Rare Earth Minerals Plc (LON:REM) has today reported an updated Mineral Resource estimate (“MRE”) for the Sonora Lithium Project in northern Mexico (the “Project”), which has seen its Indicated Mineral Resources increase by over 300% from 1.1 million tonnes (“Mt”) to 5 million tonnes of lithium carbonate equivalent (“LCE”). In addition, the Project’s Inferred Mineral Resource has been estimated as a total of 3.9 Mt of LCE, increasing the overall Indicated and inferred resources from 7.4 Mt LCE to 8.8 Mt LCE.

The significant increase in the Indicated portion of the resource, and the resource in total, has a major positive impact for mine planning and the Project’s life of mine. In particular, it will allow management to optimise the mine plan for a large and very long life lithium project, focusing on higher-grade mineral resources now identified and to maximise the Project’s net present value.

Rare Earth Minerals Plc holds an interest in the Sonora Lithium Project though its 17.19% holding in Bacanora Minerals Ltd (‘Bacanora’) and the joint ventures interest of 30% in each of Megalit S.A. de CV and Mexalit S.A. de CV as more fully described below.

Highlights:
· A 337% increase the Indicated Mineral Resource to 5.0 Mt of LCE (364 Mt of clay at a Li grade of 2,600 ppm), from the previously reported 1.14 Mt (95 Mt of clay, at a Li grade of 2,200 ppm).

o La Ventana Indicated Mineral Resource has increased from the previously reported 0.84 Mt LCE to 1.9 Mt LCE.

o El Sauz, El Sauz 1 and Fleur Indicated Mineral Resource has increased from the previously reported 0.30 Mt LCE to 3.1 Mt LCE.

· The Inferred Mineral Resource is now 3.9 Mt of LCE (355 Mt of clay at a Li grade of 2,000 ppm), compared to the previously reported 6.3 Mt of LCE (500 Mt of clay at a Li grade of 2,300 ppm) – this change is mainly as a result of the significant upgrade of Inferred Mineral Resource to a Indicated Mineral Resource.

· The Indicated Mineral Resource will be used for detailed life of mine planning with an initial focus on the higher-grade material on La Ventana and Fleur concessions.

· The MRE forms part of the on-going feasibility study, which remains on schedule for completion in the first three months of 2016.

· The updated MRE is a result of the latest drilling 16 hole (3,934 metre) drilling campaign and corresponding assay results, which were completed in October this year.

Kiran Morzaria, the Chief Executive Officer of Rare Earth Minerals Plc, commented: “The significant increase in Indicated Mineral Resource to 5Mt of LCE at the Sonora Lithium Project exceeded all our expectations. The drilling, interpretation and geological modelling has not only succeeded in delivering substantial increase in the mineral resource, but it has also, critically, improved the overall grade of the indicated portion of the resource. This will allow the management to maximise the economic returns by targeting high grade sections of the deposit, which in turn should result in a lowering of the unit costs of lithium compounds produced. In addition the inferred resource of 3.9Mt of LCE and the additional conceptual target of between 2.4Mt and 4.6Mt LCE, further illustrates that the Sonora Lithium Project still has ample scope for expansion, either in size or in production capacity.”

Details of REM’s ownership:
REM owns a direct interest of 17.19% of Bacanora and through that is has an indirect interest in the La Ventana asset of 17.19%. In addition the 17.19% in Bacanora, when aggregated with REM’s 30% direct interest in Megalit S.A de CV (the company holding the Buenavista, Megalit and San Gabriel concessions) and the 30% direct interest in Mexalit S.A de CV (the company holding El Sauz, El Sauz 1, El Sauz 2, Fleur and Fleur 1 concessions), results in a total economic interest in each of these companies of Megalit S.A. de CV and Mexalit S.A. de CV of 42.04%.

Mineral Resource Statement:
The Sonora Lithium Project has been explored and sampled using appropriate methods and is sufficiently well understood to support the estimation of Indicated and Inferred Mineral Resources. Table 1 shows the Mineral Resource Statement for the Sonora Lithium Project with an effective date of 19 November 2015. The statement has been classified in accordance with the terminology, definitions and guidelines given in the Canadian Institute of Mining, Metallurgy and Petroleum (‘CIM’) Definition Standards for Mineral Resources and Mineral Reserves (May 2014) and has been reported in accordance with NI 43-101, by the Qualified Person, Mr. Martin Pittuck (MSc., C.Eng., MIMMM). Mr. Pittuck is an engineering consultant who is independent of Bacanora.

The updated Mineral Resource statement for the Sonora Lithium Project was reported using a cut-off grade of 450 ppm lithium and was contained within a pit shell based on reasonable optimisation parameters and LCE selling price agreed between SRK and Bacanora. The updated Mineral Resource statement comprises an Indicated Mineral Resource estimated at 364 Mt, averaging 2,600 ppm Li for 5.0 Mt of LCE, in addition to an Inferred Mineral Resource estimated at 355 Mt averaging 2,000 ppm Li for 3.9 Mt of LCE. The Mineral Resource statement is set out below in table 1 below.

In addition to the Mineral Resource statement, a further conceptual target of 300 to 350 Mt, at a grade of Li of approximately 1,500 to 2,500 ppm was estimated within a pit shell run using all classified and unclassified blocks within the model. This target is considered worthy of further exploration in order to increase the quantity of classified Mineral Resource down-dip. If these figures were converted to a Mineral Resource via successful drilling and exploration, it is estimated that this could represent an additional 2.4 to 4.6 Mt of LCE at the Sonora Lithium Project. It must be noted however, that the potential quantity and grade of this target is conceptual in nature, that there has been insufficient exploration to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resource.

The updated MRE is based on the original assay results from the drilling and trenching made available to SRK and the additional assay results from the most recent 16 hole (3,934 metre) drilling campaign which was completed in October this year. A summary of the lithium bearing intercepts from this drilling campaign is contained in table 3. A technical report in respect of this updated MRE will be available on REM’s website within 45 days from today.

Notes:
1. LCE is the industry standard terminology for, and is equivalent to, Li2CO3. 1 ppm Li metal is equivalent to 5.32 ppm LCE / Li2CO3. Use of LCE is to provide data comparable with industry reports and assumes complete conversion of lithium in clays with no recovery or process losses.
2. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate and have been used to derive sub-totals, totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, SRK does not consider them to be material.
3. The reporting standard adopted for the reporting of the MRE uses the terminology, definitions and guidelines given in the CIM Standards on Mineral Resources and Mineral Reserves (May 2014) as required by NI 43-101 and JORC.
4. The Mineral Resource statement is reported on 100 per cent basis for all project areas and the portion of LCE that is attributable to Bacanora is also stated for clarity.
5. SRK assumes the Sonora Lithium deposit to be amenable to surface mining methods. Using results from initial metallurgical test work, suitable surface mining and processing costs, and an optimistic forecast LCE price SRK has reported the Mineral Resource at a cut-off 450 ppm Li (2,400 ppm LCE).
6. SRK completed a site inspection of the deposit by Mr. Martin Pittuck, MSc, C.Eng., MIMMM, an appropriate “independent qualified person” as such term is defined in NI 43-101.

REM has a 30% direct interest in the Megalit and Mexilit in Joint Venture with Bacanora Minerals. In addition, REM also owns a 17.19% direct interest in Bacanora s giving it a 17.19% indirect interest in the Mineral Resources at La Ventana and a 42.78% indirect interest in the Mineral Resources at both Megalit and Mexilit. These percentage interests have been used by REM to calculate its net attributable contained LCE presented in Table 2.

Note: All figures are rounded to reflect the relative accuracy of the estimate and have been used to derive sub-totals, totals and weighted averages. Such calculations inherently involve a degree of rounding and consequently introduce a margin of error. Where these occur, REM does not consider them to be material.
Qualified Person:
Kiran Morzaria B.Eng. (ACSM), MBA, has reviewed and approved the information contained in this announcement. Kiran holds a Bachelor of Engineering (Industrial Geology) from the Camborne School of Mines and an MBA (Finance) from CASS Business School.

Further Details on Mineral Resource Statement:
SRK visited the Sonora Lithium Project and inspected diamond drilling core, geological outcrop and drill rigs. Field and laboratory data have since been reviewed and analysed such that the scale and nature of the geology and the quality of data upon which this resource relies is well understood. Data has been gathered using industry standard methods and assays have a basic level of quality control sufficient to underpin the confidence SRK has in this resource.

SRK has worked with the drilling results, mapping data, aerial photography and detailed topographic survey provided by Bacanora to develop a 3D geological model of the lithium bearing Upper and Lower Clay units. In many areas the continuity of the clay units is established to the level required for input to project finance studies (Indicated Mineral Resource). In other areas a combination of wide spaced drilling, extrapolation beyond drilling, absence of mapped outcrop and uncertainty around fault presence and location means that confidence in the model is lower (Inferred Mineral Resource) and further work will be required to feed into such studies. Parts of the model that are further way from geological information are unclassified have therefore been excluded from the Mineral Resource (instead, these are referred to as an exploration target).

SRK’s block model is some 10 km long and 5 km wide covering the La Ventana in the north and the Fleur – El Sauz concessions in the south. The drillhole grades have been averaged using length-weighting for each drillhole intersection of each clay unit domain (lower clay, upper clay high-grade and upper clay low-grade) and then these composite values have been interpolated to provide block grade estimates in their respective clay units. The block model has been validated using several methods, including visual inspection of block and sample grades, swath plots, statistical comparisons and check estimates using different methodologies.

Drillhole spacing is variable, achieving approximately 200 m by 200 m in several places; the blocks measure 50 x 50 x 10 m and the model covers the majority of the drilled area except for the far southeast where a couple of isolated drillholes achieved low grade intersections.

Density has been assigned based on drill core samples; a value of 2.3 kg/m2 has been applied to the clay units and a value of 2.7 kg/m2 has been applied to the overlying capping basalt. A Mineral Resource has been reported after due consideration of the reasonableness of eventual economic extraction. Processing methods, efficiencies, rates and costs have been provided by Bacanora. The configuration of the deposit lends itself to open pit mining and SRK has used mining costs provided by Bacanora and has assumed a 45 degree overall pit slope angle. Revenue to the project is expected to be derived from sales of battery grade (99.5 per cent. pure) LCE. Geological samples were assayed for Lithium metal; every 1 ppm Li metal is equivalent to 5.32 ppm LCE.

Whilst no detailed review of market forecast prices has been undertaken, SRK considers a price of USD 6,500 per tonne of LCE to be reasonable given general reported view in the public domain; for the purpose of limiting the Mineral Resource to that part considered to have reasonable prospects of eventual economic extraction; SRK applied a 30 per cent uplift to the commodity price and derived a cut-off grade using anticipated technical-economic parameters associated with mining, processing and selling the product. SRK derived a marginal cut-off grade based on Bacanora’s unit cost of USD 14 per tonne fed to the processing plant and a 90 per cent recovery of product from the feed; on this basis the cut-off grade is 450 ppm Li (2,400 ppm LCE). A basic open pit shell ensures mining costs of USD 2.5 per tonne mined are applied giving consideration to topography driven waste stripping; in conjunction with metal deportment in the deposit, this limits the Mineral Resource to a defendable depth and lateral extent.

This updated MRE differs from the previous estimate announced in May 2015. The updated MRE has a greater proportion of Indicated Mineral Resource following the recent targeted infill drilling programme. The infill drilling confirmed the previous geological interpretation in most areas, which, along with good quality control results and the improved quality of estimation, allowed for a higher level of confidence to be attributed to more of the estimated block model. The overall tonnage within the Mineral Resource statement (Indicated and Inferred Mineral Resource combined) also increased from 595 Mt to 719 Mt. This is due to three main factors:

1) The additional drilling allowed for improved geological control on the model, which extended the interpreted clay units to the west, allowing for the pit optimisation to include more material to the west than the previous MRE.
2) The upper clay unit was split into high-grade footwall and low-grade hangingwall units, which improved the estimation quality and improved the grades in some parts of the model, particularly along strike to the north. This allowed for the pit optimisation to include more material to the north than the previous MRE.
3) The block model used for reporting was changed from a regularised block model with all blocks at 50x50x10m dimensions, to a model including sub-blocks down to 25x25x1m dimensions. This improved the accuracy of reporting tonnage and increased the overall reported tonnage within the Mineral Resource statement.

Rare Earth Minerals Plc is a London listed investment company focused on creating a diverse portfolio of direct and indirect interests in Lithium and Rare Earth Element deposits.

Original Article: http://www.directorstalkinterviews.com/rare-earth-minerals-plc-significant-resource-increase-at-sonora-project/412684709