality division guidelines.
This decision will help streamline the state permitting process. However,
there is no guarantee that the mining permit will be granted.
- The environmental impact statement process is also well
established in the National Environmental Policy Act, which is
the formal process to assess impacts of mining activities on federal
public lands. While the company is actively establishing the
environmental baseline conditions, there is a risk that the final record
of decision could be denied, contain conditions that would
adversely affect the project economics or be challenged. The company is
developing extensive impact studies and will establish the best
available mitigation measures to meet or exceed regulatory agency
requirements.
Opportunities:
-
The limits of the rare-earth-element-mineralized system on the Bear Lodge property have
yet to be determined. The development of existing deposits outside of
the Bull Hill mine area, the recent identification of areas peripheral
to the Bull Hill deposit that carry significant enrichment in HREE and
excellent potential for the discovery of new REE exploration target
areas all add great upside potential to the project. Oxidized
equivalents of carbonate and carbonate-related REE mineralization are
widespread on the property, and current data indicate that the area
proximal to the Bull Hill and Whitetail diatremes appears to be the most
prospective for the occurrence of significant rare-earth-element-mineralized bodies. RE
mineralization of similar grade has been found in targets beyond the two
diatremes.
- Although the resources falling in the inferred category were not used in
the PFS, they represent a significant opportunity for the project. The
total Inferred resources are 24.2 million tons (21.9 million tonnes) at
an average grade of 2.74 per cent TREO (1.5-per-cent cut-off) in three deposits.
Approximately 16.5 million tons (15 million tonnes) are high-grade oxide
and oxide carbonate resources at a grade of 2.75 per cent TREO. Future drilling
programs will focus on converting these inferred resources into measured
and indicated categories and potentially extending the mine life or
providing expansion opportunity.
- Heavy rare-earth-element-enriched iron-manganese-rare-earth veins and stockwork
zones were drilled during 2010 and 2011 in two additional target areas: Carbon and East Taylor. They are particularly enriched in europium,
gadolinium, terbium, dysprosium and yttrium and
have high grades of TREO similar to Bull Hill. More drilling is planned
to delineate the extent and orientation of mineralization in the
Carbon and East Taylor target areas to establish resources. The
successful development of minable reserves would potentially increase
the economic value of the project.
- The company is currently progressing with the development of rare-earth-oxide separation technology and is contemplating construction and
operation of a separation plant within a few years after the start-up of
the hydromet plant.
- The average concentrate grade used in this study is 45 per cent REO, based on
previous bench-scale testwork. Recent results from the continuing manganese removal testwork achieved concentrate grades of up to 64 per cent REO,
while removing most of the impurities. Confirmation of an economic
process giving similar results will increase the value of the
concentrate product.
- The identified oxide resource mineralization continues at depth in an
unoxidized state. Significant tonnages of underground mineralization
could be developed in the future if a viable method of beneficiation of
this material can be achieved.
Summary
The PFS technical and economic assessment of the Bear Lodge REE project confirms the potential viability of the project with an NPV of $1,271-million and an internal rate of return of 47.8 per cent. At a price assumption 25 per cent lower than the base-case price, the project continues to demonstrate robust economics. The definitive feasibility study will commence in the second quarter of 2012 with a planned completion date midyear 2013.
Contributors:
-
Roche Engineering is the principal author and is an independent
engineering company that carried out the PFS on behalf of the company.
Eric F. Larochelle, PEng, is the independent qualified person from
Roche Engineering responsible for the PFS, as well as process
engineering and mine and mill capital and operating cost estimation. He
also reviewed and approved this news release, as well as all sections of
the PFS.
- Mr. Noble, PE, of Ore Reserves Engineering, is the independent
qualified person responsible for resource estimation. The drill hole
database was verified independently by Ore Reserves Engineering, which
frequently undertakes mineral property studies. ORE is familiar with
the Canadian Institute of Mining, Metallurgy and Petroleum mineral resource/reserve definitions and disclosure requirements
of NI 43-101, to which the mineral resource and reserve classification
in this report conform.
- John T. Boyd prepared the mine plan. Mr. Richardson,
PE, is the independent qualified person from John T. Boyd responsible for the design of the mine plan.
- Jaye T. Pickarts, PE, chief operating officer of Rare Element, is a metallurgical
engineer and a qualified person responsible for the metallurgy and
process development.
- The Rare Element geologic staff is responsible for the geologic,
drilling and sampling data; these data and descriptions were reviewed
and approved by Mr. Noble.
- Other groups that contributed to the PFS were Mountain States R&D
International, Hazen Research Laboratories, Knight Piesold & Co. and
Imcoa (Dudley Kingsnorth).
The PFS will be available on SEDAR and EDGAR.
Markets
REEs are key components of the green energy technologies and other high-technology applications. Some of the major RE applications include high-strength magnets, hybrid automobiles, plug-in electric automobiles, advanced wind turbines, computer hard drives, compact fluorescent light bulbs, metal alloys in steel, additives in ceramics and glass, petroleum cracking catalysts, and many others. China currently produces more than 96 per cent of the 124,000 tonnes of rare earths consumed annually worldwide, and China has been reducing its exports of rare earths for a number of years. The REE market is projected to grow rapidly as these green technologies are implemented on a broad scale.
Mr. Pickarts, PE, serves as the chief operating officer of the company and as an internal, technically qualified person. Technical information in this news release has been reviewed by Mr. Pickarts and has been prepared in accordance with Canadian regulatory requirements that are set out in National Instrument 43-101. This news release was prepared by company management, which takes full responsibility for content.
We seek Safe Harbor.
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