Stockhead: Grade may not always be king, but scale is ALWAYS queen: Q+A with ARR’s CEO Chris Gibbs

When it comes to mining and exploration, the common refrain is that ‘grade is king’ but in the world of rare earths, things are not quite that simple given you are measuring the total grade of around 17 different elements in different ratios.

Perhaps more important than grade are the economics presented by efficiencies of economies of scale as no process is 100% efficient.

For starters, every time ore goes through ‘a process’ some of it is lost as waste, and this happens from the very beginning when resources are converted into economic reserves.

Rare earth elements can also be found together with radioactive elements such as uranium and thorium.

This means the material needs to be crushed into a powder to allow the minerals to be liberated before they are concentrated into a mineral concentrate, cracked into a higher-grade reactive concentrate, and separated into individual, rare earth oxides.

Needless to say, processing of rare earths can be both expensive and complex, which is why most mining companies send their product off to China, the worlds dominant miner, processor, refiner, importer and exporter of rare earth element (REE) products.

 

Scale is always queen

So, grade might not always be king, but scale is queen.

If rare earth companies are able to prove the ability to process bulk tonnages of REE mineralisation in a cost-effective manner, they will certainly be able to leverage large scale projects with modest grades into successful developments.

American Rare Earths (ASX:ARR) is taking matters into their own hands to shore up future supplies of the commodity at their Halleck Creek project in Wyoming, which boasts a maiden JORC resource of 1.43Bt.

The resource comprises an estimated 4.73Mt of Total Rare Earth Oxides (TREO) with about 24% of that being high value magnet rare earth elements essential for the clean energy transition, modern communication and national security.

The deposit extends from surface with consistent grades to at least 150m, which makes it ideal for large scale, low-cost open pit mining.

Unusually for a rare earths project, Halleck Creek – like ARR’s La Paz in Arizona – has extremely low levels of penalty elements thorium and uranium, enabling it to be much more environmentally sensitive than many comparable projects.

The almost negligible levels of radioactive elements also make the Australian company’s ore attractive to its top-tier US partners involved in Government supported R&D to develop a domestic critical minerals supply chain.

Stockhead sat down with ARR CEO Chris Gibbs to get their view on whether modest rare earth grades are an impediment to successful development.

 

What makes the Halleck Creek rare earths project unique?

“I know some people think that it [the project] is not as high-grade as some other deposits but what makes it stand out is that it is consistent grade from surface all the way to depth.

“I liken it to a large copper-gold porphyry project, where essentially, every tonne of ore that you pull out you’ll be processing,” he says.

“One challenge with rare earth mines is that they often contain high volumes of penalty elements such as uranium and thorium, which means higher processing costs to separate and take these radioactive elements out.

“But Halleck Creek is a homogenous deposit – sure, its grade is not at the same level as some of these other producing mines, but it does not have the penalty elements that these other mines have,” Gibbs explains.

“From a processing perspective, that removes a whole major part of the flow sheet.

“Another big piece here is location – the Halleck project is located right in the heart of the US in the southern part of Wyoming, a mining friendly jurisdiction and state.

“The project is located three hours out of Denver, Colorado in the largest economy in the world, which in turn, has the largest growth and requirement for rare earths.

“That is what sets this project apart, its location, and it is what sets American Rare Earths up to meet the future supply demands of the US.”

 

How do you plan to process the material?

“The processing is like a lot of other mining operations with the grinding and crushing circuit first up before we carry out magnetic separation.

“We’ve just completed the first round of test work and what we have found is that we can remove around 72 per cent of the waste material through this magnetic separation process.

“Essentially what that means is for every tonne of ore, we remove 72 per cent of gangue (or waste) material first up at a very early stage and then from there we’ll head to a flotation and leach circuit and then through to a refinery circuit.”

“The next major stage gate for this project is to complete the metallurgical test work and roll into project economics by the year end.

“But so far, we don’t see any major impediments – in fact, the ore has responded extremely well and has been upgraded at an early phase.”

 

What are some examples of low-grade mines that are in production at the moment?

“I actually ran a large molybdenum mine out of British Columbia – the Endako mine – and my cut-off grade there was 0.43%.

“Other examples of mines that are large-scale and low-grade include Freeport-McMoRan’s Morenci copper mine in Arizona which has a grade of 0.23%,” Gibbs explains.

“If you look at mines in Australia, there’s a number of low-grade high-volume scale mines such as the Boddington gold mine, Telfer, and the Cadia’s of the world.

“Mines in Canada like Agnico Eagle’s Detour Lake gold mine is low-grade, and I was part of the team that built the Mt Milligan mine in northern British Columbia, which is again, a low grade but high volume and very profitable mine.

“This is the thing when it comes to mining everyone talks about grade, grade, grade, but grade is not always king.

“You’ve got to look at the overall project, what makes a project stand out is the deposit, location, economies of scale and processing technologies.

“And whether you can mine it efficiently and effectively, we are obviously still proving out the economics and metallurgy, but so far it is very exciting.”

 

Care to share on what’s happening stateside?

“It is still early days, but one thing is certain, we have a significant deposit in the heart of the USA, the largest economy in the world that is seeking to find resources in-country to meet their needs – that is the biggest distinguishing factor.

“Even when you bring on new projects, the long-term outlook for rare earth elements is significant – some of the projections in the US alone is that you need another ten Mountain Pass(es).

“The US government have made it no secret that it is seeking to onshore supply of these critical materials, I think we are at the right place at the right time.

“Even when you bring on these new projects, the long-term outlook for rare earth elements is significant.

“In the US alone, some of the projections are that you need another ten of these Mountain Pass mines to meet rare earth demand, and we potentially have more resources than what they have got we just need to do the work on it to prove it out, show the economics and get into production.”

Thanks Chris and good luck.