Midland 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 (REE)-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 (TREOs) including yttrium, the company announced on Sept. 23. The heavy rare earth element (HREE) content ranged from 1.41% to 18.0% 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, with the remaining results to follow in shortly.

“We’ve found two new alkaline systems, big intrusions, with a lot of new rare earth oxide showings,” Gino Roger, Midland’s president and chief executive, said in a telephone interview from Montreal. “On the worldwide scene, the discovery of rare earths elements-bearing alkaline intrusions comparable to the Strange Lake B-Zone REE deposits represent a very unique chance but having found two new systems is well beyond our expectations…They are fertile. They are bearing rare earths and have some interesting numbers.”

Since the discovery of Ytterby 2 and 3, 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 km and 300 km east and northeast of Schefferville, Que.

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.

The next step is to drill identified targets, which Roger says could be as early as January 2011 and no later than June of that year.

At presstime Midland shares were $1.80, trading within a 52-week range of $1.10-$2.00.

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 REEs to manufacture everything from liquid crystal displays and laptop computers to cellphones, permanent magnets, superconductors and wind power turbines.

“I have a deal with the Japanese, and Jogmec can at any time sell their interest to a Mitsubishi, a Sumitomo, a Toyota or a Honda — the rare earth users,” Roger said. “I have access to the end users… It’s just a matter of time before investors recognize what Midland has discovered and their importance.”

In mid-September, Japan ac- cused China of imposing a ban on exporting 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 U.S., 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, 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 (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 at least 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 2010, 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, 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 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 Co., 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 13%. The Commonwealth of Independent States controls 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 is also classified into two groups: heavy rare earth elements and light rare earth elements, 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.