Wealth Minerals focuses on rare earths

With the Chinese recently choking the supply of rare earths, there’s a race to get new cheap production from outside of China. Specialty minerals explorer Wealth Minerals (wml-v) is part of that hustle, touting its Rodeo de los Molles deposit in Argentina as one of the largest undeveloped rare earth element (REE) projects in South America.

The 72-hectare project sits about 300 km southwest of Cordoba City, the second largest city in Argentina. The near-surface pit hosts a non-compliant historic resource of 5.6 million tonnes grading 2.1% total rare earth oxide (TREO) and 0.02% uranium oxide. The deposit remains open and is near power, water, road and port.

The private Argentinean company Michelotti e Hijos delineated that potential in 1992, before the Chinese started dumping rare earths onto the market, says Wealth’s corporate communications director John Kocela. When REE prices crashed, “they dropped their shovels and left it there. And fifteen years later, we showed up and decided to go ahead with it.”

Wealth Minerals optioned into Rodeo de los Molles last May and is working towards earning a 100% interest with no underlying royalties. To do so, it must make various payments amounting to more than US$3.5 million over five years to Michelotti.

Currently, the company is drilling and confirming the work that Michelotti had done before fleeing. “Essentially, they had excavated the pits and stockpiled much of the ore,” explains Kocela. “We went over and assayed it. We believe that the resource that they have outlined which is 5.6 million tonnes grading 2.1% – might be real. But still we have to 43-101 that.”

Recently, Wealth Minerals completed the first phase of drilling, consisting of 26 holes, of which it released six assays. Highlights include: 0.69% TREO over 37.6 metres, including 1.02% TREO over 22.8 metres, and 0.85% TREO over 32.7 metres, including 1.39% TREO over 19.2 metres.

Discovered in the 1980s, the deposit is hosted in fenitized alkali igneous rocks of the Las Chacras igneous complex and contains mostly light rare earth elements, such as neodymium and praseodymium. The company believes its prized asset is geologically comparable to Molycorp‘s (mcp-n) Mountain Pass project in California, where mineralization is primarily bastnasite.  

Rodeo de los Molles has two main zones: La Juli and Mina Norte, where stockpiles based on 61 and 38 samples, respectively, average 2.02% TREO and 1.55% TREO. The third, less explored zone is El Rulo.

Now, the explorer is designing a second phase of drilling, which is expected to contain more than 10,000 metres to help define a NI 43-101 resource on the project.

Wealth Minerals anticipates the resource estimate should be out by early 2012, followed by a preliminary economic assessment.  

Kocela reckons if the company is able to update the historic resource into a compliant one; it could secure Rodeo de los Molles a spot in the world’s top 10 REE deposits.

Regardless of its ranking, the company says it has a strategy in place to advance the deposit.

“When you think of the rare earth space, we think it’s very much about ‘first past the post,'” says Kocela. “There’s a lot of production that is going to come online, and that won’t be for another couple of years. So anyone who has any designs of doing well in this business better have a game plan that falls between now and then. And clearly we do.”

Do they? It’s something investors have to wait and see.

Wealth Minerals recently closed at 20¢, near its 52-week low of 16.5¢ (Sept. 30, 2011). The company has a 52-week high of $1.34 (Jan. 17, 2011). Along with its REE project, the company has three main uranium projects in Argentina, and has seen its share price suffer since the Fukushima disaster in March.