Pacific Wildcat Resources Corp PWCRF

PAW write up

[martin81]

Here is a favourable write up on the front page of Mining Markets.

https://www.miningmarkets.ca/


DAILY NEWS Jul 8, 2011 2:15 PM


For Pacific Wildcat Resources (PAW-V), the initial niobium resource it released yesterday for its Mrima Hill project in Kenya could be the start of something big.

Not only is the inferred resource of 1.51 billion lbs. niobium pentoxide, contained in 105.3 million tonnes grading 0.65% Nb2O5, sizable on its own, but it could help the company eventually get production of rare earths going at Mrima Hill.

The project also contains a high-grade rare earth deposit that overlaps the niobium resource.

"The easy thing to put into production is the niobium," says Don Willoughby, the company's corporate communications manager.

The resource, which was calculated at a cutoff grade of 0.2% Nb2O5, is located within 30 metres of surface and contained in weathered carbonatite. Once the company upgrades the resource, proves up reserves and completes a feasibility study, niobium production could provide internal funding to develop the rare earth deposit. Willoughby says the cash flow could mean development of a rare earth mine with minimal dilution and without having to rely on offtake agreements as much as other companies might have to.

There are only three major niobium mines in the world, with the biggest of these - CBMM's Araxa mine in Brazil - capable of meeting global demand on its own.

However, Willoughby says that niobium buyers don't want a single source of supply and have done whatever they can to encourage other sources.

Most of Pacific Wildcat's management were involved with Australian tantalum producer Sons of Gwalia, which went bankrupt in 2004 because of hedge book problems in its gold division (a production shortfall left it unable to cover its forward sales contracts). However, from their experience with tantalum, the management is well acquainted with the people and companies who buy niobium. Willoughby says niobium and tantalum have similar conduits to the market - both are sold on long-term contract, and not on a spot basis.

"In order to understand the marketplace, you really do need to have those contacts," he says.

Niobium is a steel-strengthening metal, consumption of which has doubled over the past decade. Pacific Wildcat reports the current price for ferroniobium at US$46 per kg.

Mrima Hill, 80 km south of Mombasa, has a long history, with work by Anglo American and the Kenya Mines Department dating back to the 1950s.

It contains various historic resources (not compliant with National Instrument 43-101) including: 50 million tonnes grading 0.67% Nb2O5, 100 million tonnes grading 0.7% Nb2O5, and 32 million tonnes grading 3.1% REO.

The current resource only goes to 30 metres depth, but a historic hole down to 196 metres ended in saprolite, indicated there is lots of expansion potential. The company is seeking to expand resources at depth with a 1,700-metre drill program under way, testing the deposit to around 100 metres depth. On the rare earth side, drilling this year has returned such hits as 30 metres of 9.98% total rare earth oxides (TREO), including yttrium, and 40 metres of 5.58% TREO. Some metallurgical work has been completed by previous operators.

Pacific Wildcat has an option to earn a 70% indirect interest in Mrima Hill. It can purchase 100% of two private companies, Stirling Capital and Cortec, which together own 70% of the project, by funding the project to a feasibility study. At that time, it will have to issue 28.7 million shares and pay A$15.2 million in cash to complete the earn-in.

The remaining 30% of the project is owned by the same vendors behind Stirling Capital and Cortec, an Australian who's a neighbour of Perth-based Pacific Wildcat president and CEO Darren Townsend, and a U.K.-based prospector.

In April, Pacific Wildcat had some bad press, with a Kenya newspaper reporting that a local group, the Kaya Mrima Self Help Group had complained to the mines commissioner that Cortec had been cutting down trees and adversely affecting the area's ecosystem.

The claims indeed lie in a forest reserve area that requires a special prospecting licence in order for work to be carried out -- which the company has been granted.

Willoughby says the area was given protected status about 70 or 80 years ago to protect a particular type of hardwood tree that grows on Mrima Hill. However, since then, local people have cut down all but five of these trees.

"So the government's concern is that when all is said and done here at the end of the road, the company is obligated to replant. . . the mined area with these hardwood trees," he says, which won't be a problem for the company.

As for the article, which quotes a lawyer for the Kaya Mrima Self Help Group, Willoughby says the story was "just not true. That lawyer has stated verbally and also in writing that he did not make that statement and that it's incorrect."

The other issue is the existence of a sacred site on the land. During the First World War, coastal battles between the British and Germans came close to the Mrima Hill area, which is only 8 km from the Indian Ocean, Willoughby explains. "In order to end this threat to their existence as they saw it, (the locals) sacrificed a young girl by the name of Mrima to whatever gods they follow with a view to ending the war, and shortly thereafter, the war did end."

That burial site is located on the Mrima Hill deposit, but Willoughby says the Kaya Mrima Self Help Group has agreed to having the remains moved.

"They couldn't be more in favour of this development because they see the prosperity that will be brought to the region and have agreed unconditionally to move Mrima's remains to another location, away from the mining area," he says.

Willoughby adds that neither of the issues is a concern to the company at the moment.

"This is not to say that somewhere down the road somebody doesn't get up in arms about this and raise the issue again, but that happens pretty much everywhere in the world."

Pacific Wildcat also has a tantalum operation in Mozambique, called Muiane, which contains 1.4 million tonnes grading 250 grams per tonne tantalum oxide (Ta2O5) for 750,000 lbs. The Muiane plant is currently in the commissioning stage.

The junior has 111.1 million shares outstanding and has traded in a 52-week range of 17¢-$1.87.