Farm-In Finalised and Drilling Commences

RNS Number : 3848F

Rare Earth Minerals PLC

23 May 2013

 



23 mAY 2013

Rare Earth minerals plc

("Rare Earth Minerals" or "the Company")

Lithium Farm-in Deal Finalized with Bacanora Minerals Ltd and Diamond Drilling Commences on Lithium Joint Venture, Mexico

Rare Earth Minerals PLC (AIM: REM) is pleased to announce that it has executed formal agreements with Bacanora Minerals Ltd ("BCN"), a Toronto Stock Exchange listed company (TSX-V: BCN), pursuant to which REM is granted certain rights to participate in drilling and project evaluation of the El Sauz and Fleur Lithium concessions (the "Concessions" or individually, a "Concession") in northern Mexico in line with the binding memorandum of undersanding announced on February 14, 2013. The Concessions adjoin and are along strike from the BCN's La Ventana concession.

Highlights of the Agreement:

·      REM will earn an initial 10% interest in Bacanora's 100% owned subsidiary that will hold the Concessions by making an upfront cash payment of $250,000 (which has been received by Bacanora) and providing another $500,000 to the Company in two instalments, to be used for exploration and drilling on the Concessions and delivered in full no later than 4 weeks after drilling starts.

·      Following completion of the above, REM shall have an option to increase its interest in the Company's subsidiary to 30% by providing written notice of exercise, together with delivery of an additional cash payment of $500,000, on or before August 11, 2013, and thereafter depositing a further $1,000,000 within 6 months of exercise of this option, which funds shall be used for drilling and exploration expenditures on the Concessions.

·      Following completion of the prior two stages, REM will thereafter have an exclusive option to negotiate terms to increase interest in the subsidiary holding the Concessions from 30% to a maximum of 49.9%.

Drilling Update:

A diamond drill under contract from Godbe Drilling of Colorado, USA has arrived on the Concessions. The drill is set up and has commenced drilling the first of 10 holes.

The initial diamond drilling will consist of approximately 2,500 metres of NQ core in 10 holes which will have the following objectives:

·      Test the thickness and extent of the clay units exposed on El Sauz concession

·      Provide an initial estimate of the lithium content of these units at depth,

·      Determine if the clay units on El Sauz continue to the north and onto the Fleur concession and

·      Determine if the clay units on the Concessions are the same units as those exposed on the adjoining La Ventana concession

The drilling programme is estimated to take approximately 80 days with final results of drill core analyses expected in late August.

In conjunction with the drilling, mapping and rock sampling will resume on the Fleur concession in order to provide the Company with a full assessment of the lithium potential of this concession. Previous surface rock sampling, as announced April 11, 2013, demonstrated that exposures with lithium contents of up 7,220 ppm and potassium grades of up to 3.07% occur on the concessions. Results of geological mapping have delineated exposures of the sedimentary-volcanic succession that hosts the lithium-bearing clay units cover an area of 80 hectares in an arcuate belt approximately 2 km long in a northwesterly direction and 1 km in width. Sediments on the southwest side of the arc dip gently to the southwest, whereas those on the northeast dip to the northeast.

David Lenigas, Rare Earth Minerals Chairman commented:

"The Company is very pleased to be quickly advancing this project with the first drill testing. If this test is successful it will then provide the geological evidence necessary to demonstrate that the basin that hosts the lithium-rich clays extends for at least 7 kilometres in a northwesterly direction and onto Bacanora's adjoining La Ventana concession, leading to a far better understanding of the basin and the scale of the resource on the project areas."

About the Sonora Lithium Project:

The El Sauz and Fleur lithium concessions ('the Concessions') form part of the Sonora Lithium Project in northern Mexico that the Company has a joint venture in with Bacanora Minerals Ltd. The Company will earn an initial interest of 10% in the Concessions with an option to earn up to 49.9% interest in the Concessions from Bacanora Minerals Ltd as announced on 14 February 2013. The Concessions cover 3,411 hectares out of a total of 5,786 contiguous hectares that make up the Sonora Lithium Project owned by Bacanora.

Initial rock sampling and mapping of the Project by Bacanora located the lithium-bearing clay units. Drilling by Bacanora in 2010 and 2011 located two lithium-bearing clay units (upper and lower) that average 41 and 22 m in thickness, respectively, and that are separated by an ignimbrite unit varying from 1 to 45 m in thickness. The sedimentary-volcanic sequence dips at approximately 20^o to the east and crops out along 3.5 km of strike length. The exposures are in erosional windows looking through overlying basalt that covers much of the area. The lithium-bearing clay minerals have been identified as hectorite and polylithionite.

The Concessions border the La Ventana concession that is 100% owned by Bacanora in which Rare Earth Minerals has no interest..  NI 43-101 compliant inferred resources have been estimated for two clay units (referred to as the "La Ventana Lithium Deposit") on the La Ventana concession. The inferred resources for the two clay units total 60 million tonnes averaging 3,000 ppm Li (equivalent to 1.6% lithium carbonate assuming 100% recovery and no process losses). Bacanora has used the inferred resources on La Ventana for a Preliminary Economic Assessment ("PEA") of the La Ventana concession (refer to Bacanora news release dated January 25, 2013). Highlights of the PEA for a potential lithium mining and production operation with an output of 35,000 tonnes battery grade lithium carbonate per annum over a 20 year open pit mine life suggest annual revenue of $US210 million for an Internal Rate of Return ("IRR") of 138%, with a 1.9 year pay back. Capital costs are estimated at $US114 million and average operating costs at $US1,958/tonne. Net present value ("NPV") of the Project, discounted at 8%, is $US848 million, assuming an average lithium carbonate price of $US6,000/tonne.

Lithium is the lightest of the alkali metals and has unique electrochemical properties that make it the element of choice for batteries of high energy storage capacity and other energy applications as well as a host of industrial and health applications." 

____________________________

*LCE = lithium carbonate (Li₂CO₃)Equivalent: determined by multiplying Li value in percent by 5.324 to get an equivalent Li₂CO₃ value in percent. Use of LCE assumes 100% recovery and no process losses in conversion of Li to Li₂CO₃.

Qualified Person's Statement:

Information in this announcement relates to information compiled by Carl G Verley, P.Geo, a consultant to the Company, who is a member of the Association of Professional Engineers and Geoscientists of British Columbia and is a Qualified Person with respect to the information disclosed herein.

For further information please contact:     

Rare Earth Minerals Plc                                                              .

David Lenigas, Non-Executive Director                                        

[phone]                                                                

NOMAD - WH Ireland

James Joyce

Nick Field

[phone]

PR - Pelham Bell Pottinger

Charlie Vivian

[phone]

Weston Macklem

[phone]

 

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