State encouraged by Interior rare earth mineral findings

Photo/Andrew Jensen/AJOC

FAIRBANKS — Alaska state geologists have reported favorable findings of critical minerals in a geological reconnaissance in Interior Alaska and Southeast Alaska, with indications of high concentrations of both light and heavy rare earth elements, or REEs.

State officials reviewed the results Nov. 30 at a rare earths minerals conference at the Princess Lodge in Fairbanks. The state Division of Geological and Geophysical Survey have also published technical reports on the surveys.

About 230 people attended the 2012 Alaska Strategic and Critical Minerals Summit, sponsored by the state Department of Natural Resources. In opening remarks, state Natural Resources Commissioner Dan Sullivan said the meeting was aimed at bringing explorers together with potential investors and customers for new Alaska rare earths projects.

“We want you to meet, talk and leave here with deals,” Sullivan said.

Meanwhile, Ucore Rare Metals Inc., a Canadian exploration company, continues its development work at what may soon be Alaska’s first, and the nation’s only for now, commercial rare earths mine, those at the conference were told.

Ucore’s project is at Bokan Mountain, in Southeast Alaska near Ketchikan on Prince of Wales Island. It has a concentration of heavy rare earth minerals, which are particularly scarce and valuable.

Also at the conference, a respected Alaska mining consultant cautioned that Alaska new rare earths projects face not only the usual disadvantages of remoteness and high costs but also challenges unique to the highly-specialized rare earths markets.

In the Interior, possible deposits of REEs have been located in the Moran district west of Fairbanks and in a Ray Mountains area northwest of the city, Bob Swenson, Alaska’s state geologist, told the conference. Swenson is the director of the geological survey division, which did the exploration.

The state Legislature funded the exploration with a $2.73 million appropriation.

Swenson said rare earths were detected in samples taken from streams and from soils.

“There are indications of possible placer deposit of rare earths as well as lode sources,” he said.

Larry Freeman, a geologist in the geological survey division, said in a separate interview that analyses of stream sediment samples, known as pan concentrates, showed values of up to 2.9 percent rare earths minerals in samples taken in the Moran area.

In the Ray Mountains area, similar pan concentrate samples showed 1 percent to 2 percent across a wide area. An interesting finding was that heavy rare earth showings were found in the eastern part of the survey area while light rare earths were found in the western part, Freeman said.

“We found this pattern all through the area,” he said.

The exploration, conducted by the state Division of Geological and Geophysical Surveys, built on earlier work done in the Ray Mountains area by the U.S. Bureau of Mines, Swenson said at the conference.

“The Bureau of Mines work allowed us to really focus in on certain areas we felt to have high potential,” he said.

Minerals potential in the Ray Mountains area was surveyed to help state officials make a decision over selecting lands in the area from the state’s remaining land selection entitlement from statehood. Swenson said potential REE accumulations were also detected at one location in Southeast Alaska.

Others at the Nov. 30 conference said that REEs have been found at other locations in the Southeast, near Snettisham, Salmon Bay and Salt Chuck, the location of a former palladium mine.

Swenson said Alaska has known occurrences of 15 critical minerals on the U.S. Geological Survey list of strategic and critical minerals. 

Commissioner Sullivan, who opened the conference, said Alaska has a huge mineral endowment besides rare earths.

The state has an estimated 17 percent of the world’s coal resources; 6 percent of the world’s undeveloped copper; 2 percent of world lead resources; 3 percent of the world’s gold, and 8 percent of world zinc resources, Sullivan said in his presentation.

In its presentation, Ucore Rare Metals Inc., said it is at an advanced exploration stage and plans to have its feasibility study done in 2013.

Ken Collison, Ucore’s chief operating officer, said Ucore recently published a preliminary economic assessment of the project, an important milestone. Bokan Mountain has a major concentration of heavy rare earth elements that are greatly in demand by industry, particularly Dysprosium and Terbium.

Completion of the feasibility study, the next step, would set the stage for the company’s approval for construction.

Applications for permits would follow. Collison said it is uncertain how long those will take.

Ucore has also developed a method of processing ore to produce rare earth products at the mine site, pointing a way for rare earth minerals producers to end their dependence on China for processing, Collison said.

Meanwhile, a dose of market realism was injected into the proceedings, however, by Curt Freeman, president of Avalon Development Corp., a geological and mine development-consulting firm. 

Curt Freeman warned the conference to be cautious about the potential for mines in Alaska, and that rare earths markets are highly sensitive to supply fluctuations.

New producers, particularly in high-cost places like Alaska, may face significant hurdles, he said. The industry recognizes this, he said. Despite the critical importance of rare earths and very high prices some are commanding, most mineral exploration dollars in Alaska are still targeted at conventional base metals and precious metals prospects, he said.

“There is great value in some rare earth elements but small volumes being sold make the market extremely price sensitive. Small changes in supply can drive up, or depress, prices very quickly,” Freeman said.

Buyers, however, want price security and will seek arrangements with producers to assure a fixed-price schedule on long-term contracts, he said.

“They don’t care about operating cost variations for producers,” Freeman said.

Because of this, buyers may be wary of taking a chance on a new supplier from a new area like Alaska, and particularly if the mine operator is a small company, he said.

“To get into the market and establish a record for reliability a new producer may have to ‘steal’ a buyer from another supplier,” Freeman said.

Tim Bradner can be reached at [email protected].

12/06/2012 - 8:00am