Rare earth discovery in Namibia intrigues Etruscan (October 24, 2008)

Etruscan Resources‘ (EET-T) initial interest in exploring northern Namibia was to find iron oxide copper gold (IOCG) deposits and the Canadian junior believed that the rare earth occurrence at its Lofdal property might be associated with IOCG-type mineralization.

But now results from its prospecting program suggest that there is also the possibility of discovering a stand-alone and economically significant rare earth deposit.

Etruscan has outlined a large number of rare earth element enriched carbonatite dykes associated with an alkaline intrusive complex on its Lofdal permit in northern Namibia, about 400 km northwest of Windhoek, the capital.

“There has never been any active mining of rare earths in Africa but there’s certainly a lot of potential,” says Kirk Woodman, Etruscan’s chief project geologist.

The delineation of such a high density of dykes with associated intrusive complexes suggests that the potential for the discovery of an economic rare earth element deposit is high, management believes.

“We’re quite excited but it’s early days yet,” says Richard Gordon, Etruscan’s head of investor relations.

Analytical results from 242 outcrop samples and six drill holes indicate that both light rare earth elements and heavy rare earth elements are present in sufficient total concentrations (0.5% to 6%) to be of possible economic significance.

“This is a very significant development for Etruscan,” Don Burton, vice president corporate development and chief operating officer said in a prepared statement. “We are in the early days of exploration. However, the potential to discover a world-class rare earth deposit at Lofdal is very real.”

Rare earth elements (REEs) make up a group of 16 elements. Deposit grades are reported as the sum of the total concentration of all rare earth elements present, plus yttrium, which is typically an important accessory.

Based on the relative percentages of rare earths at Lofdal and current market pricing, the insitu value of the Lofdal dykes — assuming an average grade of 0.5-2% TREE+Y, falls within a range of US$250-$500 per tonne.

Etruscan notes that this is equivalent in grade to a 10-20 grams gold per tonne gold deposit at a price for gold of US$800 per oz.

“While we have only begun our work at Lofdal, with those kinds of grade equivalents and a target area of 150 sq km, this is a significantcorporate development,” Burton said.

Rare earth elements are specialized commodities and typically are used for a number of environmentally friendly or high-technology applications including “super” magnets for electric motors and rechargeable batteries in hybrid cars, automotive catalysts, mobile phones and video-display screens.

China dominates the rare earth market, producing more than 95% of the world’s supply. And the central government in Beijing has recently slapped export quotas and tariffs on the commodity.

With the single exception of the Mountain Pass operation in the United States, there are no primary rare earth deposits in production outside of China, Etruscan points out. Only a handful of rare earth deposits are being considered for development.

Rare earth elements are distributed in rocks, but it’s very unusual to find them in sufficient concentrations to translate into an economic mineral deposit.

In addition to the 15 REEs (also referred to as lanthanides), the element yttrium is commonly associated and reported with REE deposits.

Deposit grades are typically reported as percentages of total rare earths (TREE), or total rare earth oxides (TREO), plus or minus yttrium.

A rare earth deposit can be made up of a mixture of these 16 elements and the economic value of the deposit can only be calculated based on the respective concentrations and current market pricing of each element.

The average grade of all 242 dyke samples was 0.8% total rare earth elements plus yttrium (TREE+Y).

Etruscan reports that 124 of the samples were at or above an average grade of 0.5% and averaged 1.34% TREE+Y and 67 of the samples were at or above an average grade of 1% and averaged 1.94% TREE+Y.

The highest individual sample graded 6% TREE+Y and samples taken by the Geological Survey of Namibia have graded up to 8.3% TREE+Y. The best drill intercept was 5 metres of 1.7% TREE+Y.

Rare earth elements are subdivided into light rare earths (LREEs) and heavy rare earths (HREEs).

LREEs and yttrium command moderate prices varying from US$4 – US$30 per kilogram. HREEs, by contrast, can attract much higher prices ranging from US$100-US$800 per kilogram with thulium and lutetium selling between US$2,000-US$3,500 per kilogram. The carbonatite dykes at Lofdal are enriched in HREEs.

“It’s really unusual for these carbonatites to be enriched in the HREEs,” Woodman says. “Typically they’re enriched in LREEs but this one is enriched in HREEs.”

Field mapping has demonstrated that more carbonatite bodies exist than had been mapped previously. In some cases, previously syenite intrusions are in part carbonatite plugs of significant dimension. Individual dykes have been mapped over strike lengths of up to 1.3 km.

Rare earth deposits are commonly associated with anomalous concentrations of uranium or thorium and the REE-enriched dykes at Lofdal are characterized by anomalous concentrations of thorium.

The airborne radiometric anomaly at Lofdal that is associated with the REE dykes and alkaline complex covers a surface area ofabout 150 sq km. But mapping and sampling so far have only penetrated an area of about 25 sq. km.

Mapping has also defined larger intrusive carbonatite bodies there. An intrusion mapped to the southwest has characteristics similar to the REE-enriched dykes, Etruscan reports, and the company is awaiting final results.

The Canadian junior has more than 13,000 sq km of land in West Africa’s gold belts. Its major mine development projects include the Youga gold project in Burkina Faso, the Agbaou gold project in Cote d’Ivoire and the Finkolo gold project in Mali.

Etruscan also has a 52.1% interest in Etruscan Diamonds, which holds land in South Africa’s Ventersdorp diamond district.

Currently Etruscan is trading at about 38 a share. Over the last year the gold explorer has traded at between 32 and $2.79 per share.