Montero Mining and Exploration (CVE:MON) has revised a portion of its initial NI 43-101 compliant resource for its Wigu Hill rare earth element (NYSEMKT:REE) project in Tanzania to outline a higher grade deposit for the Twiga zone, it said Tuesday, lending potential for an initial starter pit.
The initial inferred resource, for the Tembo and Twiga zones released in September 2011 included 3.3 million tonnes grading 2.6% light rare earth oxides. The updated estimate released Tuesday, prepared by AMEC, is only for the Twiga portion, and is based on data from the initial 15 core boreholes used in 2011, as well as data from infill drilling of 17 boreholes completed in 2012.
The newly defined higher grade rare earth resource at Twiga, located on the south eastern ridge of Wigu Hill, is comprised of 1.9 million tonnes at a grade of 2.7% light rare earth oxides. According to the company's statement, a sensitivity analysis at a cutoff grade of 3% has also shown that the inferred mineral resource contains a higher grade portion consisting of 0.47 million tonnes averaging 5.2% light rare earth oxides, to a depth of 50 metres from surface.
Shares of Montero rose more than 8.3 per cent this morning, to 6.5 cents. The company's stock was halted earlier today pending the release of the news, and resumed trading shortly after the announcement.
"The Twiga Zone sits at the base of Wigu Hill close to current infrastructure and roads and could potentially represent an initial starter open pit," said president and CEO Dr. Tony Harwood in the statement.
"Montero is studying this zone with a view to direct shipping of a pre-sorted mineral concentrate product for REE refining."
In a recent interview with Proactive Investors, the chief executive said that the junior explorer is dealing with rare earth minerals in fresh, unweathered rock, and can use various physical processes to upgrade those minerals to a higher grade percentage, through methods including gravity separation and x-ray sorting, with the potential to upgrade to up to 50% TREO in a rare earth mineral concentrate. "If we can do that, we can target reducing one of our biggest costs in the rare earth extraction process using acid consumption in the leaching plant," he said in July.
Metallurgical testwork on samples from the property are ongoing and Montero has already produced samples of saleable product for marketing purposes, with the updated resource today providing a base for the testing of potential trial mining in the next stage of the project. "The current tonnage itself may appear to be small, however, this resource reflects the potential of only a small near surface fraction of the Wigu Hill Complex," the company said in its statement Tuesday.
The rare earths explorer is also coming off fresh from the receipt of its EIA certificate - part of the requirement for a mining license application. The EIA certificate from the Tanzanian government was received in late June, to fulfil section 92(1) of the Environmental Management Act in the country. The company is planning to submit a mining license application within the quarter, with expectations that it will receive the permit sometime in the first half of next year.
Montero's main Wigu Hill rare earth element (REE) deposit in Tanzania, which is 81 per cent owned by the company, is a steep hill that is 250 metres above sea level, 550 metres above the surrounding coastal plain, with the highest peak at 796 metres above sea level.
The project is located about 65 kilometres south of Morogoro and 200 kilometres southwest of Dar es Salaam in southeastern Tanzania. The project, which is accessed by all-weather roads and is 12km from a rail siding on the Tazara railway linking the project with the port in Dar es Salaam, covers a 142 square kilometre area. Grab samples from the site have yielded results as high as 27.25% total rare earth oxides, with up to 16.68% TREO from drilling.
The junior explorer's plan is to fast track a portion of the large deposit to the mining and production stage, but with a more comprehensive drilling program, Montero is convinced it can expand mineral resources to well above 40 million tonnes.
Its fast track strategy and decision not to focus only on expanding resources has allowed the company to become one of the first juniors to produce samples of individual and mixed oxides for marketing purposes, making it attractive to potential funding partners and positioning it ahead of the pack.
Indeed, a due diligence process with an undisclosed "strategic investor" is currently underway, initially announced last December. The said investor has proposed to provide equity funding at project level toward the development of the project, which includes both a mine and refinery, according to the company.
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