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Canada Rare Earths Acquires 3 New Quebec Graphite Projects and Discusses Goeland Rare Earth Exploration Program Results
Vancouver, British Columbia - February 27th, 2012 - Today, Canada Rare Earths Inc. ("Canada Rare Earths" or "the Company") (TSX.V: CJC; FSE: YXEN; OTC-BB: CJCFF) introduces a new strategic direction with the acquisition of three (3) promising new graphite project acquisitions, all located in southern Quebec, as well as discusses the results of the Company's Goeland rare earth exploration program.
ABOUT THE NEW PROJECTS
These three new acquisitions, coined the Lac des Isles West, La Loutre and Labelle projects, collectively provide the Company with a strong foothold in the re-emerging graphite space that boasts promising demand fundamentals and is consequently now starting to garner a significant amount of attention from the resource investment community.
Lac Des Isles West Property
The Lac Des Isles West property totals approximately 4700 hectares and borders the western limit of the Timcal Lac Des Iles Graphite Mine close to the town of Mont-Laurier, Quebec, 150 kilometers (km) northwest of Montreal. The Timcal Lac Des Iles Graphite Mine is the larger of two Canadian graphite producers, has been in production for over twenty years and produces graphite products of various sizes and purities. The Lac Des Iles West property is dominantly covered by the same geological sequence of Marble, Paragneiss, Quartzite and Amphibolite in which the Lac Des Iles Mine is found and major NNW structures that control graphite mineralization in the area are observed in the Lac Des Iles West property, including the possible extension of the Lac Des Iles Mine structure. The property is easily accessible from a major secondary road; numerous tertiary/forest roads transect the property.
La Loutre Property
The La Loutre property consists of contiguous claim blocks totaling approximately ± 2,500 hectares (25Km2) situated approximately 53 km to the east of Timcal's Lac des Iles Graphite Mine, 117 km northwest of Montreal.
The La Loutre Property was originally explored for base and precious metals by Soquem in 1989. Based on the results of a helicopter-borne electromagnetic (EM) survey, prospecting and reconnaissance geological mapping, their work identified several zones of parallel conductors each measuring as much as 2 kilometers long. Ground exploration followed in 1990, and according to historical reports by Levesque and Marchand, graphite is present in different lithologies on the property. The geology is consistent with the Central Metasedimentary Belt of the Grenville Province and includes quartzofeldspathic rocks, quartzite, biotite gneiss, marble and locally pegmatitic quartzofeldspathic rocks. Graphite is locally present in quartzite and biotite gneiss and in shear zones where the graphite content usually ranges from 1% to 10% Graphite on surface, including visible flakes, with the showings indicating an apparent strike length of approximately 5 kilometers, giving a large prospective area to explore for a graphite resource.
Labelle Property
The Labelle Property totals approximately ± 680 contiguous hectares (7 Km2) situated approximately 67 km east of Timcal's Lac des Iles Graphite Mine, 114 km northwest of Montreal. The Labelle Property was originally explored and exploited in the 1950s, with a main graphite zone identified by trenching. The size of the trench is 250 feet long by 10 -15 feet depth and 5 to 10 feet wide. The historically indicated graphite grade is variable between 8-15% Graphite with local grades up to 30% Graphite.
In 1960, the property was operated on a small scale for a few months, including some rudimentary concentration at a small gravity plant not designed for any other purpose. A few tonnes of concentrates were sold. Based on the results of the concentrate, they assumed that the real grade was closer to 25% Graphite.
The geology of the property is consistent with the Central Metasedimentary Belt of the Grenville Province and includes marble, granitique intrusion, syenite-quartz and Quartzite. Graphite is locally present as Plumbago (naturally occurring graphite) and in marble, all close to the contact with a granitic intrusion. The Labelle property covers over five (5) kilometers along this contact and includes the possible extension of a strong EM anomaly found southeast of the main historic work area which coincides with this contact. This contact has never been explored.
The Company cautions that neither it, nor the Qualified Persons named below have verified the quality and accuracy of the historic sampling results reported in this news release, which predates the introduction of National Instrument 43-101, and cautions readers not to rely upon them. The historic figures were generated from sources believed to be reliable; however, they have not been confirmed. Although the sampling results are relevant, they have not been verified.
Alain Moreau P.Geo, geologist, a Qualified Person as defined by National Instrument 43-101, has reviewed and approved the Lac Des Iles West technical content of this release.
Jean-Sebastien Lavallée P.Geo, geologist, a Qualified Person as defined by National Instrument 43-101, has reviewed and approved the La Loutre and Labelle technical content of this release.
ACQUISITION TERMS
Lac Des Isles West
Canada Rare Earths has an option to earn a 100-per-cent interest in the Lac Des Isles West property from the Vendor by making the following payments and issuing the following shares to the Vendor:
- $12,500 upon signing of the letter agreement (paid).
- 250,000 common shares on receipt of the TSX Venture Exchange ("TSX-V") acceptance of the agreement.
- 250,000 common shares 6 months from TSX-V acceptance of the agreement.
In addition, the Company agrees to pay the Vendor a bonus of $1 million in cash or common shares, at the election of the Company, upon a positive production decision on the project.
La Loutre Property
Canada Rare Earths has an option to earn a 100-per-cent interest in the La Loutre Property from the Vendors by making the following payments and issuing the following common shares to the Vendors:
- $15,000 upon signing the letter agreement (paid).
- $15,000 and 1,000,000 common shares on receipt of the TSX-V acceptance of the agreement.
- $15,000 6 months from TSX-V acceptance.
- $15,000 and 500,000 common shares 12 months from TSX-V acceptance.
- $15,000 and 500,000 common shares 18 months from TSX-V acceptance.
During the period which is 12 months from the date of TSX-V acceptance, Canada Rare Earths will complete a minimum of $100,000 of exploration on the Property. The vendors will retain a 1.5-per-cent net milling royalty on the property, 0.5% of which can be purchased by Canada Rare Earths for $500,000.
Labelle Property
Canada Rare Earths has an option to earn a 100-per-cent interest in the Labelle Property from the Vendors by making the following payments and issuing the following common shares to the vendors:
- $15,000 upon signing the letter agreement (paid).
- $15,000 and 250,000 common shares on receipt of the TSX Venture Exchange ("TSX-V") acceptance of the agreement.
- $15,000 and 250,000 common shares 12 months from TSX-V acceptance.
During the period which is 12 months from the date of TSX-V acceptance, Canada Rare Earths will complete a minimum of $50,000 of exploration on the Property. The vendors will retain a 1.5-per-cent net milling royalty on the property, 0.5% of which can be purchased by Canada Rare Earths for $500,000.
ABOUT GRAPHITE
Natural graphite comes in several forms: flake, amorphous and lump. Graphite has many important new applications including its use in lithium ion batteries, fuel cells and nuclear and solar power that have the potential to significantly increase the demand for this critical element. For instance, there is between 10 and 30 times more graphite required by weight to produce a lithium-ion battery than there is lithium. In addition, the recent discovery of a new material called graphene, which is actually derived from graphite, has also heightened interest. International research is now underway into a number of its potential applications including enhancing the speed and processing power of many modern electronic devices. This has also increased the interest in graphite.
Meanwhile, global consumption of natural graphite has increased from ~600,000 in 2000 to 1.2 MM t in 2012. Demand for graphite has been increasing by approximately 5% per year since 2000 due to the ongoing modernization of China, India and other emerging economies, resulting in strong demand from traditional end uses such as the steel and automotive industries. Of the 1.2 million tons of graphite produced annually, approximately 40% is of the most desirable flake type. China, which produces about 73% of the world's graphite, is seeing production and export growth leveling and export taxes and a licensing system have been instituted. A recent European Commission study regarding the criticality of 41 different materials to the European economy included graphite among the 14 materials high in both economic importance and supply risk (Critical Raw Materials for the EU, July 2010). As a function of these fundamentals, demand for graphite and thereby prices are expected to rise as electric vehicles and lithium battery technology continue to be adopted and while the material performs a greater role in new technology applications. Graphite prices have been increasing in recent months and over the last couple of years and prices for large flake, high purity graphite (+80 mesh, 0.2mm, 94-97% Carbon) have more than doubled.
EXPLORATION PLANS
Canada Rare Earth plans to mount an aggressive exploration campaign on these properties commencing with a complete compilation of historic geologic work followed by surface work, trenching and diamond drilling. The exploration targets are multiple crystalline flake graphite targets similar to other graphite deposits and mines in Quebec such as Focus Metals Inc.'s Lac Knife Deposit and Timcal Graphite and Carbon's Lac des Iles Mine.
THE GOELAND RARE EARTH PROJECT
In relation to the Goeland rare earth project, the Company's exploration focus over the past year, the Company has now received all results from its phase 1 drill program as of late last week. Although the Company has encountered and tested a complex and dynamic rare earth bearing system through a widely spaced 13 hole phase 1 drill program at Goeland, with these complete results the Company has concluded that this program has failed to encounter a system that displays the requisite rare earth grade, consistency and thereby economic potential to warrant further exploration and development work on the property. In the interests of full disclosure, the Company will be publishing the full results on the Company's website for further review in the coming days.
Chad McMillan, President and CEO, comments that "it is certainly quite disappointing to receive such poor results from a project of such high potential. Given the nature of the program; encountering a complex geological system and using a widely spaced drill grid to thoroughly investigate many high potential areas, the Company remained optimistic of the discovery potential at Goeland until all of our results were received."
Mr. McMillan continues to add that "that said, as we reviewed incoming results and recognized the potential that the balance of the Company's results may not prove favorable, that the timing for receipt of these results had been marred in numerous delays, and coupled with a closing window of opportunity to secure attractive new projects in a fast moving sector, management recently began informally and independently investigating several other new opportunities which could also fit the interests of the Company, if desired. The initial results of this work are the Lac Des Isles West, La Loutre and Labelle acquisitions. These three acquisitions feature attractive resource exploration and development characteristics, including, being situated in an outstanding jurisdiction and with very good logistics, being close to infrastructure and existing processing facilities, indicating large resource potential, including historical exploration and production activity and data, and featuring favorable acquisition terms. Though I am disappointed in what hasn't materialized at Goeland, there are now new opportunities in front of us, and so with those we will continue to move aggressively forward in the best interests of our shareholders."
Mr. Benoit Moreau, Geo and P. Eng., Vice President of Exploration for the Company, is the Company's Qualified Person for the purpose of NI 43-101 and has reviewed the geological information on the Goeland project described herein. In addition, Mr. Moreau has also submitted his resignation as Vice President, Exploration of the Company effective as of today's date, though he has agreed to assist the Company as a consultant as required in transitioning away from the Goeland project and into the Company's new ventures. The Company thanks Mr. Moreau for his hard work over the past year and wishes him well in his future endeavors.
More information about the Company's future plans will be provided when available. For more information on Canada Rare Earths Inc., please visit www.canadarareearths.com or call 604.685.5851.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
On Behalf of the Board,
"Chad McMillan"
President & CEO
Cautionary Note Regarding Forward-Looking Statements: Certain disclosure in this release, including statements regarding the Company's plans for and intentions with respect to the acquisitions and exploration of the Goeland, Lac Des Isles West, La Loutre and Labelle Projects, historical information of the projects, and drilling information of the Goeland project constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. In making the forward-looking statements in this release, the Company has applied certain factors and assumptions that the Company believes are reasonable, including that the Company is able to obtain any required government or other regulatory approvals and any required financing to complete the Company's planned exploration activities, that the Company is able to procure equipment and supplies in sufficient quantities and on a timely basis and that actual results of exploration activities are consistent with management's expectations. However, the forward-looking statements in this release are subject to numerous risks, uncertainties and other factors relating to Canada Rare Earth's operation as a mineral exploration company that may cause future results to differ materially from those expressed or implied in such forward-looking statements. Such uncertainties and risks may include, among others, actual results of the Company's exploration activities being different than those expected by management, uncertainties involved in the interpretation of drilling results and geological tests, delays in obtaining required government or other regulatory approvals or financing, inability to procure equipment and supplies in sufficient quantities and on a timely basis, equipment breakdowns and bad weather. There can be no assurance that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on forward-looking statements. Canada Rare Earths does not intend, and expressly disclaims any intention or obligation to, update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
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