Medallion Resources Ltd (TSX-V: MDL) has signed a Letter of Intent (LOI) with a private vendor to acquire an option for 100% of a Red Wine REE exploration project, which consists of four Labrador mineral licences totalling 3,325 hectares.
The property covers parts of the Red Wine peralkaline intrusive complex in an area approximately 100km northeast of Churchill Falls, Labrador.
"The acquisition of the Red Wine Property is an important step for us, as it expands Medallion's property portfolio with a potentially significant heavy-REE project", Medallion President Bill Bird said. "Peralkaline rocks, in particular those that contain the mineral eudialyte, are prime targets for heavy REE's and the Red Wine rocks are well-known for REE occurrences and high concentrations of eudialyte."
The company said that its agreement provides a full field season of exploration work, before it is required to begin a series of payments to the vendor. The vendor has also agreed to purchase a C$50,000 private placing shares, to assist in funding this initial exploration work.
During the coming field season ... [we will] map and sample, fly an airborne radiometric survey and conduct petrographic and mineralogical analyses. The data and conclusions will be presented in an NI43-101-compliant Technical Report", Bird added.
Upon completion of the exploration program, Medallion may elect to proceed with the Option to acquire a 100% interest in the property.
To maintain the option, it must pay to the vendor over a period of five years, an aggregate of $525,000 cash and issue 1.9 million common shares. Medallion must complete, during the five-year period, $400,000 in exploration work on the Property.
The company noted that there is a 3% royalty, which it has the right to purchase half of (1.5% pts) at any time, by making a cash payment of C$1.5 million to the Vendor.
Medallion Resources is the second TSX-V listed rare earth explorer to option into a Red Wine REE property in as many days. Yesterday, Great Western Minerals Group (TSX-V: GWG) entered into an option agreement with Search Minerals’ (TSX-V: SMY), in respect of a 50% working interest in a Red Wine property, which comprises 401 claims over 10,025 hectares.
In order to earn the option, GWG must pay C$225,000 in portions until 30 April 2012. GWG will also issue 1.5 million common shares before that date and fund a C$1.5 million exploration program over three years with a minimum requirement of C$750,000 in the first year. The company will also be responsible for paying Alterra, which will operate the project, a 10% management fee.
According to GWG, the Red Wine complex hosts up to 30% of the heavy rare earth element (HREE) enriched material eudialyte.
Samples with up to 1.3% total rare earth oxide (TREO) and greater than 3% zirconia were obtained in the preliminary sampling by Search Mineral’s Alterra subsidiary. Of the TREO, up to 50% of the REEs are the critical, and highly valuable, HREE.
Disclosure: The author holds no positions in the company