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Kimberley Rare Earths intercepts broad zones of rare earths at Cummins Range, Western Australia

Kimberley Rare Earths (ASX: KRE) has intercepted up to 41 metres at 3.85% total rare earth oxides (TREO) at the Cummins Range Rare Earth Project in Western Australia as it aims to upgrade the project’s Resource.

Broad rare earth intercepts have been returned from the infill and extensional reverse circulation drilling program that was recently completed at Cummins Range.

The best intercepts from the program include:

- 41 metres at 3.85% TREO from 11 metres;
- 61 metres at 2.04% TREO from 2 metres; and
- 30 metres at 2.93% TREO from 37 metres.

High grade intercepts of up to 3 metres at 11.14% TREO from 51 metres have also been intercepted.

So far about 50% of assays from the program have been received, with the remainder due within 10 days.

“The most exciting thing about this for us is it’s really confirmed this deposit as being a very consistent and good quality deposit,” Kimberley managing director Tim Dobson told Proactive Investors today.

“Also, it’s changed our view on the shape of it a little bit, having a northwest-southeast strike, and we’re seeing that it’s still open in those directions, both to the northwest and to the southeast.”

Segments of the deposit have been observed as being preferentially enriched in heavy rare earth oxides (HREO), with studies underway to determine if these can be taken advantage of during the early stages of mining.

There is potential to exploit the deposit using open pit mining, with much of the deposit outcropping or occurring within 50 metres of the surface. Due to the near surface nature of the mineralisation, no pre-strip would be required for a potential starter pit.

Importantly, low levels of uranium and thorium could reduce the radiation management criteria for the project.

The Cummins Range drilling program was initially aimed at extending and upgrading the existing JORC Inferred Resource, which currently stands at 11 million tonnes at 1.1% TREO, based on a 0.5% cut-off.

Results from a 2007 drilling program at the site were missing some quality control data and lacked a specific gravity measurement, meaning the Resource was unable to be upgraded.

Dobson said the company was focused on gathering sufficient data to make an upgrade possible.

“We’ve now measured that specific gravity, and in conjunction with the independent geologist we have got all the quality assurance/quality control done properly, so we’ve now ticked both those boxes."

A total of 4,230 metres of drilling has been completed in 77 holes, with 4,499 samples submitted to Intertek/Genalysis in Perth for analysis.

In addition to rare earths, each sample will be assayed for uranium, thorium, phosphorus, scandium, niobium, tantalum and a range of gangue elements, to assist with metallurgical characterisation.

Kimberley also tested five high priority aeromagnetic target areas, with drill sites selected by combining the gravity and geochemical data.

Difficult drilling conditions including binding clays, voids and water flow in several holes reduced the program over the central resource area.

These ground conditions are also characteristic of the strongest mineralised zones in the Cummins Range rare earth resource.

While final results are pending, Dobson says Kimberley has started metallurgy work, with basic sighter flotation tests being carried out on samples from the 2007 drilling campaign.

“Once we’ve got all the assays in we’ll then identify which samples, intersections that we want to use for a much larger flotation test work campaign," he said.

“Over the summer when we can’t drill we’ll actually be doing a lot of metallurgy; that will then also assist us with the next drilling program and we will almost definitely take a diamond drill rig into the site at the end of the wet season to get much better metallurgical samples.”

Kimberley holds a 25% interest in Cummins Range, but has the right to earn up to 80% by finding exploration and development through to the delivery of a bankable feasibility study.

The company will spend $10 million within four years to increase its interest to 55%.

Analysis


Kimberley’s Cummins project is in the same state as Lynas Corporation’s (ASX: LYS) Mount Weld, which is believed to be the richest known rare earths deposit in the world. This provides the company with a road map of sorts for approvals.

In addition, the majority of rare earths oriented stocks have been marked down by the market in the last few months.

Kimberley Rare Earths has been no exception, down from $0.17 in July to a current share price of $0.10 in December,

On an EV/Resource Tonne valuation, Kimberley is currently one of few rated negatively. Clearly, with any market pick up, this situation will be unlikely to last, providing an opportunity for investors at current prices.

On an in-situ valuation, Cummins' resource would be valued at around $4 billion, depending on recoveries in mining and processing.

While it might have only listed in May 2011, Kimberley is among the front line of rare earth producers, one of few advanced rare earth resource players outside China.

Managing director Tim Dobson is progressing Cummins through exploration and development into production.

The sell-off of rare earth stocks seems to have discounted and disregarded the potential of this world class project, having reduced the market capitalisation of Kimberley to near cash levels.

This provides investors with an opportunity to get onboard at the beginning of a well-funded multi-year exploration and development program.

Kimberley Rare Earths appears ready to follow in the footsteps of other notable Australian rare earth developers such as Lynas Corporation, Arafura Resources (ASX: ARU) and Alkane Resources (ASX: ALK).


Article originally published at: http://www.proactiveinvestors.com.au/companies/news/23071/kimberley-rare-earths-intercepts-broad-zones-of-rare-earths-at-cummins-range-western-australia-23071.html