Quantum Rare Earths Development (CVE:QRE, FRA:BR3, OTCQX:QREDF), is a Canadian based exploration and development Company that is developing the Elk Creek Carbonatite Project, which is located in Nebraska. The project hosts a large Inferred Resource of Niobium and also carries significant Rare-Earth zones. Quantum is also exploring for Rare Earths in Canada and Australia, where it has two greenfield exploration projects that are located within the same mineral field as the high grade Mount Weld Rare Earth Mine under development by Lynas Corporation (ASX:LYC). American investors can now invest in Quantum via the OTCQX.
The Elk Creek Project is an intrusive complex of carbonatite and related rocks and is host to the Elk Creek Niobium Deposit, which is an elongate, approximately east-west orientated mineral occurrence, that carries along strike for at least 800 meters, and remains open in several directions and at depth. The entire carbonatite complex is displayed as an oval shaped anomaly that has a diameter of 7 kilometers and carries additional occurrences of both Niobium and Rare Earths that remain only partially explored, and is one of the largest known carbonatite complexes in the world.
Elk Creek was originally developed during the 1970s and 1980s, when Molycorp Inc. (NYSE:MCP), completed over 150,000 feet of drilling that included 25 drill holes within a core zone, that identified a high-grade Niobium resource, and at least 88 additional holes that identified additional mineralization containing both Niobium and Rare Earths within the outline of the seven-kilometre-diameter geophysical anomaly.
Quantum Rare Earths secured the Elk Creek Project in December of 2010, and immediately completed a compilation and digitization of all historic data, including re-assaying of 25 diamond drill holes of 14,739.8 meters, originally completed by Molycorp. This led to the recent production of a NI 43-101 Compliant Inferred Resource Estimate of 80.148 million tonnes at 0.62% Nb2O5 for 493.3 million kilograms of Niobium, calculated at a cut off grade of 0.40% Nb2O5.
This Inferred Resource only covers a small part of the mineralized zone and does not include the potential for mega tonnages of Lanthanides indicated by the earlier work completed by Molycorp. The Company completed an equity raise of $6.5 million in late 2010, and has already finalized a high-resolution airborne gravity and magnetic survey, and launched a $2 million drilling program.
Drilling will test at least three locations within the boundary of the current Inferred Niobium resource, and will serve as infill holes to upgrade the current Inferred Resource, and also provide sufficient material for metallurgical test work. The first hole is testing the eastern portion of the deposit where historic drill hole EC-11 recorded 267 meters at 0.71% Nb2O5, and was located between vertical holes EC-27 that intersected 49 meters at 0.57% Nb2O5, and EC-30 which recorded 150 meters at 0.65% Nb2O5.
Subsequent drill holes will step out approximately 3,000 meters to the east
to explore and define Rare Earth Zones, especially around historic drill hole EC-93 that reported 155.5 meters of 2.70% TREO.
The underground Niobec Mine, in Québec, is the only Niobium Mine in North America and is only one of three primary sources of Niobium ore in the world to-day, and currently produces 7 to 8% of world demand. The underground mine had a NI 43-101 Compliant Proven and Probable Reserve of 45.716 million tonnes of Nb2O5 at a grade of 0.53%, containing 243.8.11 million kilograms of Niobium. The mine produced 4.4 million kilograms of Niobium in the last calendar year for revenues of $158.7 million, and at a cost of $79.4 million, for a cash margin of $79.4 million. That translated into an operating margin of $18 per kilogram of Niobium, which has risen to $28 per kilogram in the current year, due to much higher market demand and pricing.
The operating parameters at Niobec are very relevant to commercializing Elk Creek, as both projects host Niobium in pyrochlore and where Quantum expects to confirm a similar sized resource and produce roughly the same amount of Niobium.
The expansion potential at both projects could also be very substantial. The Niobec resource is contained within a 4 kilometer alkaline intrusive and is owned by IAMGOLD Corporation (TSX: IMG, NYSE: IMG), who have just completed a Preliminary Economic Assessment that has upgraded the resource for bulk mining from an open pit for a NI 43-101 Compliant Measured and Indicated Resource of 458.11 million tonnes at 0.42% Nb2O5 for 1.927 billion kilograms of Niobium. After tax Net Asset Value is estimated at $1.6 to $2 billion, and is analogous to a 20 million ounce gold deposit.
The Elk Creek Niobium resource is contained within a much larger alkaline intrusive complex that measures 7 kilometers in diameter, and also has substantial upside potential for an increase in ore resources.
Other large carbonatite complexes under development include the Peak Resources (ASX: PEK) Ngualla Rare Earth carbonatite complex, which is located in Tanzania. This complex has a much smaller diameter of 3.8 kilometers and is in the early drilling stage with potential for at least several hundred million tonnes of ore containing Niobium, Rare Earths and Potash and is currently capitalized at A$90 million, which is a very substantial premium to the more advance Elk Creek project.
The market for Niobium in the form of Ferroniobium has grown at an annual compound rate of 10% and is widely used by steel and specialty metals manufacturers as an alloy to enhance the physical, mechanical, chemical and thermal properties of their products. Steel containing niobium belongs to a class of steels known as High Strength Low Alloy steels that are used in the pipeline, construction, aeronautical and automotive industries, and typically contain 100 g/t of Niobium.
Examples of major benefits include the Øresun Bridge connecting Sweden to Denmark, over a distance of 7,845 meters, utilized HSLA steel containing 0.022% Niobium, for a saving of 15,000 tonnes of steel and saving $25 million in building costs. The addition of $9 worth of Niobium as an alloy to the steel in a car reduces the amount of steel employed, and cuts weight by 100 kilograms, and also increases fuel efficiency by 5%.
The Company is also developing the Archie Lake Project in Saskatchewan, where a mineralized outcrop containing REE and Yttrium has been traced for 600 meters on surface, over widths of 5 to 6 meters. Aero-magnetic and extensive ground sampling work has identified values of 5%, 10% and up to 29.9% REE + Y and indicates strong possibility of additional parallel targets which will be drilled shortly.
Quantum recently acquired the Jungle Well Project, which is 150 kilometers from Mount Weld, and the Laverton Project, which is 45 kilometers north of Mount Weld, which are both in Western Australia, and cover an area of approximately 17,000 hectares. Both areas have reported significant REE values from surface and trench sampling.
Quantum Rare Earths intend to fast track development of Elk Creek, and will carry the distinction of being the only Niobium producer in the United States, where 100% of demand for this strategic metal is currently met by imports from foreign sources.