Rare Element Resources Launches Bear Lodge Scoping Study

With its share price recently hitting new highs, Rare Element Resources (RES-V, RRLMF-O) has started a scoping study on the Bull Hill Southwest deposit at its Bear Lodge rare earth element (REE) project in Wyoming.

The scoping study is expected to be complete sometime in mid- 2010, and will address metallurgy, environmental studies and permitting in detail, and preliminary mine, plant and geotechnical engineering.

The Bull Hill Southwest deposit hosts an inferred resource of 9.8 million tons averaging 4.07% rare earth oxides (REO) at a cutoff grade of 1.5% REO. The resource consists of 4.6 million tons of sulphide material, 4.1 million tons of oxides, and 1.1 million tons of transitional material. The oxide zone extends from surface to between 300 and 500 ft. depth, while the overall mineralized system extends to more than 1,000 ft. and along a strike length of 1,000 ft.

The company started a drilling program in August to upgrade and expand the resource, which is still ongoing. An updated resource estimate is expected near the end of the first quarter of 2010.

At the same time, it is conducting preliminary metallurgical testing of Bull Hill Southwest mineralization. Testing, which has focused on near-surface oxides, has been promising so far, reports lab Mountain States R&D International.

Oxide mineralization is higher-grade (averaging 4.3% REO) and occurs in aggregates of fine-grained bastnasite-group minerals found within near-surface dykes and veins. The dykes and veins are friable and vuggy, and as a result, drill core recoveries are often poor. Metallurgical testing has shown that pre-concentration crushing, attritioning, and screening can get a 90% recovery of the REEs, with a 13% REO grade in the minus-500 mesh (-25 micron). Further testing is expected to increase the concentrate grade.

Rare Element says the Bull Hill Southeast deposit is composed of sets of carbonatite dykes and intervening stockworks, which occur in a swarm of steeply dipping bodies that intrude an alkalic diatreme breccia.

The company is upbeat on the composition of the deposit, noting that more than 50% of the distribution of rare earth elements on the property are those that are most widely used and have good growth potential, including lanthanum, neodymium, praseodymium and samarium. Lanthanum is used in nickel metal hydride batteries (which are used in hybrid cars, among other things), while neodymium and praseodymium are used in permanent magnets in electric motors and generators for hybrid cars.

The Bear Lodge property, which has seen extensive testing by the U. S. Geological Survey, also hosts extensive gold occurrences. Rare Element Resources owns 100% of Bear Lodge, but has a joint venture with Newmont Mining (NMC-T, NEM-N), which can earn a 65% interest in the gold and base metals on the property by spending $5 million on exploration.

The junior completed a $3-million financing in late September that consisted of 1 million units at a price of $3 apiece. Each unit was composed of a share plus one warrant exercisable at $4.25 for a period of 18 months.

Rare Element Resources shares have seen a spectacular run-up this year. Trading at just over 50¢ in May, the stock hit a high of $4.69 on Oct. 1. Rare Element currently trades at around $3.39, with a 52- week low of 26.5¢. The company has 28.9 million shares outstanding.