Robust Pre-Feasibility Study advances ‘a brand-new economic sector’ for Quest Rare Minerals’ Heavy Rare Earth Project
November 4, 2013 — Tracy Weslosky, Publisher and Editor-in-Chief of InvestorIntel interviews Peter Cashin, President and CEO of Quest Rare Minerals Ltd. (TSX: QRM | NYSE MKT: QRM) to discuss the company’s most momentous milestone achieved to date — Quest’s just-released Pre-Feasibility Study for its Strange Lake Heavy Rare Earth Project (B-Zone Deposit), as well as what investors can look forward to in the coming months from one of the leaders in the rare earth industry. Led by a highly experienced management and technical team with a proven track record, Quest Rare Minerals is focused on the advancement of its flagship Strange Lake property in northeastern Quebec, which has the potential to become an important long-term supplier of critical heavy rare earth elements.
Tracy starts by congratulating Peter on the announcement of Quest’s positive Pre-Feasibility Study. “We’re very proud of the study’s results,” explains Cashin. “Quest has presented a financial model that is very robust, pretax and post tax, both in terms of the internal rate of return and net present value at 10% and 12% discount rates. We have also said that, as a bare minimum, we would require at least a 20% (after tax) internal rate of return — and we’ve achieved that. We have about a 22% internal rate of return. Strange Lake is a large industrial investment, but it also a very, very large operation that will be an important source of critical heavy rare earths, as well as niobium and zirconium, long term.”
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Delving a little deeper into Strange Lake and the significant scope of the project, Tracy follows with, “Robust may be an understatement, depending on whom you ask because we’re looking at $2.5 billion, but Strange Lake isn’t just another effort for a rare earth mining project. This is an industrial development of substantial size and could arguably be the major source of super-critical materials for North America,” and asks Peter to comment. “That’s a very good point,” says Cashin, “and that’s always been our marketing intention going forward; that Strange Lake will provide the catalyst for the establishment of a brand-new economic sector for Canada and certainly the province of Quebec. And the spin offs of that, having high-purity individual rare earths, is it could potentially lead to the stimulation of manufacturing capacity. For any government, that is what it wants; having a source of these critical metals provides the federal government with a bargaining chip when negotiating for free-trade zones and becomes an important source for those critical metals for the federal government’s partnership with NAFTA, EU Freed Trade Zone, NATO, etc. 85% of the materials (the value proposition from the deposit) that we will produce at Strange Lake come from the critical heavy rare earth element end (including neodymium, yttrium, europium, dysprosium, as well as lutetium and holmium).”
Commenting on Quest’s Pre-Feasibility Study, Cashin states: “The critical aspect of what we’ve presented in the Pre-Feasibility Study (PFS) is that Quest has advanced the metallurgical work on the rare earth ores to the point where we’re able to report fairly robust yields (in the low to mid 80% range), as well as for niobium and zirconium. We have gone through the mini pilot plant work and we’re now building out for a full-scale pilot plant that should be up and running by the end of the first quarter (or beginning of the second quarter) next year. That is important because it will allow us the opportunity to optimize the flowsheet we’ve developed so far. And there are numerous opportunities to optimize the model we presented in the PFS that will positively impact both the CAPEX and OPEX that we reported for the operation,” which Peter further outlines in the interview. “A 3% improvement in the yields that we reported will actually add 1.1% to the project’s internal rate of return,” notes Cashin.
Other topics include Quest’s competitive advantages, its zirconium placement with TAM Ceramics Group, the company’s advancing discussions to establish partnerships for Strange Lake’s critical rare earths, the sizable announcements and milestones Quest has achieved in the past year, as well as J.P. Morgan’s downgrade of Molycorp., and the WTO’s ruling against China’s REE industry.
Finally, Peter provides an overview of some of Quest’s upcoming announcements and comments on how there is a lot of opportunity for Quest to improve its HREE yields. Regarding the constrained supply of heavy lanthanides outside of China, Peter’s discusses his view of ‘if you build it, they will come,’ regarding the perceived long-term deficit situation for HREEs. “Ultimately our view is if we bring comfort to the market that Quest will be a reliable, long-term source of critical heavy rare earths,” explains Cashin, “that the level of consumption will follow in kind over time.
Disclaimer: Quest Rare Minerals Ltd. is an advertorial member of InvestorIntel.
An accomplished entrepreneur and corporate finance professional, Tracy Weslosky is the CEO for InvestorIntel Corp. and the VP of Business Development for Bellotti Capital Partners ... <Read more about Tracy Weslosky>