Wyoming-focused Rare Element Resources (TSE:RES)(AMEX:REE) late Thursday unveiled a revised preliminary feasibility study (PFS) for its Bear Lodge rare-earth project.
The subject of the PFS is the Bull Hill deposit within Bear Lodge,
which is the most advanced resource and will be developed first. The new
study includes revised and improved estimates for both capital and
operating costs, the company said.
Bear Lodge's PFS gives a net present value of $1.27 billion, at a 10
percent discount rate after state taxes but before federal income taxes,
and an internal rate of return of 47.8 percent with two-year payback of
Initial capital cost is seen at $334 million and life-of-mine capital is estimated at $404 million.
The company said that it sees an average annual operating cost of
$61.8 million and operating costs of $194 per tonne mined and $2.94 per
kilogram of bulk mixed rare earth carbonate concentrate.
"We are very encouraged with these revised results," Rare Element's president and CEO Randall Scott said.
"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."
A 19-year mine life is anticipated, based on mineable mineral
reserves of 5.7 million tonnes at an average grade of 3.6% total rare
earth oxides (TREO) with an average metallurgical recovery rate of 81.4
percent. The average annual production rate is seen at 20,962 tonnes
bulk mixed rare-earth carbonate concentrates, containing 9,433 tonnes
Based on a three-year trailing basket price, average prices are seen at $17.36 per kilogram of rare earth concentrates.
At a price assumption 25 percent lower than the base case price, the
project continues to demonstrate "robust economics", the company said.
Rare Element also said that there is substantial upside potential to
increase reserves and resources as exploration continues at the Bull
Hill, Whitetail Ridge, East Taylor and Carbon areas on the project.
There is also potential in the district to delineate resources of heavy
rare earth elements, the company added.
A definitive feasibility study is due to start in the second quarter of 2012 with a planned completion date of mid-year 2013.
"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," Scott
"Commercial discussions are underway with several companies regarding
strategic partnerships and off-take agreements. We will finalize a NI
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."
Several other deposits and targets within Bear Lodge, including
Whitetail, Carbon and East Taylor, located to the west and north of Bull
Hill, are likely to be developed sequentially, assuming resource and
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
Wyoming has been identified among the best mining jurisdictions in
the world, according to the Fraser Institute's 2012 report. The project
area is located northwest of the town of Sundance, Wyoming, which is
located along US Interstate Highway 90, 35 kilometers by air west of the
South Dakota state line.
Following completion of the PFS, the company said it will start more
detailed metallurgical design, additional pilot plant testing, and
engineering studies to be reported in the definitive study.
The Bull Hill Mine is planned as a conventional truck and shovel
open-pit operation. The mineral reserves are derived from a measured and
indicated mineral resource of 6.2 million tonnes averaging 3.75% REO.
Located within the pit is another 4.1 million tonnes of high-grade
oxide inferred mineral resource that will be the subject of further
drilling in 2012. An additional 10.9 million tonnes of near-surface
high-grade inferred resources occur outside the pit area.
Rare Element also said that future drilling programs will focus on
converting inferred resources into measured and indicated categories,
and potentially extending the mine life or providing expansion
Development of the Bear Lodge project is planned to consist of three
principal components: the open-pit mine operation at Bull Hill, a
physical upgrading plant for mineral pre-concentration located on-site
adjacent to the mine, and a hydromet plant for further concentration of
the rare-earth elements into a rare-earth carbonate concentrate product
at Upton, Wyoming.
Various governmental approvals and permits will be required for the
development of these facilities, Rare Element said. Rare Element said
that to date, no fatal flaws associated with environmental permitting,
legal issues, title, taxation, or socio-economic impacts, have been
Rare earth elements are key components of the green energy
technologies and other high-technology applications. Some of the major
applications include high-strength magnets, hybrid automobiles, electric
automobiles, advanced wind turbines and additives in ceramics and
glass, among many others uses.
China currently produces more than 96 percent 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 market is
projected to grow rapidly as these green technologies are implemented on
a broad scale.
Full details of the PFS can be found at: http://www.rareelementresources.com/s/NewsReleases.asp