Rare Element Resources' PFS for Bear Lodge shows "solid economics"

Rare Element Resources (TSE:RES)(AMEX:REE) Thursday unveiled a positive Pre-Feasibility Study (PFS) for its Bear Lodge rare-earth project in Wyoming.
The results of the PFS show that the Bear Lodge project is technologically feasible with robust returns on invested capital, the company said.
Total 19-year life-of-mine capital costs for the project have been estimated at $445.9 million including a 25 percent contingency of $89.2 million. The initial capital cost is $375.1 million. On a nominal case basis based on a rare earth oxide (REO) concentrate price of $17.36, Bear Lodge would have an internal rate of return of 44.9 percent, a net present value (at an 8 percent discount) of $1.7 billion and a payback period of two years.
Rare Element said that the mine will be operated as a conventional truck-shovel open pit mine. The PFS determined that the scope of the development of the Bear Lodge project should consist of two components: the open-pit mine operations, a PUG (physical upgrade) plant on-site at the Bull Hill mine and the Hydromet plant (hydrometallurgical) at Upton, Wyoming, adjacent to the railway line.
Upton is located approximately 40 miles from the Bull Hill mine.
The PUG plant is designed to process up to 1,000 tpd (tons per day) of high-grade oxide material and 1,000 tpd of oxide carbonate and stockwork material, which will be blended to meet mine pit production plans and market demands.
The life of mine operating costs on a nominal basis have been estimated at a total of $254.73.
Rare Element president and CEO, Randall Scott, said: "We are very encouraged with these results. The PFS was designed to provide an engineering and economic assessment of the viability of the Bear Lodge project and, more specifically, the Bull Hill Rare-Earth Element (REE) open pit mine, and these results clearly demonstrate the solid economics of this project.
"We feel that conservative economic data were utilized in this report so to receive such positive results clearly shows the merit of the Bear Lodge project and we will continue on with the development of a bankable feasibility study.
"Additionally, we will be finalizing 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 the updated mineral reserve and resource estimates that will encompass those drill results from the 2011 exploration season for which we already have received assay results."
Rare Element has been and continues to negotiate with some highly recognized companies for potential off-take partnerships, it said.
Rare earths are critical and enabling metals for the green technologies. Some of the major applications include 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 percent of the 124,000 tonnes of rare-earths consumed worldwide annually, and has been reducing its exports of rare earths each year. The rare-earth market is projected to grow rapidly as these green technologies are implemented on a broad scale.
In January, the company announced the results of an updated NI 43-101 compliant resource estimate of rare-earth elements plus yttrium contained in three deposits at its Bull Hill deposit. However, this interim estimate included less than half of the new assay results from holes drilled in 2011, the company said, and therefore expects to update the resource again by the end of this year using all 2011 drill holes.
The latest resource estimate in January consisted of 6.8 million tonnes with an average of 3.75 percent rare-earth oxide (REO) in the measured and indicated categories. That was up from 4.9 million tonnes with an average of 3.77 percent REO a year-earlier – both used a 1.5 percent cut-off grade.