Shares of Quest Rare Minerals (QRM-V) closed 25% higher at $3.23 per share Jan. 12 after the junior announced that heavy rare earth oxides represented 22.4-76.5% of the total rare earth oxide content intersected in its drill program at Strange Lake in the second half of 2011.
Highlighted intercepts from the drill program were 1.44% total rare earth oxides (TREO) over 144.4 metres in drill hole BZ11218, and 1.23% TREO over 116.1 metres in hole BZ11189, including 3.04% TREO over 11.7 metres and 4.9% TREO over 4.9 metres. Drill hole BZ11135 returned 1.48% TREO over 45.6 metres and 3.29% TREO over 9.9 metres.
The drill program was designed to complete in-fill drilling of the B-Zone rare earth deposit to the limits of the virtual 25-year open-pit mine shell on 50-metre by 50-metre drill centres to a maximum vertical penetration of 150 metres and 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 of between 1.12% and 6.11% TREO over thicknesses of 2.34 metres to 144.3 metres characterize all holes drilled into the zone,” the company said. “These intersections are contained within a larger 95.2 and 147.0 metre-thick mineralized envelope grading between 0.87%-1.07% TREO.”
Geotechnical and metallurgical test holes were also completed during the 2011 field season and will be used in the pre-feasibility study the company is preparing.
“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 BZone,” John Kaiser, author of the Daily Kaiser Research Report, wrote 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 The unpublished bad news is that the prefeasibility study I thought would arrive in January will not likely arrive until July 2012. In other words, Quest is just like every other rare earth junior in suffering delays.”
The company says its exploration efforts will now 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 preliminary economic assessment completed in 2010.
The mine model in the PEA called for an open-pit production rate of 4,000 tonnes per day, a capital expenditure of $563.4 million (including a 25% contingency), a payback in the fourth year of production and a minimum mine life of 25 years, Quest outlines on its website.
Quest discovered the BZone on its Strange Lake property in northeastern Quebec in 2009.
The company has $44.5 million available for working capital, sufficient it says to move ahead with its plans to complete a prefeasibility and bankable feasibility study of the BZone deposit and continue exploration on its other rare earth properties, which include the Misery Lake project, 120 km south of Strange Lake.
The Strange Lake rare earth element deposit, first discovered by the Iron Ore Company of Canada, is 220 km northeast of Schefferville and 125 km west of the Voisey Bay nickel-copper-cobalt mine.
At presstime in Toronto Quest was trading at $3.03 per share within a 52-week range of $1.75-$8.88 per share.
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