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Strange Lake - Rare Minerals

October 25, 2013

Quest Rare Minerals Ltd. has released results of its prefeasibility study (PFS) for its Strange Lake deposit in northern Quebec on the border with Labrador. The $2.57 B project looks positive to move forward with a pilot project and feasibility study next year.

The Strange Lake project covers a total area of approximately 23,680 hectares and is situated approximately 1,100 km northeast of Québec City. Vale’s nickel-copper mine at Voisey’s Bay is the closest mine, located approximately 125 km east of Strange Lake, on the Labrador coast.

The deposit currently has an indicated resource of 278,128,000 t at 0.93% TREO, 1.92% zirconium oxide (ZrO2), and 0.18% niobium pentoxide (Nb2O5), and an inferred resource of 214,351,000 t at 0.85% TREO, 1.71% ZrO2 and 0.14% Nb2O5. It is the world’s largest and highest-grade heavy rare earth (HREE). “Quest believes that strategic North American industries from defense to automotive (electric cars) to wind turbines will welcome a stable source of rare earth product. Quest offers a major high-technology industrial opportunity for Québec and Canada with potential for employing many highly-skilled technical and engineering employees.”

Total project construction capital costs are estimated at $2.57 billion, based on a minimum mine life of 30 years. The cash operating costs average $432 million per year, $300 per/t milled. The project will generate on average $1.047 billion of revenue per year, comprised of 55.8% from the sale of HREE+Y concentrate, 17.3% from the sale of zirconium product, 12.9% from the sale of niobium product, and 13.9% from the sale of a light rare earth (LREE) concentrate.

In 2014 the company will see the establishment of Supply and Strategic Development Agreements, commence a Pilot Plant and start a Feasibility Study. The company anticipates around 834 full time jobs will be created in the mining, processing and admin functions. The mine is designed to ship 1,440,000 t of ore per year to the metallurgical processing facility, located near Montreal.

Quest Rare Minerals (ticker QRM on TSX) trades at $0.84 with a market cap of $59M. The shares are down from $1.20 a year ago.


It looks like a great project. Still the project begs the $2.6 B question—how does a small company raise close to $3B in capital in a hard market ?

It is interesting that Avalon Rare Metals Nechalacho Rare Earth Elements Project in NWT is reconsidering its initial plan to site its hydromet facility at Pine Point NWT. Now they are looking at Saskatoon. Both Quest and Avalon are disinclined to consider hydromet plants in the high cost north.

No doubt about it the Strange Lake project would be a major coup for Quebec, and for Canada. There are no heavy rare earth processing facilities in the western world—China has a near monopoly.