Dear Fabi Quantum Rare Earth is pleased to bring you an exclusive interview that was featured in The Critical Metals Report Februsry 13th. Jeb Handwerger JH Editor of Gold Stock Trades tells Sally Lowder of The Critical Metals Report TCRM in the interview that the world remains at risk of supply shortfalls. It's not strictly a rare earths story, either. Read on to see what he has to say about the nascent niobium space.. TCMR: We've talked a little about HREEs as they relate new manufacturing applications. Are there other metals you'd like to discuss? JH: Yes. Let's transition into the ferroalloys. Earlier, we were discussing the Glencore/Xstrata deal. Part of that story is the need for ferroalloys. These are elements such as molybdenum, vanadium or niobium that are added to steel to make it lighter and stronger. Niobium is used to make super alloys, which are important to the defense of the United States as well as in industrial development. TCMR: How is niobium important to strategic defense? JH: Niobium-which is on the U.S. list of strategic metals-is used to make aeronautics and defense weaponry, the newest generation of helicopters, jets and jet thrusters, missiles, rockets and things we're not even aware exist. TCMR: Where are the niobium mines located? JH: Two operating mines are in Brazil and one is in Québec, the Niobec Mine, owned by IAMGOLD Corp. (NYSE:IAG). IAMGOLD recently announced a $950M initiative to triple the niobium production with plans to spend $90M in 2012, $320M in 2013 and $540M in 2014. TCMR: That's pretty dramatic for what's primarily a gold mining company. JH: Exactly. That's one of the issues I brought to my readers-why a gold producer would segue into expanding its niobium production. The simple answer is that IAMGOLD foresees substantial profits and a high rate of return on its investment in this strategic metal. Some of the top gold miners see the same potential, due to the growth in demand for these strategic metals for technology and green energy applications. They understand that we're living in an age of energy conservation. They smell profits. This is what capitalism is about. Where can they get the most bang for the buck? We're all going to be looking at how we can conserve energy, and an intrinsic part of that conversation is that steel will have to be made simultaneously lighter and stronger. It takes the addition of niobium to do that, which is part of the reason why it appears on the government's short list of essential strategic metals. The Obama Administration has put in a bill to increase miles-per-gallon (mpg) requirements by 2015, all the way up to 54 mpg. The automotive industry has to make cars lighter to improve fuel efficiency, but they can't sacrifice strength, which they need to meet safety targets. That's what makes these ferroalloys, or these alloying agents, so important. When added to steel, the niobium increases the strength while at the same time reducing its total weight. Those efficiencies trickle down into shipping, into manufacturing-all the way down the supply chain. TCMR: With only three niobium mines in production, are there other niobium deposits getting ready to meet supply requirements going forward as government and consumer demands increase for lighter, more fuel efficient and stronger steel products? JH: It's astonishing that the United States currently has to import 100% of the niobium it uses. It doesn't seem right when we're looking at a global renaissance in energy conservation that will require lighter, stronger steel. This is a much bigger market than the rare earth market. TCMR: That's scary. JH: Enter center stage, Quantum Rare Earth Developments Corp. (QRE:TSX.V; BR3:FSE; QREDF:OTCBB). It's the only company that has an NI 43-101-complaint resource of niobium in the U.S. Its Elk Creek Project in Nebraska is an ideal location for a mine. It's smack in the middle of farmland through which major roads and rail lines are available for expansion. Quantum has both state and local support. At one point, back in the 1970s and 1980s, this was a Molycorp Inc. asset that was supposed to go into production, but then the whole industry moved overseas. Now, Quantum is building upon the research done by Molycorp. In fact, some of the original Molycorp people are updating the findings, working on the metallurgy and the development process for the same property they worked approximately 40 years ago. Quantum has an experienced chemical engineer on board and a strong metallurgical team with decades of experience. TCMR: How does Elk Creek compare with Niobec? JH: Niobec has proven and probable reserves of 45.7M tons at .53% niobium. Elk Creek has an inferred resource-a much earlier stage, not reserves-of 80.1M tons at 0.62% niobium. It's an early stage project but it's showing that it has the potential of becoming a very large, high-grade mine. Results from its 2011 drill program indicate that Quantum hit some high-grade niobium, and that's being factored into a new resource estimate targeted for publication within the upcoming few weeks. It could be huge. TCMR: What about permitting? Nebraska isn't a typical mining address. JH: The state and local government has been 100% supportive, so initially it seems ideal for permitting. I've seen no opposition in what I've researched-only support. There should be an independent PEA published in the first half of 2012. We still consider it a bargain price to the investment community; the nine-month downtrend has been broken above its 200-day moving averages. The trajectory is upward at this point. Volume is growing, too, which shows that Quantum is gaining increased interest. As I indicated, while the giant IAMGOLD is sinking $950M into Niobec in Québec over the next three years, I conjecture that we might see another mining giant out there willing to enter the highly profitable niobium market at bargain basement prices. TCMR: It will be interesting to see what happens in terms of niobium exploration going forward. This space seems to be in its infancy, just as the rare earths sector was in 2007. To read the full article go to http://www.theaureport.com/pub/na/12562 Shawn Westcott 604.568.7365 ext 227 - 1.877.385.0345 www.quantumrareearth.com TSX.V: QRE QTCQX: QREDF FSE: BR3 |
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