Namibia Rare Earths has found a unique deposit of rare earths metals at the Lofdal site in Africa with the highest concentration of heavy rare earths in the world to date.
Don Burton (center), the President of Namibia Rare Earths is in the enviable position of having access to the highest percentage of heavy rare earth metals in the world to date.He is pictured here with Gerry McConnell (right), CEO of NRE and Mike Niehuser (left) of Beacon Rock Research, an independent analyst who has visited and published reports on the project. The deposit, called Lofdal is in Namibia, Africa. The resource was just announced in September and is undergoing additional exploration in the near term.
Burton said, “I'm a geologist and have been working in western Africa for the last 20 years through Etruscan Resources where we developed two gold mines.During the course of our exploration for gold in Namibia we discovered a new deposit of rare earths.Endeavor Mining Corporation took over Etruscan in 2010 and we spun the Namibian assets out to a new company. Together with Gerry McConnell we did a $30 million dollar raise when we IPO’ed Namibia Rare Earths Inc. in 2011. The immediate objective was to carry out enough exploration work on the property that we could develop a 43-101 compliant resource as quickly as possible.”
The Lofdal project is the only one of its kind to date.Burton said, “It has an exceptional distribution of rare earths, with a lot of heavy rare earths. We have heavy rare earth enrichment to the level of 80%-90%.In terms of heavy rare earth enrichment the most advanced project would be in Sweden, with Tasman but they only have 53% enrichment. The initial resource at Lofdal has been developed very quickly. We found the outcrop in the fall of 2010 which led to the drilling program. In September of this year, we brought to the market a 43-101 resource with a grade around 0.6% TREO but with 85% heavy enrichment. That is significant on its own. The exploration potential of this carbonatite complex is also very significant. As an explorationist, regardless of the commodity, one of the greatest benefits we can give to shareholders is discovery. If it is a world class deposit, your shareholders should realize value. At Lofdal, it is a brand new district. We've only looked at half of it.”
Burton believes that the need for heavy rare earths will continue. He said, “There is a Criticality Index published by the US Department of Energy which identifies those metals needed to drive clean power and energy technologies. In that chart, they have identified the most critical rare earths – neodymium, europium, terbium, dysprosium, and yttrium. The last four are heavy rare earths. Over 90% of the value of our deposit at Lofdal is in those four critical rare earths. That is what makes it unique.”
So unique is the Lofdal deposit that Burton and his team are carefully evaluating the geology. He said, “We are on a learning curve with the geology. Other people in the industry don't know of anything like this in the world – a carbonatite deposit with heavy rare earths. Usually, they are all light rare earths. We have taken 4000 rocks from the surface. We believe they follow a distinct pattern. You can trace them and follow the heavy rare earth enrichment along structures. The resource is on one small part of one of them. We will need some academic help to figure out why it is there but our exploration expertise is providing a high success rate on discoveries.”
Financially, Namibia Rare Earths is stable despite the challenges to the price of rare earths. Burton said, “We have 77.8 million shares issued. Fully diluted we have 85 million shares. Our market cap is $23 million dollars. We have about $20 million dollars in the bank so we are essentially trading at cash. We think there is a tremendous opportunity to add value. We have one major shareholder which is Endeavor Mining. They have 38.5% of the shares. Another 20% is held by directors, officers and friends of the board. It's a very new story. We were very fortunate to be able to raise the money in 2011. The objective was to complete a large enough financing such that we wouldn’t have to go back to the market for three years. Given current market conditions, we are very pleased that we decided to do a larger raise. It is insulating us from some difficult times.”
At this time, Burton and his team are waiting on metallurgical test results from their 43-101 resource. He said, “The missing link we have is the metallurgical report. We are waiting on the positive outcomes from that. We expect those during Q1 of next year. On average the current resource cuts off at about 150 vertical meters but we have exploration drill holes that show the deposit goes to 350 vertical meters. We want to wait for the metallurgical report to decide if we want to expand the resource. We have one drill rig that will continue to work until the end of November strictly on exploration outside of the resource area. We are hunting for additional discoveries in this 200 km2 carbonatite complex.”
Why should investors take a second look at rare earths? Burton said, “You should have confidence in rare earths as a commodity. We know there is a lot of speculation on where the prices are going. We just believe it is inevitable that the rare earth sector and the heavies in particular will be in high demand. Whichever company can deliver a sustainable source of heavies outside of China will be in demand. We are an exploration company. We are not a mining group. We know what our business strengths are. We believe in the potential of the property to return multiple discoveries. It's like a treasure box. The potential for discovery is very high. We are a new company and we are not very well known because we haven't been doing a lot of marketing – we’ve been focused on the ground. We have assembled a group of highly experienced people on the management side. Gerry McConnell and I have over 20 years’ experience working in Africa.”
Burton believes that his experience and the experience of the NRE team will lead to success. He said, “The experience of the board and management in terms of developing a project in Africa is very good. One approach we have that is different from our peers is that we recognize what our strengths are. We are not rushing into a feasibility study. When we are ready to move this first discovery to development, we will be looking for a qualified partner to help with financing and to move the project forward. We have potentially six million tonnes to start with which may sound small, but in terms of heavy rare earth supply, it is very significant. A project of that size with our grades and levels of heavy enrichment could produce 2500 tons of heavy rare earths per year. The output of those four critical heavies we talked about (dysprosium, yttrium, terbium and europium) from such an operation could conceptually represent 10-15% of the current world supply. And that is not saturating the market. If the heavies are available at acceptable prices there will be no shortage in demand for these special metals. Just looking at what we have today, Lofdal would be a simple open pit situation with some sorting on site. We are not talking about financing a chemical extraction plant. This isn't the type of project that would be looking for half a billion dollars next year.”
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