Newmont Mining Corp. (NYSE:NEM) and Rare Element Resources Ltd. (TSX.V:RES) established a joint venture in June 2006 to explore Rare Element's Bear Lodge Project near Sundance, Wyoming. Under the terms of the deal, Newmont is spending US$5 million over five years to earn a 65% participating interest in the gold and other minerals on the property, but not the 'rare-earth' elements or any uranium. Newmont can earn an additional 15% by financing the project through feasibility. Rare Element Resources is advancing the rare earths project themselves at this time.
A total of 13,326 feet of drilling data, as well as data from an additional 16 holes by other companies prior to 2004, have resulted in a National Instrument 43-101 Mineral Resource Estimate on the Bull Hill area of the Bear Lodge project. According to the estimate, Bear Lodge contains a 9.8 million tonne inferred resource averaging 4.7% rare earth oxides.
Approximately 34% of the resource is within 100 feet of a drill hole and 69% of the resource is within 200 feet of a drill hole. For comparison, a historical (non-43-101-compliant) resource of 4.3 million tons averaging 3.8% rare-earth oxides (REO) was estimated previously by Hecla Mining Company in 1991, so the new estimate exceeds the historic one by more than 125 percent. The new resource estimate focuses only on the dike sets in the Bull Hill Southwest target area, and there is significant additional potential for expansion of the Bull Hill Southwest resource and for definition of resources in other areas.
The US Geological Survey has studied the area extensively (USGS Prof. Paper #1049-D) and has estimated that it contains one of the largest deposits of disseminated rare-earth elements in North America. The REE deposit, virtually all of which is located on claims owned by Rare Element Resources, also has an association with extensive surrounding gold occurrences and some copper mineralization. Both the gold and REE mineralization are located within a large alkaline-igneous intrusive complex having multiple intrusions and brecciation events.
The rare-earth elements are the 15 lanthanide-series elements, including lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. Yttrium and scandium, although not lanthanides, are generally included with the REEs, as they often occur with the lanthanides and have similar chemical properties. They are called the catalysts for high-tech living.
Aside from batteries for hybrid vehicles, rare earth elements are also used in electronic devices such as computer chips, television/computer monitors, high-power magnets, military defense systems and even iPods. With an industry having gone from virtually nil to what is estimated to be a $1-billion industry in the United States alone, clearly the demand for rare earth elements has been increasing in quantum proportions--a pattern which is anticipated to continue at an unprecedented rate.
Demand for rare earth oxides is set to increase by more than 50% or 200,000 tonnes per year by 2015, driven by growth in hybrid cars and other industrial and high tech applications, according to Dudley Kingsnorth of the Industrial Mineral Company of Australia (IMCOA).
Speaking at the annual convention of the Prospectors and Developers Association of Canada last month, Kingsnorth said demand last year amounted to some 124,000 tonnes of rare earth oxides, with an average price of between $9 and $11/kg REO, making the industry worth $1.25 billion per year.
The gold exploration portion of the Bear Lodge Project is managed entirely by Newmont, and offers investors exposure to gold.
Exploration in 2008 built on the successful 2006-07 exploration programs and established a more detailed understanding of the project area geologic setting. Twenty six drill holes had been completed by Newmont on joint venture ground in 2006-07. Newmont has already spent approximately 2 million dollars on the JV project.
A renewed emphasis on finding high-grade gold mineralization within the Sundance property prompted a review of historical drill holes having better grade mineralization. This type of alkaline intrusive gold mineralization provides the basis for a comparison of potential deeper high-grade veins at Sundance with those of the Cripple Creek system, which had produced nearly 20 million ounces of gold from deep high-grade veins. High-grade gold samples have been found at the Sundance project both in surface rocks and in drill holes with the following historical drill holes, intercepts, and assay results being representative of this type of mineralization*:
- Drill-hole S-33 - 15 ft @ 7.97 g/t Au (0.233 opt) *
- Drill-hole S-35 - 5 ft @ 33.94 g/t Au (0.991 opt)
- Drill-hole S-60 - 5 ft @ 10.32 g/t Au (0.301 opt)
- Drill-hole S-81 - 20 ft @ 5.78 g/t Au (0.169 opt)
- Drill-hole S-84 - 10 ft @ 4.79 g/t Au (0.140 opt)
- Drill-hole SU 96-4 - 15 ft @ 4.69 g/t Au (0.137 opt)
Obviously, with the existence of the Newmont JV looking for gold and Rare Element's focus on REE's, investors have two viable opportunities to realize shareholder value over the near and long term.
Rare Element Resources is headed by Donald Ranta, an exploration and evaluation executive experienced in planning, implementing, and directing successful mineral exploration and acquisitions throughout North and South America. He has successfully directed and led innovative exploration efforts resulting in the discovery and evaluation of several major deposits including Montana's McDonald gold and Mexico's Santa Gertrudis gold ore bodies, and contributed to the discovery and evaluation of Nevada's Sleeper gold.
He has also participated in the acquisition or discovery of a number of gold and other metal deposits on several continents. In addition, he serves as a director of Animas Resources Ltd., Otis Gold Corp., and has been a Vice President of Exploration at Echo Bay Mines and Manager/Vice President for North American Exploration at Phelps Dodge Mining Company. He is also a former president and board member of SME and was a board member of AIME. He holds a PhD in geology/geological engineering from the Colorado School of Mines, an MS from the Mackay School of Mines, and a BS from the University of Minnesota. He is a Certified Professional Geologist with AIPG.
Rare Element Resources has a relatively tight share structure with 23.9 million shares outstanding. Their current treasury and burn rate can carry the company into 2011 without needing to raise more funds. More information can be obtained from their web site at www.rareelementresources.com.