3 Mar 2011 10:27
4 March 2011
SRX:AIM
Rare earth mineralization confirmed at Sierra Rutile mine
Highlights
·; Rare earths mineralization confirmed by independent laboratory at grades of 2.2% in existing HTT stream
·; Rare earth mineralization contained in a by-product stream of existing and ongoing rutile production, which has already been mined and partially processed
·; Study commenced to evaluate processing requirements to further separate and recover rare earths
Sierra Rutile Limited announces that SGS Lakefield Research Limited ("SGS") has confirmed the existence of rare earth oxides ("REOs") at a grade of 2.2% in Sierra Rutile's high-tension tailings ("HTT") stream. As part of the Company's recently announced strategic review update, significant rare earth mineralisation was identified and, following SGS' independent assessment, the Company is now exploring opportunities to refine and market these REO by-products.
The distribution of REOs in the HTTs is attractive and contains high concentrations of neodymium, lanthanum and praseodymium. HTTs are produced from Sierra Rutile's existing dry processing plant and, as such, the REOs are not in the ground, but in a by-product stream from Sierra Rutile's existing production of rutile and ilmenite. The HTTs are the same source from which Sierra Rutile already recovers its zircon by-product by re-processing it through the dry processing plant.
Sierra Rutile will now commence a study into how best to separate and recover the REOs from the HTTs. This will consider both the optimization of Sierra Rutile's existing dry processing plant and the potential addition of further processing facilities to realize the value of the REO in the HTTs. Sierra Rutile will also analyse its existing stockpiles of HTTs from historical production to determine the availability of REOs in these stockpiles. The Company will announce the results of the study and analysis in due course.
John Sisay, Chief Executive Officer of Sierra Rutile, commented, "The independent confirmation of rare earth mineralization in the tailings stream is a positive step and we now have clarity on the type and extent of these minerals. Sierra Rutile is assessing the feasibility of future rare earth production given the relatively attractive cost position of processing rare earths which are already extracted and significantly refined as part of our normal rutile separation process. The market dynamics and long-term fundamentals of the REO industry are attractive and we have therefore taken the decision to proceed with further studies."
Sierra Rutile's existing operations generate approximately one tonne of HTTs for every two tonnes of rutile produced. The Company's 2010 rutile production of 68,000 tonnes produced approximately 34,000 tonnes of HTT last year.
Samples from 14 locations in the HTT stream were analysed by SGS. Locations were chosen based on processing methods, the conductivity and radioactivity of processed material, and the chemical properties of REOs.
The distribution of REOs compare well to the deposits of non-Chinese rare earths companies (the "Comparator Group", as defined below) (refer to Figure 1). None of the Comparator Group companies are in commercial production at this stage.
Figure 1Rare Earth Distributions | SRX Tailings sampled - Rare Earth Distribution (%)1 | Rare Earth Comparator Group Distribution (%) 2 |
Light Rare Earths | ||
Lanthanum | 22.78% | 21.34% |
Cerium | 49.33% | 40.83% |
Praesoodymium | 4.84% | 4.57% |
Neodymium | 19.37% | 16.14% |
Samarium | 2.56% | 2.60% |
Heavy Rare Earths | ||
Europium | 0.08% | 0.37% |
Gadolinium | 0.57% | 1.55% |
Terbium | 0.05% | 0.29% |
Dysprosium | 0.14% | 1.48% |
Holmium | 0.03% | 0.27% |
Erbium | 0.10% | 0.76% |
Ytterbium | 0.15% | 0.67% |
Lutetium | Testing in Process | 0.12% |
Other | ||
Yttrium | Testing in Process | 8.62% |
Scandium | Testing in Process | 0.00% |
Other | 0.00% | 0.40% |
Total | 100.00% | 100.00% |
1 Testing of yttrium, lutetium and scandium is still in process. | ||
2 Comparator group comprises rare earth companies only, including Lynas, Molycorp, Great Western Minerals, Arafura, Avalon, Quest, Rare Element and Ucore | ||
Using the samples tested by SGS and applying current REO prices, the potential value of the total contained REOs in the sampled HTT stream is US$104.2/kg of REO. This value excludes yttrium, lutetium and scandium, for which testing remains ongoing. The US$104.2/kg of REO compares favourably to the Comparator Group, for which the contained value of REOs is US$111.5/kg of REO (refer to figure 2). The REO grade of the HTT samples, as tested independently, is 2.2%, implying a REO value of approximately US$2,258 per tonne of HTT.
Figure 2Value of REOs in tailings | SRX sample tailings - value of processed REO (US$/kg) 3 | Rare Earth Comparator Group (US$/kg) |
Light Rare Earths | ||
Lanthanum | 20.5 | 19.2 |
Cerium | 44.4 | 36.8 |
Praesoodymium | 6.5 | 6.1 |
Neodymium | 28.1 | 23.4 |
Samarium | 2.3 | 2.3 |
Heavy Rare Earths | ||
Europium | 0.6 | 2.7 |
Gadolinium | 0.6 | 1.6 |
Terbium | 0.3 | 2.1 |
Dysprosium | 0.6 | 6.6 |
Holmium | 0.0 | 0.1 |
Erbium | 0.1 | 0.4 |
Ytterbium | 0.2 | 0.9 |
Lutetium | Testing in Process | 0.4 |
Other | ||
Yttrium | Testing in Process | 8.9 |
Scandium | Testing in Process | - |
Total | 104.2 | 111.5 |
Grade of tailings (%) | 2.2% | |
Implied value of REO in SRX sample tailings (US$/tonne) | 2,258.9 | |
3 Prices as at 25 February 2011 from Metals Pages for all elements except holmium, erbium, ytterbium and lutetium, for which estimates have been taken | ||
ENDS
For further information:
Sierra Rutile Limited
John Sisay, Chief Executive Officer
Telephone: +44 (0) 20 7321 0000
Arbuthnot Securities
Nominated Advisor & Broker
Hugh Field / Richard Johnson
Telephone: +44 (0) 20 7012 2000
Mirabaud Securities LLP
Joint Broker
Peter Krens
Telephone: +44 (0) 20 7321 2508
Aura Financial
Andy Mills / Harry Cameron
Telephone: +44 (0) 20 7321 0000
Sierra Rutile Limited
Sierra Rutile Limited is a mining company with operations in the Republic of Sierra Leone. The Group is the country's largest private sector employer and produces rutile, zircon and ilmenite for use in industrial applications. The Group's operations have historically accounted for over 65 per cent of the exports of Sierra Leone. The Company changed its name to Sierra Rutile Limited on 24 February 2011.