Friday 2nd December 2016

Resource Clips


Heavy Potential

Elissa Has Found Rare Earths in Nevada

By Ted Niles

Elissa Resources’ motto “Security in discovery” has a dual meaning. The first is the suggestion that company shares are a wise investment. But given that Elissa’s focus is on those mysterious but essential minerals known as rare earths, its secondary meaning, national security, makes it particularly apropos. “Rare earths are very important economically,” says President and CEO Paul McKenzie, “particularly to economies as big as the United States. And those counties are not producing rare earths.”

China is: about 97% of them. And China, as a consequence of new environmental regulations and quotas, has reduced its rare earths exports by about 70%. McKenzie explains the consequences, “It causes the price of rare earths to skyrocket. And they’ve steadily done so over the past couple of years; in the last six months alone they’re up 300% to 500%. And it scares the hell out of other countries because they cannot have a steady source of rare earths, to the point where the United States is strongly considering stockpiling them.”

Elissa Has Found Rare Earths in Nevada

There are 17 rare earth elements, and their uses defy enumeration. “Pretty much everything we use in this modern world is entirely dependent upon them,” McKenzie says, “from computers to cell phones to hybrid cars, wind generation, lasers, fluorescent light bulbs.” He adds, “There are military applications, so the US does not want to get caught short.” This is where Elissa’s Thor Project comes in: “We’re basically trying to create domestic sources in the United States of rare earths.”

Thor comprises 183 contiguous claims, totalling 1,481 hectares, located on the Nevada side of the Mojave Desert Region, about 120 kilometres south of Las Vegas. Work to date has consisted of surface mapping, satellite imagery analysis, channel sampling and geochemical work, with sample results as high as 10.6% REE. There is as yet no resource estimate, but even now McKenzie is particularly excited. “We found a structure [the Lopez trend] 2.6 kilometres in length,” he reports, “and wherever this thing comes up out of the alluvial of the Mojave desert we’re getting very strong grades of both heavy and light earths on surface.” Elissa has had similarly positive returns on its other two areas of focus: Black Butte and NED.

The presence of these rare heavy rare earths makes Thor of unique interest. “There are no straight-up heavy rare-earth deposits,” McKenzie says. “You’re going to get a light deposit occasionally with a percentage of heavies. But in our case, of all the sampling we’ve got back, about 10% were heavies, and 90% were light. That’s significant.” McKenzie contrasts Thor with its neighbour 26 kilometres to the west, Molycorp’s Mountain Pass Mine—the only producer of rare earths outside China, currently undertaking a $531-million modernization and expansion program—and the renowned Bayan Obo Mining District in Mongolia, both of which show under 1% representation of heavy rare earths. “Because of their size they’re going to produce some good amounts of heavies. But they’re certainly not supporting world demand.”

Every time we’ve set foot on the property it’s become more intriguing, more interesting, more exciting —Paul McKenzie

McKenzie continues, “There are four metals that are deemed critical by the US Department of Energy: neodymium, terbium, dysprosium and yttrium. We have some very strong representation of all of those. In fact, we have strong representation in 13 of the 17 rare earth elements. The ones we have strong representation of are the ones deemed most critical by the US Department of Energy.”

Following further ground geophysical work and the acquisition of more ground in the area, McKenzie anticipates drilling to begin “within a few months.” He says, “Every time we’ve set foot on the property it’s become more intriguing, more interesting, more exciting. But really the truth is going to be in the drill program. If that stacks up for us, then we’ll immediately expand that pretty aggressively.”

McKenzie argues, “Even a small discovery could potentially be a fast track to production. And we know that [Molycorp] is looking for more heavy rare earths. They’re becoming a pretty aggressive company; they’re smart. I think what they’re really trying to do is to become to rare earths what Cameco is to uranium. They want to be the dominant player. If we have something of size, even modest size, they may well be interested.”

Elissa Resources has 28.8M shares, currently trading at $0.37 and a market cap of $10.7 million. In addition to Thor, it has two gold projects: Sage Creek in Idaho and St Elmo in Nevada. Both properties are “drill ready,” and McKenzie anticipates a Sage Creek drill program of “about six to twelve holes of no less than 100 metres depth” will begin soon. He believes that both projects have “multimillion-ounce potential.”

McKenzie concludes, “We have a significant advantage being next to Molycorp. They are in the process of reopening, and they’re spending a billion dollars to do so—a vast majority of that going into their refining process and refining facilities. This may give us an edge if we make a discovery.”


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