Quantum Rare Earth options out 80% of Australian properties to Florella Holdings

Quantum Rare Earth Developments Corp. (CVE:QRE) (OTCQX:QREDF) said Wednesday that it has optioned out 80 percent of its Australian Jungle Well and Laverton properties, collectively known as the Australian properties, to Florella Holdings, in an effort to focus on its Elk Creek project in Nebraska.

The Jungle Well project is located about 40 kilometres west of the town of Leonora, in Western Australia, and is roughly 160 kilometres southwest of Lynas Corp's Mt. Weld rare earth element mine.

A recently completed exploration program at the property included the re-evaluation of an ultramafic dyke, Quantum said, to confirm historic rare earth oxide values for samples collected in 2007 and 2009. A total of nine grab samples were taken along the length of the dyke, and all showed highly elevated total rare earth oxides (TREO) values of 0.93 percent to 12.80 percent.

The company said samples showed variable rare earth distribution, with persistent enrichment in neodymium and the more valuable heavy rare earth oxides.

Under the terms of the deal, Florella will have the option to acquire up to an 80 percent interest in the Australian properties in exchange for cash payments of C$60,000 to Quantum on signing, a further cash payment of US$120,000 within 14 days of exercising the option, shares of newly-listed Florella totaling no less than A$750,000 once the company's initial public offering is completed, and an additional C$60,000 as reimbursement for costs incurred in preliminary exploration work by Quantum.

Quantum will retain the remaining 20 percent interest in the properties, and the parties will then form a joint venture, with Quantum's stake to be carried to commercial production, it said.

Lynas' Mt. Weld deposit, located nearby Quantum's Jungle Well property, contains a resource of 17.49 million tonnes at an average grade of 8.1% TREO, with a cut-off grade of 2.5% TREO. 

"Given the high grades of the Jungle Well samples, in combination with large circular magnetic features on the property, Quantum’s management is encouraged with the recent results," the company said in a statement.

The mineralized dyke was traced for approximately 70 metres through a series of pits, trending northwest to southeast. A follow up exploration program is expected, which will include radiometric and magnetic airborne surveys, as well as additional sampling of the known ultramafic dyke, and other surrounding structures.

Quantum said the deal will benefit the company, as it will result in an accelerated work program at Jungle Well, while allowing the rare earth explorer to focus on the development of its Elk Creek project in southern Nebraska.

In late September, the company announced the results from the remaining two drill holes of its spring/summer exploration program at its Elk Creek project, with both holes hitting high grade mineralization east of the property's Niobium deposit.

Results were finalized for holes NEC11-004, located roughly 2.5 kilometres east of the Niobium deposit, and NEC11-005, located around one kilometre east-northeast of the deposit at the company's niobium-rare earth element project.

The in-fill and step-out drill campaign was designed to upgrade the resource estimate to the indicated category, to expand the known niobium resource, and to collect samples for development studies of niobium ore from the property.

Hole NEC11-004 intersected 236.19 metres of 2.10% total rare earth oxides (TREO), including 68.18 metres of 3.32% TREO, while hole NEC11-005 returned 433.97 metres of 0.92% TREO, including 164.85 metres of 1.21% TREO.