Rare Element Resources ex-CEO, Dr. Bill Bird, has resurfaced and restructured
Medallion Resources (MDL:TSXV)to search for an economic rare earth metals deposit. Medallion Resources is our Speculative Featured Rare Earth Company of 2010.
Bill Bird was the CEO of Rare Element Resources from July 2005 to October 2007. It must be noted that, during his tenure with the company, Rare Element's share price increased from a low of
.17 to $1.60 per share and saw its market capitalization more than quadruple. Dr. Bill Bird was pivotal in setting the stage for Rare Element's continued growth (currently trades at $3.65). Also during his tenure with Rare Element Resources, Dr. Bird struck a deal with Newmont Mining, signing a definitive joint-venture agreement to explore Rare Element Resources' Bear Lodge property for gold.
Now, after almost 2 years, Bill Bird has resurfaced as the CEO and President of Medallion Resources, a company solely focused on the acquisition and development of rare earth metal deposits - Dr. Bird's passion.
After speaking with several well respected professionals in the mining sector, and more specifically, the rare earth arena, we learned that Dr. Bill Bird is an authority when it comes to rare earth metals and has proven himself as one of the best in the business.
Bill Bird's strategy with Medallion is as follows: Medallion will position itself, through acquisition of top-quality projects and the application of advanced exploration techniques, at the forefront of the rare earth exploration industry. Medallion's criteria for additional acquisitions emphasize heavy REE's and new types of rare earth metal occurrences that may be amenable to large-tonnage open-pit production.
Our interest in Medallion arose from Dr. Bird's involvement and the recent deal they just struck with a familiar face. We are bringing forward Medallion Resources at this time for one reason...
Dr. Bird and his team at Medallion have already made significant progress in their search for a potential world class rare earth metals deposit. Medallion did this by signing a definitive option agreement to acquire an interest in the highly respected Eden Project (located in Manitoba) with Dr. Bird's old friends at Rare Element Resources. Before we explain the working relationship which Medallion has entered into with Rare Element Resources, it should be noted that Medallion management has stated that the Eden REE occurrence is one of the top-ten North American rare earth element prospects.
Eden REE Property Highlights:
· Potential for high values of neodymium, a key component of super magnets & hybrid cars.
· Large mineralized area, high REE values & multiple-mineralization styles support target for large surface deposit
· Property is expected to present few permitting, environmental or social concerns
· One of few REE properties in Canada within practical distance of roads, power & mining-service centres (only 6 kilometres from a major highway and only 20 kilometres from Leaf Rapids, where hydroelectic power is available)
· Mining-friendly Manitoba is considered the second-best jurisdiction in the world for exploration & mining
On February 23rd 2010, Medallion and Rare Element Resources completed a definitive option agreement. The details are as follows:
Option to Acquire an Interest in the Eden Project -- Medallion has an option to earn a 65% interest in a joint venture (the "Option") to explore the Eden REE property, which comprises eight crown mineral claims (1871 hectares). In order to maintain its Option, Medallion, over a five-year period, must complete the following work-commitment expenditures and payments and share issuances to Rare Element Resources Ltd, the property owner and potential joint venture partner:
Production from the claims is subject to a 3% Net Smelter Return royalty ("NSR"), which is in favour of the prospector that originally staked the claims. Half of this NSR may be purchased for $1.5 million.
Upon completion of the payments and work commitments, Medallion may exercise its Option to acquire its interest in a joint venture with RES, which will be created to explore the Claims (Medallion will hold 65% and RES will hold 35%). At that time, the Claims will be deeded to the joint venture. Medallion will be the operator of the project during the Option period and, as the majority interest holder, it will be the operator of the joint-venture project, as well.
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Medallion's Immediate Plans at Eden Lake
Medallion's plans for the 2010 Eden REE Exploration Program are quite extensive. Management has cited that with the recent REE discoveries and the early stage of work at the Eden property, the opportunity for the definition of significant mineralization is exceptional. A two-phase program is needed to further this definition. The first-phase-program goal, which will be completed in 2010, is to locate drill targets throughout the eight-square-kilometre, intensely mineralized REE core area.
These targets will focus on the following:
* Expanding the volume of known REE-rich carbonatite.
* Testing for a large REE-rich carbonatite stock at depth.
* Expanding the volume of known REE-rich pegmatite.
* Exploring for additional REE-rich hydrothermal veins.
* Assessing areas of potential metasomatic enrichment of the REE's.
* In all occurrences, assessing potential for the more-valuable heavy REE's.
The previous exploration work, particularly the 2002 discovery and characterization studies and the 2006 reconnaissance drilling, provide a good basis, including known untested targets, for this first phase of a new generation of work at the Eden Project.
Mining in Manitoba
As mentioned earlier, the Eden Project is located in the favourable mining province of Manitoba. Manitoba has been selected as the second-best jurisdiction (among 72 worldwide) in which to explore for, and mine mineral resources by Fraser Institute's Annual Survey of Mining Companies in 2008/2009. This is a very notable piece of information and something that adds to our confidence in continued development and support from the region. As a project advances, knowing you have the government on your side is vital.
Medallion has no issues with First Nations, Metis, aboriginal or other communities within the Eden REE Project claims or the Eden Lake ASI. There are no known endangered species within the Eden Lake ASI and there are no environmental organizations that have any unusual interest in the Eden REE Project claims or the Eden Lake ASI.
Eden Lake's History
Rare-earth elements have been known at Eden Lake since 1988, when detailed sampling by the Manitoba Energy and Mines Minerals Division discovered elevated levels of REE's in the core area of the Eden Project. At that time, the discovery garnered only moderate interest because REE's were not thought to be of great importance. As with much of Manitoba, gold, nickel and base metals were of far more interest than REE's. The tide is turning.
Now that rare earth elements/metals have entered a period of increased demand, support for projects such as Eden Lake will exist.
In last week's newsletter we talked about just how serious the US Government is taking the shortfall in rare earth supply.
Key Fact:In early 2009, US Congress ordered the US Government Accountability Office to undertake a comprehensive review of US dependence on rare earth metals for their use in military applications (night vision goggles, range finders, precision guided munitions and cruise missiles are a few examples).
This is the tip of the iceberg when it comes to the demand frenzy. China, which is responsible for over 95% of the world's production, has begun hoarding rare earth metals as a way to increase prices and ensure its own ability to sustain technological advances for years to come.
Last week we quoted Jack Lifton, an independent rare earth metals expert, who commented "China has reduced exports of the metals since 2004. If that policy continues, the world could face a huge shortfall. At end of 2015, China will no longer be exporting rare earth metals. If the West has not found its own manufacturing, then the West will be no longer making rare-earth-based end products."
As our dependency on technological products increases and infiltrates every aspect of our lives, demand for rare earth metals will only increase. If you use a phone, computer, watch TV or drive any type of electric vehicle you can relate to this. Those are just four of the thousands of products which use rare earth metals. North America has no choice; it must establish domestic producing resources or risk dependency on foreign nations.
Medallion Resources (MDL:TSXV) is a junior rare earth element company at the beginning of its growth stage. There are very few rare earth players in the market right now and with such high speculation occuring in the industry, this sector can't be overlooked.
All the best with your investments
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