Montero Mining & Exploration

Montero_Mining_931486327
Define, refine, develop & deliver

Montero Mining & Exploration is laps ahead of the rest as it fast-tracks the large, high grade Wigu Hill project towards production and aims to become Africa’s first REE producer in 2013

There is an ancient Tanzanian saying, “Haba Na Haba, Hujaza Kibaba,” which loosely translates to “little by little, a little becomes a lot.”

It’s a sentiment that multi-commodity, multi-project explorer/developer Montero Mining & Exploration (TSX.V: MON) knows well, and a fitting metaphor as the Canadian junior goes about bringing into production its 70 per cent-owned high grade Light Rare Earth Element (REE) deposit at its flagship Wigu Hill project 170 kilometres from the seaport of Dar es Salaam — becoming Africa’s first rare earths producer in 2013.

“We’re taking a small part of what we believe is a giant deposit to feasibility study and while we do that we’ll continue drilling out the bigger deposit. This will reveal its true potential, but today the imperative is actually to get to mining at a smaller scale, get a small refinery going, and get into production producing rare earth chemicals for sale,” Montero’s president, chief executive officer and director, Dr. Tony Harwood tells CBJ at Mines & Money London.

“At Wigu Hill, during the first half of the coming year we’ll be conducting the feasibility study. Towards the second half of the year we’ll be applying for the mining license which we hope will then be granted within the second half of the year.  After that, assuming this is positive, we can go into construction and production.”

Montero has the deposit, jurisdiction and the company heads to realise this ambitious vision, not to mention early-mover advantage in REEs, ahead of the pack in today’s increasingly demanding international markets. In syncing this high grade project with precisely the right people to take it into commercial output, little by little (by a lot), the company remains destined to become Africa’s first rare earths producer.

From a little to a lot

Originally discovered in the 1950’s and just 12 kilometres from a rail-siding on the Tazara railway, Wigu Hill’s large carbonatite complex spanning 6.4 kilometres by 3.2 kilometres houses bastnaesite mineralization; the principal REE carbonate mineral mined by dominant China (responsible for approximately 97 per cent of the global market today) and in the U.S.

It didn’t take long for Montero to realise that it was dealing with a giant mineralised system, very low in uranium and thorium which have thwarted the best-laid-plans of plenty other REE juniors and majors, and Harwood says that the catalyst for success has really been drilling.

“We found mineralisation more-or-less everywhere over the hill, and in developing 10 targets each time we got to one of them it expanded. I believe the whole hill is home to bastnaesite mineralisation,” he says.

“We don’t believe we [had] a geological or exploration problem—just a matter of getting rigs onsite and drilling the best targets—and the biggest concern to the team then became getting to understand the metallurgy.”

This was the case two years ago, triggering Montero’s innovative exploration strategy. Recognising the merits of getting into production early at around 100,000 to 200,000 tonnes per annum using Wigu Hill’s current resource of 3.3 million inferred tonnes (at 2.6 per cent light rare earth oxide (LREO5) from two deposits in the project’s eastern ridge alone), and putting plans in place for continued resource expansion, Montero began the metallurgical research without a single drill hole in the ground. This paid off and encouraging results were soon obtained, including early sampling and trenching which returned values as high as 27.25 per cent TREO (total rare earth oxides).

“We quickly realised that the main issue facing many of the future rare earths companies was going to be metallurgy: How do you extract the rare earths to achieve the real value that we’re now seeing in rare earth prices?” says Harwood.

“If we drilled it in a conventional way, we’d probably spend two or three years doing that before entering a feasibility study—as would be done in a conventional gold or copper project. We see the imperative of getting into production early as being driven by the current high rare earth prices and locking in the ever important off-take agreement with end users”

Montero also knew that this world-class REE deposit could only ever be operated to the best abilities of the people employed to do so, and the company has employed some of the best geologist, mining engineers and chemical engineers in the business. In addition to ground developments—increasing to 70 per cent project ownership in October, hitting 11.65 metres of 7.35 per cent TREO in November, and readying to start Stage 2 refining testwork in early 2012—the company has picked up and retained some of the best consulting, metallurgical and country-experienced people around.

Unrivalled expertise in REEs

Describing Montero’s ability to hire choice experts across all necessary disciplines as a gratifying trend, geologist Harwood recalls how the team began work with leading South African minerals processing group, Mintek.

“They have over 25 years of rare earths experience. We linked with them and soon started to send samples for analysis in mineralogical work in early 2010,” he explains.

“My group and I have been in the mining business in Africa for many years and worked on various large and small mining projects. I worked as a consultant in rare earths in the early 1990’s when they were referred to as strategic metals or electric metals; that’s one of the reasons we focused the company into this project when we set up Montero.”

With Mintek, Montero quickly established and conducted two concurrent programmes: A mineral processing programme to take the run-of-mine (ROM) material and produce a bastnaesite concentrate; and a second programme taking run-of-mine material through a process of leaching and precipitation for rare earths extraction to saleable products.

“Our latest press releases to the market is an indication of the progress we’ve made—certainly over the past year—and how advanced we now are with our vision to become a rare earths producer in 2013,” Harwood says, referring to December news that two of three stages of hydrochloric acid leach process tests are complete (the third is ongoing) and Stage 2 refining testwork will begin early in 2012.

This is where Montero’s most recent hires take effect. Chemical engineer Geoff Skelton, previously the general manager of the Impala Platinum refinery, is one of a handful of individuals to have actually built a hydrometallurgical facility before. Mike Freeman, formally of Sentrachem and Mintek, has a great deal of rare earth experience. Tanzania country manager, Grant Pierce, is a known mine builder based in Dar es Salaam and has worked all over Africa, including for majors Barrick and Resolute in Tanzania. David Hodgson, brought on in early November as a non-executive director, is the former-COO of AngloGold Ashanti where he was responsible for 22 gold mines (including projects in Tanzania).

“The fundamental basis to any programme is getting the right people in place. You may have the right deposit, you may carry out all of the right test work, but a lot of the business comes down to people,” Harwood affirms.

“We’re also capitalising on the knowledge of Mintek, and in 2012 we will be looking to appoint an international consulting group to help on the hydrometallurgical refinery Phase 1 feasibility study.”

Define, develop, refine

With high grade Wigu Hill’s initial inferred resource confirmed and ripe for expansion, a crack team of chemical, metallurgical, exploration and country experts compiled, early metallurgical works conducted in support of plans to fast-track production in 2013, and sustaining market demand underpinning a healthy balance sheet for the foreseeable, Montero  will turn its attentions to construction in approximately six months. As the team weighs up precisely where it will put the refinery—targeting production between 3,000-5,000 tonnes per year initial output—it is also convening with would-be offtake partners.

“Interestingly, we’ve been approached by European groups and Asian groups including some from China, Korea and India. Those discussions are all at various stages of detail,” Harwood says.

“We’ve found that the end-user is really looking for continuity of supply rather than to have fixed a particular price. These offtake parties are particularly interested in the refining side of the work we’re doing but this has to be backed up by a great deposit.”

Wigu Hill more than lends itself to supply continuity. Ongoing exploration in parallel with initial production offers favourable future supply indications for potential buyers, and the brains behind the project’s development are the ideal bunch to take it into operation quickly.

In addition to works at this project, Montero has seen numerous other achievements across its phosphate and uranium portfolio, spanning Tanzania, Quebec and notably South Africa; the team recently produced an NI-43-101 of 32 million tonnes at the Duyker Eiland phosphate project (as part of the Phosco project in the Western Cape). At Phosco, a Preliminary Economic Assessment (PEA) is underway, and continues to support plans to take the project to commercial levels.

“We also have a programme of exploration geared towards looking for the heavy rare earths in ionic clay deposits, which we’ll believe are the future of heavy rare earth exploration and eventual production—deposits currently mined in China, and we’re looking for them in Africa,” Harwood adds.

“They’re easy to mine and process and the programme has already identified potential targets.”

At Wigu Hill, plans for initial mining and refining continue to take shape and the start date for feasibility works draws near. Montero has spent 2011 advancing its metallurgical research and gathering the best in the business ahead of starting construction. Successes further afield demonstrate the team’s ability to de-risk and create value outside of Wigu Hill, while maintaining a steadfast focus on getting this world-class REE project swiftly into production. And while the rest of the world continues to wake up to the REE trend, scrambling to get in on the action, Montero is years ahead of the pack, on track to becoming Africa’s first REE producer.

www.monteromining.com

For Montero Mining & Exploration’s latest presentation and more about Wigu Hill, please visit:

www.monteromining.com/downloads/presentation.pdf

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