Donald Ranta, President, CEO, and Director of Rare Element Resources, answered the following questions via written response on 18 February 2008.
Clint Cox: When did you join Rare Element Resources (RES)?
Donald Ranta: Beginning of October 2007.
Cox: What is your mining background?
Ranta: 35+ years in the mining industry; I began as an exploration geologist and had steadily increasing responsibilities in exploration and in the evaluation of projects–worked for Kennecott Copper, Gulf Mineral Resources, AMAX/Climax Molybdenum, Phelps Dodge as head of North American Exploration, and Echo Bay Mines as VP worldwide exploration. About ten years ago I entered an entrepreneurial phase in my career by contributing to the start-up of four companies, three of which are continuing to progress, and then I joined RES.
Cox: What was attractive about the RES story?
Ranta: The high-quality of the people associated with the company; the excellent opportunities of the Bear Lodge property for both rare-earth elements and for gold.
Cox: How did you get interested in the Rare Earth Elements (REE)?
Ranta: I had toured Molycorp’s Mountain Pass Mine some years ago, and had followed the exploration activities at a number of alkalic systems for many years. The opportunity of learning more about alkalic systems and REE deposits, along with a substantial gold play on the same property was a compelling draw to join RES.
Cox: What role do the REE play in today’s society?
Ranta: An ever-increasing role. China is the leader in this area and they have set up a large research facility to test and develop new uses for the unique properties of rare earths. Magnets, hybrid vehicles, and refrigeration are some of the current uses but the biggest R&D successes for rare-earths are probably yet to come.
Cox: What are some of the other metals commonly associated with REEs?
Ranta: Iron, copper, uranium, thorium, palladium, platinum, etc
Cox: Please provide some detail about the recent assay results you received for Bear Lodge.
Ranta: The highlight of the recent assay results is an aggregate true thickness of 111.9 feet over four separate mineralized intervals averaging 4.69% REO in drill-hole RES07-1. The rare-earth mineralization encountered in drill-hole RES07-1 is contained within three well-defined carbonatite dikes, and one FMR (iron-manganese-rare-earth element) dike, which all intrude a body of heterolithic intrusive breccia of the Southwest Bull Hill target. This geologic setting is similar to that hosting other REE intercepts on the Bear Lodge property. Two additional core drill holes, RES 07-2 and RES 07-3, were completed during the 2007 rare-earth drill program, and REE assay results for these drill holes are pending. All intervals with visual REE mineralization have been sent to the metallurgical testing laboratory and will be used if the assays are adequate.
Cox: What are the biggest challenges for the Bear Lodge project?
Ranta: We know that significant occurrences of REEs are on the Bear Lodge property based on 24 drill holes; now we have to determine how much bigger it is via additional drilling; and are there multiple deposits on the property? We are also working on finding the best way to process the REE-bearing material and economically extract the metals, including from both the near-surface oxidized (FMR) material and the deeper non-oxidized carbonatites. We are assembling all the drill-hole information into a digital database so that an NI 43-101-compliant resource estimate can be made. Once all of this is well along we can look more in depth at the issues of marketing and sales of potential REE products.
Cox: Describe the minerals present at Bear Lodge.
Ranta: Rare-earth mineralization in the near-surface oxidized dikes consists of very fine-grained bastnaesite-group rare-earth minerals complexly intergrown with gangue minerals often occurring in hexagonal bodies up to a few centimeters in diameter.
Rare-earth mineralization in the non-oxidized carbonatites also commonly occurs within hexagonal pseudomorphic bodies, but the mineral constituents are coarser-grained and consist of the strontium-rare-earth-carbonate mineral, ancylite, which is intergrown with strontianite and minor barite.
Cox: Are the gold and REEs found together or separately at Bear Lodge?
Ranta: Gold occurrences at Bear Lodge that have been recently drilled are adjacent to and nearly surround the REE-mineralized area at Bull Hill. Some weakly anomalous gold is found in the area of the Bull Hill REE mineralization.
Cox: What is the current status of the metallurgy for Bear Lodge?
Ranta: A number of preliminary tests had been run on the REE mineralization including leaching and flotation with a hot-flotation step, but neither of the first two test programs provided definitive results. Beneficiation tests are currently being conducted by MSRDI of Tucson, Arizona, primarily on both mixed and non-oxidized rare-earth mineralized samples to determine the feasibility of producing commercial rare-earth concentrates. Building on the previous metallurgical test work, they will investigate a number of conventional and non-conventional processing methods such as concentrating (or removing) the larger weight percentage of the gangue by appropriate processing techniques leaving behind smaller weight percentage of the valuable minerals in the residue (tailings).
Cox: Do you have any cost estimates for how much it would take to get Bear Lodge into production?
Ranta: Not at this time, but our goal, following successful metallurgical testing, resource estimation, and expansion of the mineralized zone, will be to determine order-of-magnitude operating and capital costs.
Cox: How will you acquire the funds needed for ongoing operations?
Ranta: We are backed by a well-connected finance team that has always been able to raise the funds necessary to Rare Element. We have $2 million in the bank now and expect another $750,000 in 2008 from warrant exercises. If we need to finance more, it is market dependent, but has not been a problem in the past.
Cox: What is the timeline for developing Bear Lodge?
Ranta: It is totally dependent on completing the technical work noted above, and following up with marketing and sales investigations.
Cox: How has the Bear Lodge project changed over the last year?
Ranta: During 2007, Rare Element continued to explore the Bull Hill area carbonatite dikes with core drilling of three holes. Confirmation drilling of two holes at the Bull Hill Southwest target, which contains the historical resource, successfully collected larger amounts of carbonatite samples, which are being used to continue metallurgical studies of this known area of rare-earth mineralization. The Company has confidence that MSRDI will investigate a variety of concentration methods to determine which methodology works best for both the mixed and non-oxidized rare-earth occurrences at the Bear Lodge property.
In addition Newmont has drilled 15 holes testing and expanding the gold mineralization.
Cox: What are common misperceptions about rare earths?
Ranta: Probably their name – that they are “rare”. They are very abundant on earth and mining companies are finding occurrences of them all the time. Because of rare-earths’ physico-chemical properties, they are not often concentrated in exploitable deposits. Those same properties also make it difficult to concentrate rare-earths in laboratory or plant settings. Deposits such as Bear Lodge with a high grade of approximately 3.8% REEs are very unusual.
Cox: Talk about China and REEs.
Ranta: China produces nearly 100% of the world REE supply. Their near monopoly on production allows them to increase tariffs and prices on their products. The Chinese government recently increased export tariffs on Chinese rare-earths to between 15 and 25%. Is China a reliable supplier of REEs at reasonable prices for the long term?
Cox: Who is most concerned about China?
Ranta: Users of rare-earth elements produced by China, because of their near monopoly.
Cox: What deposits are currently being looked at worldwide?
Ranta: Mountain Pass, California; Bear Lodge, Wyoming; Mt. Weld, Australia; Nolans Bore, Australia; Olympic Dam, Australia; Hoidas Lake, Saskatchewan; Thor Lake, Northwest Territories; Palabora, South Africa; Bayan Obo etc in China.
Cox: Are there any significant stockpiles of rare earths in the world today?
Ranta: The tailings dam at Bayan Obo in China or one of the other mines there may be considered a stockpile.
Cox: What is the history of the Bear Lodge deposit?
Ranta: The first prospecting activity in the Bear Lodge area probably took place in the late 19th century when gold prospectors worked placers and small veins in the Bear Lodge Mountains. Thorium and REE mineralization was recognized in 1949 and resulted in a flurry of prospecting activity. The lack of a readily available market for these minerals in the 1950’s caused active exploration to cease. The US Geological Survey studied the Bear Lodge Mountains in the 1970s and reported that one of North America’s largest disseminated REE deposits is found there, according to MH Staatz (1983) in Profession Paper 1049-D.
Hecla Mining Company explored the Bear Lodge rare-earth mineralization in the late 1980s, identifying a swarm of carbonatite dikes at the Bull Hill Southwest target. Hecla drilled 12 core holes into the system intercepting multiple rare-earth concentrations in nearly every hole; earlier, four holes drilled by Duval and Molycorp also had intercepted rare earths. Based on the 16 holes with rare-earth intercepts completed by 1991, Hecla estimated a REE resource, which is considered historical, of 3.9 million metric tonnes (4.3 million tons) averaging 3.8% rare-earth oxides (not compliant with requirements of NI 43-101).
Rare Element has explored the Bull Hill area carbonatite dikes with core drilling of three holes in 2004, two holes in 2005, and three holes in 2007. All but two holes (RES 04-3 and RES 05-1) encountered significant intercepts of oxidized (FMR) and non-oxidized carbonatite dikes that host rare-earth mineralization. The Company’s drill holes were designed to confirm the presence of high-grade REE mineralization, to tighten drill-hole spacing within the mineralized zone, to expand the known mineralized zone of the Bull Hill Southwest target, to gather metallurgical test samples, and to test other REE targets. The historical grades and thicknesses of rare-earth-bearing mineralization defined by Hecla as occurring in FMR and carbonatite dikes have been verified by Rare Element’s recent drilling programs. Metallurgical test work has been previously conducted at two laboratories and a new metallurgical testing program is ongoing using samples from the 2007 drilling program.
Cox: Describe the geology that allows for the presence of this deposit.
Ranta: The Bear Lodge Mountains are composed of the upper levels of a mineralized Tertiary alkaline-igneous complex that has intruded and domed the surrounding Paleozoic and Mesozoic sedimentary rocks in the early Tertiary (approximately 38-50 million years ago). A few large Precambrian rock inclusions are found within the complex and host some of the gold mineralization. The alkaline complex has surface dimensions of approximately 4.5 by 10 km (2.8 by 6 miles) elongate in a northwesterly orientation, with a number of small intrusive outliers cutting sedimentary rocks outside the complex. Rare-earth-element mineralization occurs in the north-central core of the Bear Lodge dome, which consists of multiple intrusions of phonolite, trachyte, and other alkaline igneous rocks, and a variety of associated breccias and diatremes.
Extensive rare-earth occurrences in well-defined near-surface FMR (iron oxide-manganese oxide-REE) dikes and deeper carbonatite (a high-carbonate igneous rock) dikes are surrounded by a number of more widely distributed gold occurrences. One swarm of dikes, striking northwesterly and dipping steeply to the southwest, intrudes a body of heterolithic intrusive breccia of the Bull Hill diatreme. FMR (iron oxide-manganese oxide-rare earth) dikes and veins are interpreted to be intensely oxidized and leached equivalents of the carbonatite bodies that have been strongly weathered from surface to about 120 m (400 ft) deep and moderately weathered another 30 m (100 ft) or so. Carbonatite dikes are interpreted to transition toward the surface into FMR and range in size from veinlets to large dikes approaching 15 m (50 ft) in width. Virtually all of these REE occurrences in the Bear Lodge area are controlled by Rare Element Resources’ claims.
Drill holes in the Bull Hill Southwest target have penetrated the dike swarm including one main thick dike ranging up to 15 m (50 ft) in true thickness, but the dikes have been demonstrated to pinch and swell in both strike and dip directions. The dike swarm has been traced with drill holes up to 240 m (800 ft) along strike and 300 m (1000 ft) down dip, and the dikes appear open down dip and in a southeasterly direction.
Cox: What is the current status of permitting at Bear Lodge?
Ranta: Environmental and permitting activities are being coordinated by Newmont for both gold and REE exploration. A systematic program of drill testing for grade and tonnage of a potentially large gold system is expected to proceed once a new exploration permit is in place allowing much greater flexibility for drill-hole locations than is currently available. Newmont’s permitting efforts are progressing in order to allow an expanded drill program on up to 200 acres. This permit also would allow much greater flexibility for the locating of drill holes for REE exploration. Permit approval could occur later in 2008.
Cox: Which area are you most excited about?
Ranta: The Bull Hill Southwest target is the most advanced with a historical resource, open for expansion in several directions, and, thus, the highest priority. Additional work here would most likely provide the greatest benefit, and metallurgical testing is being done on material from here. The Bull Hill Northwest target has an historical Hecla drill hole with excellent REE results, which has not been adequately offset and explored. The Potential Carbonatite Plug target indicated by an REE-mineralized carbonatite stockwork zone is interpreted to lay at depth southwest of Bull Hill Southwest. The stockwork zone was detected in past holes drilled by the Company, Hecla, and Molycorp. It is interpreted to be a carapace, or shell, over a potential large plug-like intrusive body of carbonatite. This plug is hypothesized to be the feeder structure for the Bull Hill dike-swarm and other carbonatite dikes in the vicinity. Because of its possible size, the potential for a large mineralized plug is one of the most attractive REE exploration targets in the district.
Cox: What are the most significant uses for REE?
Ranta: Industrial uses include:
• Catalysts, including petroleum cracking & auto emissions
• Rechargeable batteries, super magnets
• Hydrogen storage, nuclear reactors, magnetic refrigeration
• Metal-alloying, ceramics & glass additives
• Fiber optics, lasers, phosphors, computer memory
Consumer product uses include:
• About 20 kilograms of REEs in every hybrid car
• TVs, computers, cell phones, DVD players, cameras
• Nickel-metal-hydride batteries, fluorescent lighting
• Medical Magnetic Resonance Imaging equipment
• Car catalytic converters, computers & electrics
Cox: Are there any advantages to the mineral ancylite?
Ranta: Ancylite is the principal rare-earth mineral, which is intergrown with strontianite, in non-oxidized carbonatite dikes of the Bear Lodge property. Ancylite is a carbonate and, as such, is easily amenable to acid leaching once it is concentrated. It contains about 43% total REE, so it has less total REE than bastnaesite, which contains about 75% total REE. Our current metallurgical testing program should provide a more complete answer to the question.
Cox: Are there any significant world deposits known to contain ancylite?
Ranta: I am in the process of learning about the mineralogy of different REE deposits around the world. At this time I do not know of any other deposits with ancylite as the principal rare-earth mineral.
Cox: How much thorium is present in the minerals?
Ranta: Preliminary analysis has indicated a range from a few ppm up to a few hundred ppm thorium in the REE-mineralized material at Bear Lodge. Thorium-bearing minerals in thorium-rare-earth element veins and dikes tend to be stable under natural conditions and concentrate as detrital, relatively insoluble, resistate minerals, even in low pH conditions. Thorite and thorianite have been identified at Bear Lodge, and it is uncertain if any thorium occurs in REE minerals.
Cox: Who do you rely on for your REE market research?
Ranta: Only limited market research has been done by RES. We use several sources such as conferences, several websites, industry experts, the Mining Journal, Metal-Pages Ltd. – from which we get the regular price updates, and various other industry participants like ourselves that put such information on their websites.
Cox: What is the biggest advantage of Bear Lodge?
Ranta: An identified and historically estimated resource of high-grade REO with significant expansion potential located in an easily accessible area with excellent infrastructure nearby; also located in Wyoming which is a state that is friendly to mining and mineral development.
Cox: What is the biggest challenge at Bear Lodge?
Ranta: Initially the biggest challenge is to determine the amenability to metallurgical extraction of rare earths from the relatively high-grade rare-earths mineralization on the Bear Lodge property.
Cox: What has surprised you the most about the rare earths?
Ranta: My biggest surprise is to learn about how rare it is to find economic deposits of rare earths and secondly how widely they are used and the potential for expanding those uses. Also it is surprising that China currently produces nearly all of the rare earths used worldwide.