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Peak Resources Demonstrates High Rare Earth Recoveries At Ngualla, Points To Low Cost Mine

Peak Resources' (ASX: PEK, OTCQX: PKRLY) results from testwork at Ngualla have revealed recoveries of 95% from the initial acid leach stage and 99% from the primary precipitation stage.

Within a few short years Ngualla has evolved from a greenfields discovery to the fifth largest rare earth deposit outside of China, and the highest grade of the top seven.

Ngualla has a Resource of 170 million tonnes at 2.24% REO, which hosts a highly weathered and near-surface zone estimated at 40 million tonnes at 4.07% REO - equivalent to 1.6 million tonnes of contained REO.

The Tanzanian based project has now yielded some very positive rare earth recoveries from test work completed on the high grade weathered rare earth mineralisation.

The importance of these recoveries is that they highlight the potential of Ngualla to be a low cost rare earth mine in terms of both capital and operating costs, due to its shallow outcropping high grade mineralisation.

The recoveries though as yet are from non-optimised test work.

Richard Beazley, managing director, commented on the positive news: "These results are a significant step forward towards the confirmation of a viable sulphuric acid leach process for rare earth mineralisation at Ngualla."

The next step for Peak is the sulphuric acid leach 'proof of concept' work, which is on schedule to be completed during the September 2012 quarter.

Acid leach process optimisation studies are also planned to further improve recoveries and reduce costs.

Importantly, 54% of the in ground value at Ngualla is from the five critical rare earths; neodymium, dysprosium, europium, terbium and yttrium.

Additional test work results

Acid leach tests on a further 31 samples confirm that high rare earth leach extraction rates of 86% can be expected from sulphuric acid leaching of high grade weathered bastnaesite rare earth mineralisation within the central core of the Southern Rare Earth Zone.

Initial results from the development of an acid bake process for peripheral mixed bastnaesite - monazite rare earth mineralisation shows encouragement with 94% extraction of rare earths using concentrated sulphuric acid and baking at 250°C.

Metallurgical test work strategy

The objective of the metallurgical test work currently in progress is to prove a commercial rare earth mineral processing route for Ngualla and is focussed on three areas:

1. Confirmation and refinement of the sulphuric acid leach process to establish the mineral processing plant design and associated capital and operating costs.

2. Rare earth leach extraction efficiency test work on a larger number of weathered bastnaesite mineralisation samples collected over the entire Southern Rare Earth Zone to confirm the effectiveness of the sulphuric acid leach process on the portion of the Mineral Resource likely to be targeted for development, and improve statistical confidence in the relationship between leach extraction, geology and mineralogy.

3. Evaluation of the acid bake process as a possible alternative processing route, particularly for additional future production from peripheral monazite mineralisation.

Peak is likely to deliver rapid news flow over the second half of 2012.

News will include metallurgical test work updates, plus results from the 15,000 metre resource upgrade drilling program, and also the 4000 metre resource extension drilling program.

There is also 11,000 metres of drilling at the Northern Zone, with 2000 metres of diamond drilling at the Southern and Northern Zones.

Analysis

With a market cap. per REO tonne under $20, Peak is well under-rated compared to peer averages, allowing investors an opportunity to increase exposure pending a potential re-rating in the stock.

Not to be forgotten with Ngualla is the simple fact of being the world's fifth largest rare earth deposit outside of China, while also being the highest grade of the top seven.

Add to the mix milestones and catalysts for valuation change including; extensive drilling programs in 2012 targeting a resource upgrade and resource extension, plus a Scoping Study and more metallurgical test work.

A positive outcome from this work has the opportunity to reward investors over a 12 to 18 month time frame.

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