Midland Exploration explores Ytterby REE project

In September 2009 Midland Exploration (MD-V) staked the Ytterby rare earth property in Quebec, not far from Quest Rare Minerals‘ (QRM-V) Strange Lake property. A year later the junior explorer announced the discovery of  two new rare earth element enriched systems on its Ytterby 2 and Ytterby 3 properties, 65 km and 100 km south of Quest’s Strange Lake B-Zone. (The Ytterby 1 claim block is 5 km south of the Strange Lake REE deposit.)

Midland and its partner Japan Oil Gas and Metals National Corp. (Jogmec) identified the new targets using a 3,143 line-km airborne radiometric and magnetic survey and exploration crews prospected and sampled the exposed portions of anomalous magnetic and radiometric targets.

Initial results from grab samples from more than 81 areas and boulders returned values of up to 18.0% total rare earth oxides (TREO) including yttrium, the company announced on Sept. 23. The heavy REE content ranged from 1.41% to 18.0% HREE for samples with more than 0.5% TREO.

Individual REE analyses returned numbers of up to 8.22% cerium oxide, 3.38% lanthanum oxide, 3.39% neodymium oxide, 0.66% yttrium oxide, 0.96% praseodymium oxide, 0.19% dysprosium oxide and 0.35% gadolinium oxide, the company reported. So far 292 assay results have been received from the 585 samples collected.

Since then Midland and Jogmec have staked an additional 777 mining claims in the area for a total of 2,662 claims over 865 sq. km. The project consists of four distinct claim blocks between 200 and 300 km east and northeast of Schefferville, Quebec.

Midland has completed a 300 km ground magnetic and radiometric survey to evaluate the best REE targets that have been identified and is planning a second phase of geological mapping and geochemical sampling to be followed by diamond drilling.

At presstime Midland was trading at $1.80 per share and over the last year has traded in a range of $1.10-$2.00 per share.

Jogmec has the option to acquire 50% of the project by funding $2.5 million in exploration before the end of March 2012. Jogmec also has the right to transfer all or part of its interest in the Ytterby project to one or more Japanese companies or a consortium of Japanese companies.

That option will appeal to Jogmec and many others companies who covet the rare earth elements to manufacture everything from liquid crystal displays and laptop computers to cell phones, permanent magnets, superconductors and wind power turbines.

In mid-September, Japan accused China of imposing a ban on REEs after it detained a Chinese fishing boat captain following a collision with two Japanese coast guard boats. According to a subsequent report on Bloomberg, China’s Ministry of Commerce denied the ban exists.

For Japan and many other countries including the United States, China’s dominance of rare earths (it produced about 97% of the world’s supply last year while the U.S. produced none), and its ability to cut off that supply when it chooses, has become a growing concern. Beijing has cut back on export quotas for REEs this year and hiked export taxes to a range of 15%-25%, according to the U.S. Government Accountability Office, or GAO. For the U.S. Department of Defense, which uses rare earth products in its precision-guided munitions – the China factor has become a growing priority.

Indeed rare earth materials are widespread in U.S. defense systems including lasers, communications and radar systems, avionics, night-vision equipment and satellites. The GAO also noted that the Aegis Spy-1 radar, which is forecast to be in use for atleast 35 years, has samarium cobalt magnet components that will need to be replaced during the lifetime of the equipment. Samarium metal is also used in magnets that go into the reference and navigation system of the M1A2 Abrams tank.

In a GAO briefing paper to Congressional Committees in April, the GAO noted that “current capabilities to process rare earth metals into finished materials are limited mostly to Chinese sources.” It explained that while the U.S. previously processed the metals, that industry was hollowed out and it will take up to 15 years to rebuild a U.S. rare earth supply chain.

“The United States has the expertise but lacks the manufacturing assets and facilities to refine oxides to metals,” the GAO briefing note said.

In terms of supply, China has 129 legally registered rare earths mines, according to a recent article in The Financial Times, and the Inner Mongolia Baotou Steel Rare Earth Hi-Tech Company, which produces 55,000 tonnes of processed rare earths a year, makes up about 44% of global production. The company, listed on the Shanghai Stock Exchange, is a subsidiary of China’s powerful Baotou Iron and Steel Group.

The U.S. Geological Survey estimates on its website that China has the biggest share of worldwide reserves at about 36%, while the United States has about 13%. The Commonwealth of Independent States controls about 19%, followed by Australia with 5.4% and India with 3.1%.

“Rare earths are relatively abundant in the Earth’s crust but discovered minable concentrations are less common than for most other ores,” the U.S. Geological Survey wrote in a report earlier this year.

The group of 17 chemically similar metallic elements are also classified into two groups: Heavy Rare Earth (HREE) and Light Rare Earth (LREE), according to their atomic weights and location on the periodic table. The GAO notes that the more valuable HREEs are found in southern China but also in Australia, Greenland, Canada, and the U.S.

REEs are largely contained in bastnasite and monazite.

“Bastnasite deposits in China and the U.S. constitute the largest percentage of the world’s rare earth economic resources, while monazite deposits in Australia, Brazil, China, India, Malaysia, South Africa, Sri Lanka, Thailand and the U.S. constitute the second-largest,” the report noted.

The remaining resources are made up of apatite, cheralite, eudialyte, loparite, phosphorites, rare-earth-bearing (ion adsorption) clays, secondary monazite, spent uranium solutions, and xenotime.