Matamec looks at Kipawa with fresh eyes

Juniors are resuscitating rare earth element (REE) deposits in record numbers as demand for non-Chinese supply grows, but only a few will turn out to have assets with the right mix of grade, elements, and processing ease to make it to market.

Hoping to join that elite league, Matamec Exploration (MAT-V) has assembled a team of advisors with experience in exploration and processing of REE deposits to guide the company’s work on its 100%-owned Zeus property in northwestern Quebec, south of Rouyn-Noranda.

Zeus contains the Kipawa deposit, which was first identified in the mid-1980s when Molycorp Minerals (MCP-N) (currently developing the Mountain Pass rare earth deposit in California) was searching for a source of yttrium, an element that occurs alongside REEs and is used in making phosphors for television CRT displays and LEDs.

Molycorp abandoned the project after conducting limited exploration when the Chinese — the world’s largest supplier of the metal — lowered the price for yttrium.

Now the hunt for yttrium and its associated heavy rare earth oxides (HREOs) is back on as demand for REEs grows even as China cuts back on exports to secure supplies for its own use. Currently, China produces more than 95% of the global supply of REEs and consumes about 60% of that production itself.

Matamec’s recent drilling on Kipawa has identified an NI 43-101 resource including indicated resources of 2.51 million tonnes grading 0.63% total rare earth oxides (TREOs) with 0.88% zirconium and inferred resources of 4.73 million tonnes grading 0.66% TREO with 0.97% zirconium. The ratio of HREOs plus yttrium to TREOs is 30-33%.

What makes Kipawa stand apart from other REE deposits rich in the valuable heavies is that the HREOs and yttrium occur in the mineral eudialyte, named after a Greek phrase meaning “easily decomposable.” In other words, it may be less difficult and expensive to process ore from Kipawa than from other REE deposits.

“Because eudialyte is so soluble, it may be the answer to the South China clay deposits in that it is easier to process chemically,” says Tony Mariano, Matamec’s geological consultant and an REE expert, who first evaluated the Kipawa deposit when it was owned by Molycorp. “This is the reason that Molycorp became excited about the mineral (and the Kipawa deposit) in the first place.”

Eudialyte is a red silicate mineral that forms in alkaline igneous rocks such as nepheline syenite. It is a source of zirconium and other elements including REEs and has been identified in Quebec, Russia’s Kola Peninsula, Norway, Greenland and Arkansas.

Mariano says that of all the eudialyte deposits he has examined worldwide — and he has been exposed to many over his decades-long career — Kipawa has the best prospects for producing a high-grade eudialyte concentrate that would lend itself to chemical processing, an expensive stage of production that can kill the economics of less amenable REE deposits.

Indeed, recent testwork conducted on Kipawa’s concentrates at SGS Lakefield Research under the direction of Matamec’s processing consultant Les Haymann resulted in a 68% recovery rate for zirconium and an average 61% rate for rare earths and yttrium. Haymann was also able to overcome a challenge associated with processing eudialyte: the formation of a silica gel during the leaching stage.

The Kipawa deposit is easily accessible by logging roads, occurs in a mining-friendly jurisdiction, and is hosted by coarse-grained nepheline syenite, making physical separation of eudialyte relatively effortless. Just as importantly, the deposit has “what the markets needs” in terms of REEs, including not just zirconium and yttrium but dysprosium and terbium, says Matamec president André Gauthier.

In a recent article published by Resource Investor, rare earths commentator Jack Lifton writes that even the Chinese believe they will not be able to meet the demand for dysprosium and terbium beyond this decade.

“If the demand for dysprosium and terbium doubles, then there will be a major shortage. . . beginning by 2015,” Lifton speculates, though he warns that the economics could shift if new supply floods the market.

Dysprosium is used to make metal rods in nuclear reactors and alloys for various electrical and electronic devices. It is also a crucial ingredient in the permanent magnet motors that run hybrid cars. Terbium has applications in fuel cells, electronic devices, actuators, sensors and phosphors.

This year’s exploration campaign on the Zeus property has uncovered several new occurrences, including three showings in the Falaises area grading up to 2.35% TREO and 9.7% ZrO2, the TH showings in the north part of the property, which returned up to 6.5% TREO and 72% HREO plus yttrium and the surprise showing grading, on average, 2.9% TREO and 70% HREO plus yttrium.

In early November, the company will start infill drilling at Kipawa as part of a preliminary economic assessment study. The study will in- clude recent exploration results from Zeus, an updated resource calculation that incorporates results from a 2,000-metre drilling campaign on Kipawa, preliminary plans for the open pit and process plant as well as market, tailings and environmental studies.

“In my opinion, Matamec has made the most progress in terms of exploration and processing (of eudialyte deposits),” says Mariano. — The author is a freelance writer specializing in mining issues, and principal of Toronto-based GeoPen Communication, www.geopen.com.