Exploration company Galileo Resources has received positive drilling results at its Glenover rare earths joint venture project, north of Thabazimbi, in Limpopo.

Executive chairperson Colin Bird says that the results continue to be pleasing and suggest a significant bulk-mining target with high-grade shoots for the feasibility study, which is in line with the company’s exploration and development strategy for the project.

The results to date allow the project to advance towards a definitive resource statement and, concurrently, the prefeasibility study phase. It also gives the project confidence to extend its exploration programme to other potential prospective areas, which the company believes exist on its concession.

Currently, the company is carrying out metal- lurgical testwork to ascertain the optimum flow sheet for the ore type and concentrate specification of market requirements.

A further 16 holes have been drilled and are being prepared for assay or are being evaluated for public release.

The company’s short-term plans are to model the results and the impending results to its ore resource software to determine a regulatory standard ore resource adjacent to and mineable from the adjacent phosphate openpit.

Bird explains that the company aims to expand the pit to gain easy access to the rare- earth ore. The current programme, together with the short-term drilling plan, will define an ore resource mineable from the openpit.

“Once defined, we intend to start a feasibility study on working from the openpit together with the stock piles to produce a rare-earth oxide concentrate for export to refineries,” he explains.

Further, the company aims to explore outside the domain of the openpit to identify other ore resources to expand the scale of the project, if appropriate. Notwithstanding this, the current pit expansion in terms of grade and quantity makes the short- to midterm project a significant participant in the evolving rare earths market.

“A combination of drilling, testwork, environmental and market studies should take us to feasibility study mid-2012. A decision to mine is expected to be made by about September 2012. Production would then start mid-2014,” says Bird.

He adds the company will try to improve on this schedule since it believes a spot exists in the market place for a project of this type.

In global terms, the current project has an advantage, as it is close to infrastructure and has easy access from an old openpit. Further, the project has an above-average rare earths grade with significant niobium contribution.

Meanwhile, Bird says the global rare earths industry is in a state of flux, with a significant challenge faced by the industry being new projects that will only come on stream in a few years. Further, when undertaking a feasibility study, the price of rare earths is a major input to the financial model and, currently, prices are high, but volatile pricing is expected, with some possibility of downward correction in the short term.

This makes planning a new project difficult for companies, says Bird.

The future of the rare earths industry is dependent on discoveries and normalisation of the Chinese supply, besides other things. There are many emerging companies making claims regarding the timing of projects and the quantity of production.

Bird believes that prices will drop and, as with all mining, unless you are in the lower quartile of production cost, companies may be vulnerable. However, Galileo has some hedge against these forecasts as it intends to produce an oxide concentrate which is short-term and can supply a market that forecasters predict will be undersupplied until about 2020.

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