Quest Rare Minerals: A Gem in Quebec

I wrote an article yesterday about General Moly and one of my readers wrote back and told me that a lot more readers would like to read more of my thoughts on the world of Heavy Rare Earth Elements [HREE]. I immediately thought of my favorite company in the HREE sector and that is Quest Rare Minerals (QRM).

The flagship project of Quest is a site called Strange Lake. The Strange Lake site is located close to Canada's Quebec / Labrador border region. The Strange Lake site has a very interesting history. In the 1970's it was owned by the Iron Ore Company of Canada (IOC). According to CEO, Peter Cashin the project was not far from a production decision when the bottom fell out iron ore market. Sadly the project became relatively dormant, exchanging hands several times until Quest came along.

Patrick Collins is Quest's senior project geologist for the Strange Lake project. Mr. Collins was present when the first drill hole was made and he will see the exploration program through its completion. Quest has published a 43-101 compliant mineral estimate for the Strange Lake project in 2011.

The deposit contains 140.3 metric tons of rare earth mineral resources at the indicated level, with an estimated 93% total rare earth oxide and an estimated 89.6 metric tons of recourses at the inferred level with an average grade of 88% total rare earth oxide.

Quest Rare Minerals (QRM) is located in one of the most mining friendly regions of the world, Quebec. Quest Rare is an exploration company focused on the identification and discovery of new world-class rare earth deposit opportunities. The company is led by CEO, Peter Cashin, and a highly-respected management and technical team with a proven mine-finding track record.

Quest is currently working on several high-potential rare earth projects in Canada's premier rare earth exploration areas. The flagship project of the company is the Strange Lake Project. The current scope of the project plans for the excavation of HREE material by means of open pit mining and will provide 4,000 tons per day to a plant that is located in the vicinity of the deposit. Quest has two other projects: the Misery Lake project of north-eastern Québec and the Plaster Rock area of north-western New Brunswick. Quest continues to pursue high-value project rare earth opportunities throughout North America.

The deposit is one of the largest and richest potential HREO deposits in the world. 67% of its value comes from the presence of critical REO's as the term was recently used by the US Department of Defense. Overall, all aspects of the Strange Lake project and he management team are very impressive. The pre-feasibility study should be completed by the first quarter of 2012.

The Capex for Quest has been 913 million dollars. This includes $563 million for the Preliminary Economic Assessment and $350 million for a separation plant. The proposed start of production is mid 2015. There is a 35% tax rate in Quebec and producing 12,100 tons per year there should be a 25 year mine life.

In conclusion, according to Premier Jean Charest, Quebec is more than ready to meet Japan's metal needs. Charest will be visiting Japan to meet with business leaders and politicians to try to persuade them to participate in the ambitious development of northern Quebec.

Speaking to a contingent from Tokyo, Charest said that Japan has major needs. They are a prosperous country. They are leaders in technology, and, like other countries, they have a private sector that has accumulated a lot of money for investment.

Like much of the world, Japan has been frustrated by Chinese control over a number of rare earths used in high-tech and military applications and is looking for a new source of supply. Charest said Quebec is a perfect option. Please take a look at the chart below.

A look at this chart will show that since September Quest has been severely sold off. IN truth all of the rare earth mining companies have suffered the same fate. Indeed on October 4th Quest hit an intraday low of $1.71. It has almost doubled since then and is well on its way back.

In conclusion, if my readers want to invest in a company that has what it takes to be profitable, I suggest they take a long hard look at these Quest Rare Minerals because no matter how many PR firms are hired by the myriad of companies, Quest Rare Minerals has the ingredients to be successful and profitable. At yesterday's closing price it is a bargain.