Peter Cashin: Metallurgy at Strange Lake

Asian Metal: Thank you, Peter, for agreeing to this interview, and I am very glad that you are able to speak more about progress at Quest’s Strange Lake rare earth deposit.

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Many exploration and mining companies tout that their metallurgy is understood before testing begins, yet there is extensive work that needs to be done at each project to fully understand the ore and mineralization. Quest is now in its second phase of metallurgy investigation. What do these results say about the Strange Lake B-Zone, and how critical is the metallurgy testing to developing this property?

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Peter Cashin: We succeeded in a very simplistic metallurgical flow sheet to report not only very high recoveries to solution, but also a success in our ability to precipitate separate bulk REE, niobium and zirconium products. That is on the bench scale, but that also gives guidance to the ultimate flow sheet that we would use to engineer our plant.

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Understanding the metallurgy is by far the most critical path that any new rare earth project has to overcome. At the end of the day, cost is one item, and it is your largest capital expenditure to [developing] a rare earth operation. It is the single most expensive operating cost item, and it is critically important because it gives rise to the rare earth product out of the rock.

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Asian Metal: Your recovery rates are already among the highest in the industry when compared to similar projects. What do these numbers tell the public about the site? Is there room for improvement, or are these optimal figures?

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Peter Cashin: We have done repeated experiments as confirmation, so the flow sheet is solid. The more important next step is running and scaling that flow sheet to a demonstration plant level or pilot mill. The benefit of the pilot mill, unlike bench scale, is that it utilizes a greater volume of ore material. You are not going to run it on kilograms of material, but tons per day. What you end up with is marketable product, as REE concentrate and niobium and zirconium product.

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That is important when you market to the end-users. They will want to look at the oxide mix and its characteristics. They can do qualification testing of the actual product. In steps from bench scale work to pilot plant, you are also further optimizing recoveries and maybe dropping some of the consumables, and thus, costs. There is a constant trade-off and you optimally want to get your flow sheet down to a fine art to maximize recoveries and minimize cost inputs to obtain that recovery.

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Asian Metal: Your company is choosing a common method to leach rare earths using sulfuric acid. Could you please comment about this process and associated costs?

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Peter Cashin: What we intend to have is a sulfuric acid plant on site. We are always concerned that transportation of liquid acid is an environmental liability in the event of a spill. In order to mitigate that risk and reduce acid on site, we can use an alternative material, native sulfur, and there is supply in the area. Anywhere there is a petroleum refinery, there is supply. Another potential source is iron sulfide tailings that are common waste by-product from base metal mines.

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This process is environmentally much more sustainable. The added benefit to roast sulfur in order to make sulfuric acid is that it tends to generate lots of heat that can be tied into a cogeneration plant for electricity. This can produce more than sufficient quantities for the operation and also provide heat for driers and buildings.

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With very little energy input, we can produce sufficient electricity for the operation and reduce the need for a diesel generation plant and the associated requirement for fossil fuel products. This mitigates environmental risks by reducing the diesel fuel required.

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Asian Metal: These processes were produced on a bench scale, and you anticipate beginning a mini pilot plant test later this year. What are some of the challenges that Quest could face in reproducing the flow sheet on a larger scale?

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Peter Cashin: I think, with what we have done, there is always technical risk that it will not reproduce. To ensure the confidence of the results, we have been running multiple tests. Every time we get a new idea or concept, it is tested six, seven or eight times. If all of the results are approximately within a small margin of error, then we can go on to the next thing. We can step back and try to iron-out other technical issues. You can do additional steps and apply different methodologies. We have done enough trial and error testing that we are pretty confident that what is seen at the bench scale can be reproduced.

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We have the benefit that [other miners] have increased their recoveries going from bench testing to pilot plants. We are pretty confident. The current results are an improvement over what we had already done on the project, and those results were already better than the industry average. That is imperative for the operation, improving the sellable product and increasing revenue potential.

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Asian Metal: There are often conflicting views about the future of rare earth materials in the global green and sustainable energy industries. What is your opinion about the global rate of growth in demand? Do you think reduction and substitution are threats to the industry or simply near-term solutions?

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Peter Cashin: When a company is faced with a disruption of its supply chain like electronics and the high tech industry, until there is a solution to the supply and its structure, there is always danger of substitution. There is also an admission that those substitutes are not as efficient as those products that contain rare earths. It sounds good in the press, but you have to be realistic for the timeline from development, to testing and commercialization stages. I would suggest a lot of this substitution will just go away once a viable, stable, long-term supply solution is identified. We want Quest’s Strange Lake deposit to be that solution. To commercialize these substitutions, you have to also consider the costs of retooling existing technologies. The Prius, for example, if they replace existing rare earth motors and batteries with induction motors and lithium ion batteries, which do not contain rare earths, then there are going to be high re-tooling costs for those plants. The technology also needs to be put into the car and tested as well.

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Asian Metal: Every explorer and junior miner in the industry claims that their project is on a fast-track to development. How would you evaluate progress completed to date at Strange Lake, and what additional hurdles must be overcome before Quest has reached production?

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Peter Cashin: The prefeasibility study is important because it will describe in detail the deliverable product and costs, and also it is going to enhance our ability to confirm off-take agreements and strategic alliances. There are many moving parts.

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Some assumptions will include where [rare earth] consumption levels are going to be and the price of the metals when they hit the market. If we are really conservative with our assumptions, we could be underestimating the value or size of the market, but in doing so, I am mitigating the potential that I am going to be overly optimistic or overestimate like a lot of our competitors. Some companies are overly aggressive with their assumptions on recoveries, pricing, or overly optimistic in assuming to sell 100 percent of the product mix in the deposit.

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In our deposit, there are just six metals that contribute 92 percent of the value. As opposed to assigning a value to the other materials, they receive a zero attribute. A lot of the supply-demand fundamentals are potentially growing for europium or lutetium, and that they may justify recovery. We will evaluate their financial contribution to the project as Strange Lake work advances.

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Asian Metal: It has been a pleasure once again to speak with you, and I look forward to hearing more from you and the Quest team in the near future.

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