In Tough Climate for Rare Earth Projects, TRER Seeks Funds to Move Ahead
Texas Rare Earth Resources is seeking funds for additional research for its proposed Round Top mining project, as part of a broader effort to demonstrate that a rare-earth mine at the Hudspeth County site could be a low-overhead, high-profit operation.
TRER, like other nascent rare earth projects, faces an unfriendly climate – as a political push to develop domestic rare-earth mines, which peaked three years ago, has turned to apathy, and investor enthusiasm for mining projects in general is at low ebb.
In Aug. 29 press release, TRER announced plans to offer “subscription rights” to its stockholders, rights which allow stockholders to purchase shares in future stock issuances at or below market rates. The offering, which is pending approval by the Securities and Exchange Commission, would generate about $1.6 million, the company says.
TRER wants to further refine the process by which rare earths would be extracted from ore at Round Top, and revenue from the offering would be used for metallurgical research to that end.
TRER first leased property from the Texas General Land Office at Round Top Mountain, a 5,700-foot peak 8 miles northwest of Sierra Blanca, in 2011. The company envisions mining the mountain for rare earth elements, and specifically heavy rare earths – metals that are crucial for a range of technologies including consumer electronics, laser-guided munitions and other military devices.
China produces almost all of the world’s rare earths. In 2011, Chinese officials threatened to cut of the supply. Rare earth prices skyrocketed – in the case of some of the elements, prices increased almost tenfold – and the news spurred dozens of new rare-earth mining proposals and prompted the Pentagon and some in Congress to identify the development of domestic sources of rare earths as a national-security issue.
China then backed off its threat, prices dropped, and the sense of urgency in government, and the interest in rare-earth projects among investors, waned. Two projects in the Herald readership area have been a part of this cycle. TRER’s Round Top project, and Geovic Mining’s proposal to extract rare earths at Wind Mountain, near Dell City, both began in 2011 with aggressive plans, and have since stalled or slowed. Both TRER and Geovic conducted exploratory drilling at the properties in question, but neither company has drilled in more than two years.
Though prices for rare earths are far below 2011 highs, prices are rising steadily, and TRER officials believe that Round Top, with its easy access to rail and highway infrastructure, could be an attractive domestic source of rare earths in the future. TRER originally envisioned a multi-billion dollar project at Round Top, but then reduced that figure to less than $300 million. By pursuing a smaller-scale, less capital-intensive project, the company hopes it can demonstrate the viability of a Round Top mine and attract additional investment.
Geovic announced in May that the JS Group, a Wyoming-based group with a history of investment in oil-and-gas and mining projects, had acquired a 90-percent stake in the project in the Cornudas Mountains. The JS Group will make decisions on the future of the project. Multiple calls from the Herald to representatives of the JS Group, to discuss the status and future of the project, have gone unreturned.
At Round Top Mountain, rare earth metals exist in very low concentrations, but the metals are spread throughout the mountain’s volcanic rock, meaning that the sheer quantity of ore would compensate for the low grade, TRER says. TRER plans an open-pit mine, beginning on the northwest side of the mountain; ore would be crushed and stacked on site and then would be “heap leached” – soaked for some weeks in sulfuric acid to isolate the rare-earth minerals. A hydrochloric-acid solution would be used to further process the ore, and the “tailings,” or waste materials, would be disposed of near the mine.
In quarrying, crushing and processing ore at Round Top Mountain, TRER’s project would concentrate quantities of the radioactive elements uranium and thorium. A toxic element called beryllium also exists at the mountain, beneath the volcanic rock TRER is targeting. At a public discussion of the project in January, both county officials and some area residents expressed concerns about the potential health risks a mine could pose for Sierra Blanca residents. TRER staff have acknowledged that storing or disposing of radioactive waste from the heap-leaching process would be one of the challenges of the project, but they have also emphasized that the project could employ hundreds in the Sierra Blanca area.
TRER management and board members plan to host a presentation and update on the project on Monday, Sept. 15, in El Paso, at a location and time yet to be announced. The event will be open to the public and will also be broadcast live on the web.