Update in Lithium Resources for the Sonora Project

RNS Number : 1512N

Rare Earth Minerals PLC

14 May 2015

 

14 May 2015

Rare Earth Minerals Plc.

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

Update in Lithium Resources for the Sonora Lithium Project.

Rare Earth Minerals Plc (LSE AIM: REM)) is pleased to announce a substantial increase in the Mineral Resource for the Sonora Lithium Project in the northern Mexico in which it holds an interest though its 15.4% holding in Bacanora Minerals Ltd ('Bacanora') and the joint ventures interest of 30% in each of Megalit S.A. de CV and Mexalit S.A. de CV as more fully described below. The combined Sonora Lithium Project now has an updated Mineral Resource Estimate ("MRE"), which has more than doubled the contained metal and has identified a further exploration target which have the potential to add a further 2.4 to 4.6 million tonnes ("Mt") of lithium carbonate equivalent ("LCE"). The MRE was carried out by SRK Consulting (UK) Limited ("SRK"), an independent consultant.

·     Indicated portion of the MRE is gross 1.12 million Mt LCE contained in 95 Mt of clay, at lithium ("Li") grade of 2,200 ppm.

·     Inferred portion of the MRE is gross 6.3 Mt LCE contained in 500 Mt of clay at a Li grade of 2,300 ppm.

·     Maiden MRE declared for Megalit of gross 0.9 Mt LCE contained in 50 Mt of clay.

·     Conceptual extensions within current pit shell have the potential to add 2.4 to 4.6 Mt LCE¹ contained in 300 to 250 Mt of clay at a Li grade of approximately 1,500 to 2,500 ppm.

·     This MRE (which has been prepared in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101")) does not include identified grade and tonnages contained within the Buenavista concession, as further metallurgical testing is required on this deposit; and

·     This updated MRE has been developed using a 3D geological model and Kriged grade estimates. The indicated portion of the MRE will be used for initial open pit mine design while we further develop the inferred portion of the MRE.

David Lenigas, the Company's Chairman commented:

"The size of the Sonora Lithium Project as a whole has grown significantly since the last resource update to a combined Indicated and inferred resource of 7.42 million tonnes of LCE, 226% larger than previously reported, thanks to a number of successful drilling campaigns."

"Further drilling, if successful, has the potential to add a further 2.4 - 4.6 million tonnes of LCE within the defined SRK pit shell from conceptual extensions and Sonora still has further upside to be tested at the new Buenavista concession and elsewhere on the Sonora concession package."

"We remain focused in our quest to rapidly develop this significant lithium resource."

Details of REM's ownership:

REM owns a direct interest of 15.4% of Bacanora and through that is has an indirect interest in the La Ventana asset of 15.4%. In addition the 15.4% in Bacanora, when aggregated with REM's 30% direct interest in Megalit S.A de CV (the company holding the Buenavista, Megalit and San Gabriel concessions) and the 30% direct interest in Mexalit S.A de CV (the company holding El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions), results in a total economic interest in each of these companies of Megalit S.A. de CV and Mexalit S.A. de CV of 40.78%.

Mineral Resource Statement:

The Sonora Lithium Project has been explored and sampled using appropriate methods and is sufficiently well understood to support the estimation of Indicated and Inferred Mineral Resources. Table 1 shows the Mineral Resource Statement for the Sonora Lithium Project with an effective date of 12 May 2015. The statement has been classified in accordance with the terminology, definitions and guidelines given in the Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") Definition Standards for Mineral Resources and Mineral Reserves (May 2014) and has been reported in accordance with NI 43-101, by the Qualified Person, Mr. Martin Pittuck (MSc., C.Eng., MIMMM). Mr. Pittuck is an engineering consultant who is independent of Bacanora.

The updated MRE of the Sonora Lithium Project, using a cut off of 450 ppm lithium is comprised of an Indicated portion estimated at 95 Mt, averaging 2,200 ppm Li, for 1.12 Mt of LCE, in addition to an Inferred portion estimated at 500 Mt averaging 2,300 ppm Li, for 6.30 Mt of LCE.

In addition to the MRE, a further conceptual target of 300 to 350 Mt, at a grade of Li of approximately 1,500 to 2,500 ppm within the current pit shell is considered worthy of further exploration. If these figures were converted to a Mineral Resource via successful drilling and exploration, it is estimated that this could represent an additional 2.4 to 4.6 Mt of LCE at the Sonora Lithium Project.  It must be noted however, that the potential quantity and grade of this target is conceptual in nature, that there has been insufficient exploration to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resource.

Although the first stage of drilling has been completed on the Buenavista concessions (announced 14 January 2015), further metallurgical test work is required in order to determine the processing methodology of the ore and refinement of LCE.

The updated MRE is based on assay results from drilling and trenching made available to SRK on 16 April 2015 including geological information but not assay results from the 9 holes that were announced on 24 March 2015. A technical report in respect of this updated MRE will be filed on SEDAR within 45 days from today.

Table 1: Mineral Resource Statement for the Sonora Lithium Project as of 12 May 2015

Classification	Owner	Concession Name	Geological Unit	Mt Clay	Clay Grade (Li ppm)	Contained Li (Kt)	Contained LCE1 (Kt)
Indicated	Ventana	La Ventana & Ventana 1	Upper Clay	35	1,400	50	280
	Ventana	La Ventana & Ventana 1	Lower Clay	35	3,250	120	610
	Mexilit	El Sauz, Sauz 1, Sauz 2, Fleur & Fleur 1	Upper Clay	10	1,150	10	50
	Mexilit	El Sauz, Sauz 1, Sauz 2, Fleur & Fleur 1	Lower Clay	15	2,450	30	180
	Megalit	Megalit	Upper Clay	0	-	-	-
	Megalit	Megalit	Lower Clay	0	-	-	-
Total Indicated				95	2,200	210	1,120
Inferred	Ventana	Ventana & Ventana 1	Upper Clay	100	1,700	150	800
	Ventana	Ventana & Ventana 1	Lower Clay	25	3,650	100	500
	Mexilit	El Sauz, Sauz 1, Sauz 2, Fleur & Fleur 1	Upper Clay	150	1,350	200	1,100
	Mexilit	El Sauz, Sauz 1, Sauz 2, Fleur & Fleur 1	Lower Clay	175	3,100	575	3,000
	Megalit	Megalit	Upper Clay	25	1,700	75	300
	Megalit	Megalit	Lower Clay	25	4,300	100	600
Total Inferred				500	2,300	1,200	6,300

Notes:

1.   LCE is the industry standard terminology for, and is equivalent to, Li₂CO₃.  1 ppm Li metal is equivalent to 5.32 ppm LCE / Li₂CO_3.. Use of LCE is to provide data comparable with industry reports and assumes complete conversion of lithium in clays with no recovery or process losses.

2.   Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate and have been used to derive sub-totals, totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, SRK does not consider them to be material.

3.   The reporting standard adopted for the reporting of the MRE uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May 2014) as required by NI 43-101 and JORC.

4.   The MRE is reported on 100 percent basis for all project areas.

5.   SRK assumes the Sonora Lithium deposit to be amenable to surface mining methods. Using results from initial   metallurgical test work, suitable surface mining and processing costs, and forecast LCE price SRK has reported the Mineral Resource at a cut-off 450 ppm Li (2,400 ppm LCE).

6.   SRK completed a site inspection of the deposit by Mr. Martin Pittuck, MSc, C.Eng, MIMMM, an   appropriate "independent qualified person" as such term is defined in NI 43-101.

REM has a 30% direct interest in the Megalit and Mexilit in Joint Venture with Bacanora Minerals.  In addition, REM also owns a 15.4% direct interest in Bacanora s giving it a 15.4% indirect interest in the Mineral Resources at La Ventana and an 40.78% indirect interest in the Mineral Resources at both Megalit and Mexilit. These percentage interests have been used by REM to calculate its net attributable contained LCE presented in Table 2.

Table 2: Net attributable contained LCE to REM based on total economic interest.

Classification	Owner	Concession Name	Geological Unit	Mt Clay	Clay Grade (Li ppm)	Contained Li (Kt)	Contained LCE1 (Kt)
Indicated	Ventana	La Ventana & Ventana 1	Upper Clay	5	1,400	10	45
	Ventana	La Ventana & Ventana 1	Lower Clay	5	3,250	15	95
	Mexilit	El Sauz, Sauz 1, Sauz 2, Fleur & Fleur 1	Upper Clay	4	1,150	5	20
	Mexilit	El Sauz, Sauz 1, Sauz 2, Fleur & Fleur 1	Lower Clay	6	2,450	10	70
	Megalit	Megalit	Upper Clay	-	-	-	-
	Megalit	Megalit	Lower Clay	-	-	-	-
Total Indicated				20	0	40	230
Inferred	Ventana	Ventana & Ventana 1	Upper Clay	15	1,700	25	120
	Ventana	Ventana & Ventana 1	Lower Clay	5	3,650	15	75
	Mexilit	El Sauz, Sauz 1, Sauz 2, Fleur & Fleur 1	Upper Clay	60	1,350	80	450
	Mexilit	El Sauz, Sauz 1, Sauz 2, Fleur & Fleur 1	Lower Clay	70	3,100	235	1,220
	Megalit	Megalit	Upper Clay	10	1,700	30	120
	Megalit	Megalit	Lower Clay	10	4,300	40	245
Total Inferred				170		425	2,230

Note: All figures are rounded to reflect the relative accuracy of the estimate and have been used to derive sub-totals, totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, REM does not consider them to be material.

Qualified Person:

Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.

Ends

For further information please contact: 

Rare Earth Minerals plc                                                                   [phone]

David Lenigas

Kiran Morzaria

WH Ireland Limited (NOMAD & Broker)                                       [phone]

James Joyce

Mark Leonard

Square1 Consulting

David Bick                                                                                           [phone]

Mark Longson

Glossary:

LCE:  is the industry standard terminology for, and is equivalent to, Li₂CO₃.  1 ppm Li metal is equivalent to 5.32 ppm LCE / Li₂CO₃. Use of LCE is to provide data comparable with industry reports and assumes complete conversion of lithium in clays with no recovery or process losses.

Kt: one thousand tonnes

ppm: parts per million

Further Details on Mineral Resource Statement:

SRK has visited the Sonora Lithium Project and inspected drillcore, geological outcrop and drill rigs. Field and laboratory data have since been reviewed and analysed such that the scale and nature of the geology and the quality of data upon which this resource relies is well understood. Data has been gathered using industry standard methods and assays have a basic level of quality control sufficient to underpin the confidence SRK has in this resource.

SRK has worked with the drilling results, mapping data, aerial photography and detailed topographic survey provided by Bacanora to develop a 3D geological model of the lithium bearing Upper and Lower Clay units. In many areas the continuity of the clay units is established to the level required for input to project finance studies (Indicated). In other areas a combination of wide spaced drilling, extrapolation beyond drilling, absence of mapped outcrop and uncertainty around fault presence and location means that confidence in the model is lower (Inferred) and further work will be required to feed into such studies. Parts of the model that are further way from geological information are unclassified have therefore been excluded from Mineral Resource (Exploration Target).

SRK's block model is some 10 km long and 5 km wide covering the La Ventana in the north and the Fleur - El Sauz concessions in the south. The drillhole grades have been averaged for each drillhole intersection of each clay unit and then these composite values have been interpolated to provide block grade estimates in their respective clay units. Drillhole spacing is variable, achieving approximately 200 m by 200 m in several places; the blocks measure 50 x 50 x 10 m and the model covers the majority of the drilled area except for the far southeast where a couple of isolated drillholes achieved low grade intersections.

Density has been assigned based on drill core samples; a value of 2.3 has been applied to the clay units and a value of 2.7 has been applied to the overlying capping basalt. A Mineral Resource has been reported after due consideration of the reasonableness of eventual economic extraction. Processing methods, efficiencies, rates and costs have been provided by Bacanora. The configuration of the deposit lends itself to open pit mining and SRK has used mining costs provided by Bacanora and has assumed a 45 degree overall pit slope angle. Revenue to the project is expected to be derived from sales of battery grade (99.5 percent pure) LCE. Geological samples were assayed for Lithium metal; every 1 ppm Li metal is equivalent to 5.32 ppm LCE.

Whilst no detailed review of market forecast prices has been undertaken, SRK considers a price of USD 6,500 per tonne of LCE to be reasonable given general reported view in the public domain; for the purpose of limiting the Mineral Resource to that part considered to have reasonable prospects of eventual economic extraction; SRK applied a 30 percent uplift to the commodity price and derived a cut-off grade using anticipated technical-economic parameters associated with mining, processing and selling the product. SRK derived a marginal cut-off grade based on Bacanora's unit cost of USD 14 per tonne fed to the processing plant and a 90 percent recovery of product from the feed; on this basis the cut-off grade is 450 ppm Li (2,400 ppm LCE). A basic open pit shell ensures mining costs of USD 2.5 per tonne mined are applied giving consideration to topography driven waste stripping; in conjunction with metal deportment in the deposit, this limits the Mineral Resource to a defendable depth and lateral extent.

The current MRE differs from the previous polygonal resource estimate announced in June 2014.  The main drivers for this difference are the development by SRK of a new 3D geological model and Kriged grade estimate, in addition to further drilling that has occurred during the intervening period.  The 3D geological model and Kriged grade estimate allow extrapolation of grade data over greater distances than was done previously.  This model has also identified some areas that may require more mapping and/or drilling to confirm fault and deposit geometry in order to increase the Indicated Mineral Resource.

 

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