Wednesday, 27 July 2011

Arafura Resources discovers more near surface rare earths mineralisation at Nolans Bore

Arafura Resources (ASX: ARU) has intersected significant shallow rare earths mineralisation at Nolans Bore deposit, with wide intersections within an area that had not been extensively tested by previous drilling.

Further rare earths have been confirmed at depth across large parts of the Nolans Bore resource and a revised JORC resource is expected by the end of 2011, as some of this material has not been included. This new estimate will be used as the basis for the Nolans Project Bankable Feasibility Study (BFS).

Highlights include:

- 143 metres at 3.6% rare earth oxides (REO), 19.8% phosphorus (P2O5) and 0.56 pounds per tonne (lb/t) uranium (U3O8) from 23 metres;
- 27 metres at 4.1% REO, 25.6% P2O5 and 0.58 lb/t U3O8 from 58 metres; and
- 19 metres at 5.4% REO, 27.1% P2O5 and 0.90 lb/t U3O8 from 106 metres.

The Nolans Project in the Northern Territory is regarded as one of the world's largest undeveloped rare earths projects and is aiming for rare earth oxide production from 2013, and could supply 10% of the global rare earths market from 2015.

Dr Steve Ward, Arafura’s managing director and CEO, said “the 2011 drill campaign has been a major undertaking for the company. We will have completed more drilling this year than we have in total for all previous years.

"The initial results are very encouraging and reinforce the world-class status of Nolans Bore. We look forward to further results from the campaign when we will be able to assess the extent of expansion opportunities. This is particularly important considering the current undersupply in rare earths, which is forecast to remain in place for some years to come.”

The powerful force driving Nolans to production will continue to be the increasing rare earth elements (REE) demand, predicted at 7%-9% per annum over the next 5 years, against a background of supply constraint and very restrictive export quotas in China.

The Nolans Bore deposit is 135 kilometres from Alice Springs, and has a JORC resource of 30.3 million tonnes (Mt) containing 848,000 tonnes of rare earth oxides (REO), 3.9Mt of phosphate (P2O5), and 13.3mlbs of uranium (U3O8), with potential to expand.

The company said the mineralisation is buried under about 3 metres of shallow overburden in an extensive north-south zone that transects the deposit. The presence of infrastructure inhibited access to the area during earlier drilling campaigns.

Arafura is now undertaking additional drilling to further evaluate the extent and nature of this newly recognized north-south zone of mineralisation.

These drill intercepts are part of a comprehensive campaign of reverse circulation and diamond core (DDH) drilling (totaling 52,260m) that commenced at Nolans Bore in February 2011.

All shallow (150 metre deep) reverse circulation infill drilling has now been completed (29,904 metres in 227 holes) and assay results so far are in line with expectations.

An extensive program of deeper diamond drilling is nearing completion with geological and geophysical logging confirming the presence of Nolans Bore-type rare earths mineralisation at depth across large parts of the deposit.

The campaign aims to provide improved JORC confidence levels for part of the resource necessary for the Nolans Project BFS and determine the full extent of the Nolans Bore resource for assessment of expansion opportunities.

Arafura recently expanded the scope of BFS for the Nolans project and extended the expected completion date of the BFS by nine to twelve months.

The expanded BFS will not only reduce operating and capital costs and de-risk the proposed Rare Earths Complex at Whyalla, but take advantage of 1,221 per cent higher rare earths prices, by simplifying the project flow sheet to focus on rare earth products.

Notably, the average valuation for the Nolans Rare Earths mix has lifted to US$207.53/kg (FOB) in June 2011, compared to the June 2010 value. These higher prices are expected to continue because of the demand and supply equation for rare earths.

By the end of 2011 the company expects to have a much clearer understanding of the deposit’s capability to support expanded production far into the future, with sample analysis and geological interpretation of drill data well underway.

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