TORONTO (miningweekly.com) – Montreal-based Matamec Explorations has penned a preliminary pact with a Toyota subsidiary to partner on and accelerate the Kipawa rare earths deposit in Quebec, about 100 km north-east of North Bay, the company said on Monday.

The nonbinding memorandum of understanding with Toyota Tsusho Corp (TTC), the vehicle manufacturer’s trading arm, also seeks to ultimately see the Japanese conglomerate funding a feasibility study and earning a 49% stake in the project.

“After nearly two years, TTC and Matamec have reached a way to develop the potential of the Kipawa heavy rare earths deposit in a manner that meets the needs of both companies,” Matamec CEO Andre Gauthier said in a statement.

The TSX-V-listed company said Toyota was keen to secure access to the elements contained in Kipawa, which it uses to make hybrid and electric vehicles.

Analysts have said repeatedly in recent months that there may be a glut of light rare-earth elements when mines in Australia and the US start producing from the end of 2012, but heavy rare earths such as neodymium will still be in a shortage.

China produces over nine-tenths of the worlds supplies, but has been reducing cheap exports of the elements in recent years, sending prices skywards.

Though the price of most rare earths have dropped significantly in the latter half of this year, they are still significantly above historical levels.

Companies like Toyota have had to cast their eyes around the world to secure access to the elements and try thrift and substitute them as China puts the squeeze on exports.

Matamec said it would conduct a feasibility study with TTC on Kipawa, which, if successful, would see the Japanese firm arrange the financing to build a mine that will produce a mixed rare earths oxide concentrate.

It would pay Matamec up to half of the Canadian company’s market value based on the average number in the 90 days up to November 30.

Matamec said it granted TTC up to the end of March to do due diligence on the project, subject to a preliminary economic assessment being released.

The company also owns gold prospects near Timmins in Ontario.
 

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