Matamec’s Kipawa REE project proceeds toward 2016 production with support from partner Toyota
Matamec Explorations Inc. (“Matamec”, TSXV: MAT | OTCQX: MHREF), on August 8, announced the receipt of USD$ 565,769 from its Japanese partner Toyotsu Rare Earth Canada, Inc. (“TRECan”), a subsidiary of Toyota Tsusho Corp. (“TTC”) as part of the final payment of just over CAD$ 16 million to fund a definitive feasibility study (FS) for the Kipawa rare earths deposit. Under the terms of the Joint Venture Agreement, with the final payment received, TRECan will now acquire a 49% undivided interestin the Kipawa JV Property. Matamec “is the only rare earth exploration company to have received funds to accelerate and complete a feasibility study and an environmental and social impact assessment study of a HREE deposit”.
The results of the feasibility study will be announced on September 4. This will be an important achievement, considering the difficulties that many emerging rare earth companies have been facing in order to reach this stage. Matamec has shown the importance of securing partnerships, whether in the form of an off-take agreement or other forms of cooperation, with influential industry players in order to advance investment and technology intensive mining projects as are those involving rare earths. Matamec is unique in that it is the only rare earths company to have signed a major automotive manufacturer as a joint venture partner with a guaranteed sale of its products for the duration of the mine, estimated at 13 years. Clearly, this has greatly reduced Matamec’s economic risk. TTC considers the Kipawa deposit as an essential source of HREE to build hybrid vehicles, an area in which the parent company Toyota has placed a great deal of its future growth prospects.
The actual amount of rare earths used in hybrid vehicles is small; however, these elements are absolutely crucial for the manufacturing of the magnets, superconductors, catalysts and batteries that are increasingly used in hybrid and electric vehicles. HREE’s are making it possible to reduce battery weight, dimensions while increasing their power in conjunction with developments in battery charging technology that will drive demand for EV’s and hybrids over the next few years. Demand for rare earths could soon exceed supply, given that China produces 97% of these critical metals and is tightening the reins on exports.
Matamec specializes in the development of heavy rare earths in the Canadian provinces of Quebec and Ontario but the focus has been its Kipawa project in Quebec. The partnership with Toyotsu is ensuring that production stage will be reached by 2016. Toyotsu has agreed to buy all metals produced at the Kipawa property. In March 2012, Matamec decided to skip the ‘preliminary feasibility study’ phase – in view of a favorable preliminary economic assessment – and move directly to the full FS. Meanwhile, Matamec has already started metallurgical tests, including the construction of a pilot test facility. Last April, Matamec announced the discovery of new REE zones, bringing the total number on the property to 12. The property includes HREE’s and some niobium (Nb). Niobium has a number of applications but in the automotive sector it is especially desired for its steel strengthening qualities and used to make the future ‘high strength low alloys’ to enable manufacturers to reduce weight and, therefore, lower fuel consumption. Moreover, as rare earths expert Jack Lifton noted a few years ago, the Toyota Prius is the “biggest user of rare earths of any object in the world,” including a kilo (2.2 lb) of neodymium (Nd) in the electric motor and 10 to 15 kg (22-33 lb) of lanthanum (La) in the battery pack. The higher the desired fuel efficiency, or duration of the electric charge, the more Nd and La would be required.
The partnership has enabled Matamec to overcome the financial hurdle of funding the FS, which will determine whether to proceed,or not, with construction; a ‘yes’ decision would see production starting by the second half of 2016 as scheduled. Matamec will then join Lynas and Molycorp as one of the few companies outside China able to supply high-quality rare metals. This will be no small feat, given the difficulties faced by other exploration companies in achieving project targets. Matamec has other exploration activities as well; it holds seven other sites in Quebec and Ontario, all located in well-mineralized zones, featuring gold, silver, other minerals, as well as rare earths. However, these projects are in the early stages and the Kipawa Project remains its main activity.
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