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Rainbow Rare Earth Ltd

INTERVIEW: Rainbow Rare Earths Ltd Maiden JORC Mineral Resource Estimate

Rainbow Rare Earths Ltd (LON: RBW), the rare earth element mining company, has today announced a maiden Mineral Resource Estimate completed in accordance with JORC (2012) in respect of the Company’s Gakara rare earths project in Burundi, East Africa, which is Africa’s only producing rare earth mine.

CEO Martin Eales talks to DirectorsTalk about its maiden JORC resource at Gakara. Martin explains what has been found, how this compares to expectations, further upside potential, production and the plans for 2019.

 

Highlights

· Total Maiden JORC compliant Resource of over 1.2 million tonnes of ore covering a small fraction of the Gakara Project – confirming for the first time the scale of the deposit

· Three areas (Gasagwe, Murambi South and Gomvyi Centre) are very high grade vein stockwork deposits – totalling 12,491 tonnes of Total Mineral Resource at an average TREO grade of 55% (compared to average rare earth project grades of c.1-4% TREO)

· Kiyenzi is a very large, lower grade mineralised deposit with nearly 1.2 million tonnes Mineral Resource at an average grade of 2.2% TREO employing a cut-off of 1% TREO

· The Mineral Resource is based on only four out of the 28 mineralised prospects across Rainbow’s existing Mining Licence – indicating significant further upside for future exploration

· The Exploration Target for very high grade vein ore (on a consistent 2016 basis) has increased by 70% following work undertaken across the deposit since IPO in January 2017

· Rainbow plans to rapidly bring Gomvyi Centre and Kiyenzi into production during 2019

Martin Eales, CEO of Rainbow Rare Earths, said:

“We are pleased to announce the maiden JORC-compliant Mineral Resource Estimate for the Gakara project, on time and on budget. The Mineral Resource, which is based on only four out of the 28 identified targets within our licence, shows over 1.2 million tonnes of ore, a considerable deposit in its own right, and provides further evidence that the Gakara deposit is a world-class source of rare earth oxides.

“Three of the areas are high-grade vein stockworks, and include 12,491 tonnes of ore Resource at 55% TREO. These alone will provide over two years’ head feed for our planned ramp-up to 5,000t concentrate, and we will of course continue to explore these deposits further.

“The Kiyenzi deposit has been confirmed as a very large, lower grade deposit, which ties in with the airborne and ground gravity results previously announced. The currently modelled deposit amounts to nearly 1.2 million tonnes of ore at 2.2% TREO, and may well be related to a carbonatite source. This deposit is open in all directions and is an extremely exciting prospect as it presents a new opportunity for Rainbow to further develop its mining and processing capabilities.

“These results will provide us with confidence in our ability to obtain near and medium-term sources of ore, but more importantly point to the existence of a truly unique deposit, which we will continue to explore in the future.”

 

JORC 2012 Maiden Mineral Resource Estimate

Earlier in the year, Rainbow announced that it was working towards the completion of a maiden code-compliant Mineral Resource estimate for its Gakara Rare Earths project, to be published by the end of 2018. This maiden Mineral Resource estimate, which is now complete, was undertaken on behalf of Rainbow by Benzu Minerals (Pty) Ltd , and has been reported in accordance with the guidelines of the Joint Ore Reserve Committee (JORC) 2012 code.

The most recent previously-published technical report relating to the project by Rainbow was the ‘JORC Competent Person’s Report for the Gakara REE Project, Burundi’ compiled by The MSA Group (Pty) Ltd (‘MSA’) and dated 30 September 2016, which was included in the Prospectus published in connection with the Company’s IPO on the London Stock Exchange in January 2017.

Since then, a considerable amount of work has been carried out at the Project, including greenfields and brownfields exploration, drilling, mining, ore processing testwork, modelling, and ore processing and concentrate production. This work has produced a significant amount of new technical information and data that have materially changed the understanding of the ore deposit and the REE mineralisation it contains, and has enabled the calculation of a maiden Mineral Resource estimate.

Since 2011, Rainbow has kept detailed maps of over one thousand REE vein occurrences across its mining licence, from which it has defined 28 “prospects” or “targets” (which have typically been named after the nearest village or other geographic features).

The maiden Mineral Resource estimate has been based on just four of these 28 mineralised targets, and therefore represents only a small portion of the mining licence area that the Company will seek to exploit in the coming years.

 

Deposit Name

Mineral Resource

 

Measured (t)

Indicated (t)

Inferred (t)

Total Ore (t)

TREO Grade %

Contained TREO (t)

Gasagwe

153

273

570

996

58.7

585

Murambi South

972

2,917

4,480

8,369

54.8

4,586

Gomvyi Centre

861

2,265

3,126

54.0

1,688

Total high grade deposits

1,125

4,051

7,315

12,491

   54.9

6,859

Kiyenzi*

58,671

297,274

837,033

1,192,978

2.2

26,570

Total

59,796

301,325

844,348

1,205,469

2.8

33,429

 

*Kiyenzi shown at 1% cut off grade. For detail on Kiyenzi Resources at higher cut-off grades see below.

For each of these four areas, further tonnages can be classified under JORC as ‘Target’ additional to the Resource figures. Based on standard JORC methodology these Target tonnes are as follows:

Deposit Name

Exploration Target

(t)

 

Gasagwe

1,026

Murambi South

6,622

Gomvyi Centre

5,132

Kiyenzi

1,065,170

 

Total

 

1,077,950

 

The 6,859 tonnes of TREO Resource contained in the Gasagwe, Murambi South and Gomvyi Centre deposits alone, all of which the Company expects to be mining in 2019, would provide more than two years’ of concentrate production at 58% TREO based on the Company’s target run rate of 5,000 tonnes of concentrate per annum, even before including any production from the much larger Kiyenzi body.

More detail on each of the four prospect areas is included below.

Revised Exploration Target

An Exploration Target is a statement of the exploration potential of a mineral deposit in a defined geological setting for which there has been insufficient exploration to estimate a Mineral Resource. In the CPR contained in Rainbow’s 2017 IPO Prospectus, MSA estimated that Rainbow’s entire Gakara Project had an Exploration Target range of between 20,000 – 80,000 tonnes of in situ high grade vein ore.

Following further regional mapping work carried out since the publication of the CPR, Rainbow’s REE occurrence database has increased from approximately 800 records to over 1,200 records. Of these c.1,200 occurrences, some 840 are in-situ, an increase of some 320 records from the 520 data points used by MSA.

Employing a consistent methodology and estimation criteria to that which was used by MSA on the enlarged data set has allowed Benzu to update the Exploration Target to between 34,400 to 137,500 tonnes, representing an increase of over 70%.

The four project areas included in the Mineral Resource estimate comprise 8,290 – 33,161 tonnes of this revised Exploration Target for high grade vein ore, representing only 24% of the upper and lower tonnage figures.

Brownfields exploration is being carried out on an ongoing basis by Rainbow’s geology team, with the potential for further uplifts to the Exploration Target. However, the focus of Rainbow’s exploration programmes is on converting the Exploration Target tonnage into Resources to ensure continuous replenishment of the resource pipeline and hence the medium to long term life of mine.

Kiyenzi

The Kiyenzi deposit is characterised by the presence of REE mineralisation in the form of breccias. Kiyenzi can in simple terms be described as a lower grade but large volume deposit.

The REE-bearing bastnaesite/monazite are present in large breccia units, but also as large cleaner veins, as thin to microscopic veins and perhaps as xenocrysts within the host rocks. The ‘invasion’ of REE-rich fluids in the aplites and gneiss has generated a large mineralised body, in the form of a voluminous intrusion such as a pipe. The host rocks (gneiss and aplite) are hard, but heavily fractured, such fragmentation being likely the effect of a violent hydrothermal or phreatomagmatic process which would have also caused the formation of the breccias. The morphology of such complex deposit can be visualised as a ‘breccia pipe’, commonly described in the literature as a form of manifestation of a carbonatite system.

At present, Rainbow has identified this deposit type only at Kiyenzi within the mining licence area.

Diamond Drilling of the Kiyenzi target was carried out in two phases. Following the positive intersection of mineralised breccia in phase one (464m), the second phase of the drilling work (964m) was carried out between July and September 2018 with the objective of establishing the lateral and vertical extents of the REE-mineralised intersections and ultimately to model the orebody.

Following the grade assays obtained from selected core samples of the host rocks facies and also from cores for entire drill holes it became evident that the aplites and the gneiss also had the potential to be mineralised, especially in the drill sections surrounding the breccias. TREO grades of 1% to 5% in units logged as aplites as well as in gneisses can only be explained if some form of bastnaesite/monazite mineralisation has occurred.

Owing to the complexity and variability of the mineralisation, the calculations of the Mineral Resource estimate was performed based on grades and not only on the modelling of the geology. All models were carried out using the ‘Implicit Modelling’ algorithm of the Micromine software. The grade model was performed using the ‘Inverse Distance Weighting’ interpolation also run in Micromine. Both models were achieved by an independent consultant of Micromine.

Kiyenzi mineral resource estimate at differing cut off grades

TREO Cut off grade %

Measured Resource (t)

 

Indicated Resource (t)

Inferred Resource (t)

Total Resource (t)

TREO Grade %

Contained TREO (t)

 

1.0

58,671

297,274

837,033

1,192,978

2.23

26,570

2.0

26,523

146,087

339,250

511,860

3.27

16,716

3.0

13,138

90,921

128,354

232,413

4.29

9,970

4.0

7,511

60,734

37,069

105,314

5.31

5,591

5.0

4,139

35,012

3,093

42,244

6.77

2,859

 

The Mineral Resource tonnage estimate is highly sensitive to the grade cut-off employed. This indicates the presence of a considerable quantity of mineralisation within the deposit. It is possible that Kiyenzi is connected to the carbonatite source, conjectured to be the motherlode of the vein stockworks found across the mining licence area, and warrants further investigation. Indeed, the latest mineralogy, petrography, geochronology, structural and fluid inclusions data from a PhD study (in preparation) have finally confirmed that the Gakara REE mineralisation is derived from a carbonatitic source.

Rainbow has already achieved some encouraging yields and recoveries from test processing of Kiyenzi ore and intends to commence exploitation of this deposit during 2019. It is therefore intended to process the Kiyenzi material through the existing processing plant – however the larger, lower grade ore body may well be amenable to further beneficiation, if further testwork and mineralogical tests prove positive. Furthermore, the large volume, lower grade resource will likely require a mining methodology very different to the methodology adopted to date to mine very high-grade veins within a friable, free-digging saprolitic country rock.

Gasagwe

The Gasagwe deposit is the area within the licence area where mining began during 2017. As such, much more is known about this deposit, and it therefore represents a fundamental benchmark for the delineation of JORC compliant Mineral Resource estimates in other vein stockwork prospects within the mining licence. The vast amount of geological data acquired during the past 1.5 years of mining has been applied to other deposits, allowing the degree of confidence to be considered sufficient to satisfy their classifications into Inferred, Indicated or Measured Resources.

The knowledge in relation to the Gasagwe vein structures and their mineralisation include the following:

* Vein Thicknesses: 2,181 channel samples were cut at Gasagwe using 2m spacing per 1m level of exploitation. The thicknesses of each channel sample were measured using DGPS. The variation of the vein widths over tens of vertical metres have now been established and are well understood.

* Vein Morphology: the channel samples have allowed for a greater understanding of the morphology of every vein (with cm accuracy), their continuation (and lack of continuation) laterally and at depth, and have enabled the creation of a model that can be applied with confidence to other similar stockworks in the licence.

* Grade: with some 183 samples analysed from all mining levels (from initial surface to current mine level, c.40m below surface), the consistency of grades between surface and samples at depth has been clearly established.

* Density (or SG): in all previous, historic tonnage calculations, an assumed SG of 4t/m3 was used. With the treatment of the Gasagwe ore at the Kabezi plant, real SG data have been determined, that can now be applied to volumes at Gasagwe but also on ores from other sites of the same type.

* Ore Processing: all the ore mined at Gasagwe has been processed through the Kabezi plant. The final concentrate for every single batch exported has been sampled and the grade has proved to be consistently above the specified tenor of 54% TREO. Criteria such as recovery, yield, losses, mass balance, tailings etc. are now well established and can be used for ore from other mine sites.

* Mining: the exploitation of the Gasagwe resource started in April 2017. Rainbow has reviewed the mining methods on several occasions with the aim of optimising the process. Such reviews are ongoing. The mining experience gained at Gasagwe, which include other key aspects such as the emplacement of waste dumps, the construction of access roads, the establishment of mining infrastructure, the process of expropriating land for mining purpose and the environmental measures applicable to the mining processes will all be applied to future mine sites.

Murambi South

The Murambi mine site was opened in August 2018, and the trial mining and brownfields exploration exploration undertaken to date have been very effective in providing high-quality geological and resource data that have delivered a code compliant Mineral Resource estimate.

Some 53 REE veins have been uncovered by the development works (trenching, trial mining). Most of the occurrences have been sampled as well as mapped (thicknesses, directions, dips, appearances etc.). The recorded lateral extents of the veins vary from a mere metre up to 45m, the average being approximately 9m at this stage. Similarly, the thicknesses of every vein have been measured (from some 452 precise channel sampling data points) and vary from 1cm up to 24cm, the present average being c.7cm.

A detailed ground gravity survey covering the southwestern half of the mining block has generated a series of NW-SE lineaments some of which having been confirmed to be coinciding with bastnaesite/monazite veins, generally trending in the same direction as the gravity lineaments. If such correlation can be further proved through more trenching, then some of the veins could have strike lengths of over 125-150m. Such possibility was used in the calculation of the ‘Exploration Target’ tonnage at Murambi South.

Gomvyi Centre

The Gomvyi Centre prospect was selected as a potential near-future mine site because of the following factors:

* The bastnaesite/monazite veins indentified are of high grade and, more importantly, there is a population of large veins (>50cm) for which an in-situ source has not been established yet

* The veins appear to be structurally controlled and continuous over significant distances (50-100m if not more)

* The site is easily accessible as it is situated a mere 300m from an existing road

* The outlined mine site is sparsely populated, which should result in lower compensation costs

At the time of completing the Mineral Resource estimate the mine development and exploration works were ongoing. Further trenching is intended to help confirm some of the very long vein extensions referred to above which would materially increase the Resource that can be declared for this prospect area.

Rainbow’s current plan is also to commence exploitation of the Gomvyi Centre prospect in 2019.