Quest moves higher on drill results

Shares of Quest Rare Minerals (QRM-V, QRM-X) closed 25% higher at $3.23 per share on Jan. 12 after the junior announced that heavy rare earth oxides represented 22.4% to 76.5% of rare earth oxides intersected during the company’s Strange Lake drilling campaign completed in the second half of 2011.

Highlight intercepts from the drill program included 1.44% total rare earth oxides (TREO) over 144 metres in drill hole 11218, and 1.23% TREO over 116 metres in hole 11189, with 3.04% TREO over 12 metres and 4.9% TREO over 5 metres. Drill hole 11135 returned 1.48% TREO over 46 metres and 3.29% TREO over 10 metres.

The drill program was designed to complete infill drilling of the B-zone rare earth deposit to the limits of the virtual 25-year, open-pit mine shell on 50-by-50-metre drill centres reaching 150 metres. It demonstrated the mineralization continues to the lateral and vertical limits of the pit shell and remains open to the southwest and northeast.

“Multiple, high-grade intersections between 1.12% and 6.11% TREO over thicknesses of two metres to one hundred forty-four metres characterize all holes drilled into the zone,” the company stated. “These intersections are contained within a larger ninety-five-metre and one-hundred-forty-seven-metre-thick mineralized envelope grading between 0.87 percent to 1.07 percent TREO.”

Additionally, both geotechnical and metallurgical test holes were completed during the 2011 exploration season and will be included in the company’s prefeasibility study.

“After a half-year of no news, Quest Rare Minerals published some drill results. But these don’t mean much because we already know that the junior will mine the highest-grade, most accessible fraction of the B zone,” John Kaiser of the Daily Kaiser Research Report writes in a note to clients. “It was nice, however, to see the stock go up.”

“The unpublished bad news is that the prefeasibility study I thought would arrive in January will not likely arrive until this July,” Kaiser added. “In other words, Quest is just like every other rare earth junior in suffering delays.”

The company says its exploration efforts will concentrate on upgrading indicated and inferred resources into proven and probable reserves for the prefeasibility study and confirms that it has already defined sufficient resources to “more than satisfy” the minimum 25-year production model outlined in the project’s 2010 preliminary economic assessment (PEA).

The Strange Lake mine model in the PEA called for 4,000 tonnes per day in open-pit production, a capital expenditure of $563.4 million with a 25% contingency, a payback in the fourth year of production and a minimum 25-year mine life, Quest says.

The company made the B zone discovery in 2009 on its Strange Lake property in northeastern Quebec.

The company has $44.5 million available for working capital, which it says is enough to complete a prefeasibility and bankable feasibility study of the B-zone deposit, and continue exploration on other rare earth properties, including the Misery Lake project which is located 120 km south of Strange Lake.

The Strange Lake rare earth element deposit, first discovered by the Iron Ore Company of Canada, is located 220 km northeast of Schefferville and 125 km west of Vale’s Voisey’s Bay nickel-copper-cobalt mine.

At presstime Quest traded at $3.03 per share within a 52-week price range of $1.75-$8.88 per share.