Thursday 29th September 2016

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Quantum’s Nebraska Niobium Resource Project Will Reduce Foreign Dependence

By Ted Niles

That the US imports 100% of its niobium—indeed, that 85% of the world’s niobium is produced by just one Brazilian company—doesn’t inspire panic in the average person. While familiarity with the metal and its uses is not widespread, the US National Academy of Sciences has deemed it a “critical” metal, and the absence of a domestic producer troubles Washington. Particularly as worldwide demand is predicted to outstrip supply by 2018. Enter Quantum Rare Earth Developments TSXV:QRE, whose Elk Creek Project in Nebraska boasts America’s only NI 43-101-compliant niobium resource.

The 3,802-hectare property was acquired in 2010 by Quantum, which was quick to take advantage of the work carried out by Molycorp in the 1970s and 1980s. “They did over 150,000 feet of drilling,” reports Quantum President/CEO Peter Dickie. “Molycorp walked away from a lot of their exploration projects as they put their Mountain Pass Mine into production, and this was one of them.”

Quantum's Nebraska Niobium Resource Project Will Reduce Foreign Dependence

Niobium is both a strategic and a critical metal

Based on a reanalysis of Molycorp‘s historical work, Quantum released an initial inferred resource for the property in March 2011. The company undertook a drill program the same year—the first the site had seen in 25 years—which was used towards an updated estimate announced April 2, 2012. It reported indicated resources of 19.32 million tonnes grading 0.67% niobium and inferred resources of 83.29 million tonnes grading 0.63%, both at a 0.4% cutoff.

While the new resource reflects increases in tonnage and grade, Dickie notes, “We’re realizing that the more drilling we do, the [greater] likelihood we’re going to see improvement in not only overall tonnage but grade and category as well. If you look at our drill results, we had substantial intercepts of well over 1% material. Obviously, the more drilling we do in that vicinity, the more we’ll be able to elevate our resource and our grade.”

Niobium is used in small quantities to both strengthen and reduce the weight of steel. In the form of ferro-niobium it is used in the automotive, pipeline and construction industries. It is also used in superalloys by the aerospace and defense industries. It has been estimated that demand for the metal has grown at a 10% compound annual growth rate over the last 10 years and that future demand is likely to increase at the same rate.

As mentioned above, about 85% of world supply is produced by Companhia Brasileira de Metalurgia e Mineração. Anglo American’s Catalão Mine, also in Brazil, produces approximately 6%, while IAMGOLD’s TSX:IMG Quebec Niobec Mine produces most of the rest. Dickie points out that there is only one other North American niobium producer in the wings—Taseko’s TSX:TKO Aley project in BC. Aley has inferred resources of 159 million tonnes grading 0.43%, at a 0.2% cutoff. “Obviously our grade and tonnage is quite significant from a North American standpoint,” Dickie says. “Elk Creek is likely the largest deposit with that kind of grade. And it’s the only one we know of in the US, where niobium is considered a strategic metal and subject to potential stockpiling.”

Quantum will next undertake a preliminary economic assessment. A metallurgical test program is ongoing, and Dickie hopes to see “some concrete numbers within the next few months. [The PEA] is about a four- to six-month process following receipt of the metallurgy.”

Our indicated resource contains just under 129 million kilograms of niobium. Our inferred resource has another 523 million kilograms. The current price for niobium in the form of ferro-niobium is about $43 a kilogram. So the numbers are very big on this —Peter Dickie

Quantum intends taking Elk Creek to production, but between the resource and the infrastructural advantages offered by the American heartland, Dickie admits that the project now entices larger companies. “We have had some discussions ourselves and been made aware of others who have had their eyes on this project. I would suspect that one or more may act on it prior to us getting into production.” He adds, “Potentially we’ll have a partner involved by the time we start drilling on this project again.”

While it has been a difficult year for mining equities generally, Dickie believes Quantum is undervalued more as a consequence of niobium’s obscurity. He explains, “Close to 90% of the market comes from a private mine in Brazil. A lot of the transactions are dealt with between a private company and the end user, so they’re never reported. It’s not as widely known a market as other commodities.”

He concludes, “It’s not normally done on smaller-market materials such as niobium, but certainly if you want to look at the in situ value at [Elk Creek], it’s very valuable. Our indicated resource contains just under 129 million kilograms of niobium. Our inferred resource has another 523 million kilograms. The current price for niobium in the form of ferro-niobium is about $43 a kilogram. So the numbers are very big on this.”

At press time, Quantum had 86 million shares trading at $0.205 for a market cap of $17.6 million. Its other projects include the Archie Lake REE property in Saskatchewan and the Jungle Well and Laverton rare earth projects in Western Australia.


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