Forte Energy shares boosted by Firawa’s rare earth potential

Forte Energy (LON:FTE, ASX:FTE) advanced around 8 per cent today after a positive update from the Firawa uranium project in Guinea. 

Earlier, Forte told investors that Firawa may host a substantial body of rare earth element mineralisation.

The stock jumped around 14 percent in early trade, before settling down as the session progressed. Forte closed at 8.12 pence up 0.62 pence, or 8.3 percent on the day. 

REEs are hot property at the moment, as the developed world looks for new sources of the vital metals to loosen China’s grip on global supply. China is believed to control more than 90 percent of global rare earth production, furthermore it has also begun to import rare earths from outside the People’s Republic.

Rare earths are used to manufacture specialist electrical components that are crucial in most modern technologies. 

With an increasingly protectionist stance, the major tech-hungry developed economies seem increasingly exposed to ever increasing prices.

Countries such as South Korea and Japan, both heavily dependent on the metals for high-tech manufacturing, are scrambling to secure future supplies. 

China slashed exports by 40 percent in the summer prompted a 300 percent surge in rare earth prices.

So far, the rare earth story has been somewhat under the radar for many UK investors, largely due to the lack of London-listed in companies prospecting for these elements.

However with such a compelling supply-squeeze story the sector is likely attract more interest. 

Meanwhile, Firawa’s rare earth potential could add a significant new dimension to the uranium mine development project.

“On paper, the in-situ value of the REE (rare earth) contained in this sample would seem to exceed the value of the contained uranium,” Forte managing director Mark Reilly said.

However he also said the discover rare earths may lead to a slight delay in the project.

“The emergence of a possible REE component to the existing Firawa uranium resource would complicate the planned metallurgical design process," he added.

“Therefore some additional work will be required to allow the company to reach a decision on which course the testing and process design should take.”

Reilly emphasised that this additional work would not delay the testing process significantly.

The REE content was discovered recently, when Forte commissioned a detailed inductively coupled plasma (ICP) analysis of a sample of Firawa ore to identify an unrecognised material – that was found to have a mass balance deficit.

This subsequently found that the material showed a total REE grade of 1.3 percent.

The company has completed almost 10,000 metres of drilling at Firawa but no REE assays have been carried out on the drilled material.

Forte will await the test results before it makes a decision on a possible re-assay program to examine the already drilled material for REE content.

Firawa currently has a 17.7 million tonnes (Mt) JORC mineral resource, at 296 parts per million (ppm) for 11.6 million pounds (Mlbs) uranium.

The uranium deposit remains open in all directions.

Plans for the forward exploration programme are already in place.

Following a recent visit to Firawa by management, it was decided to undertake some road and bridge rehabilitation to facilitate the transport of drilling equipment to site, which is expected to commence in the coming weeks.

Meanwhile, mapping and sampling to better define the Firawa strike extensions is set to commence in December 2010, while infill and resource extension drilling at Firawa to commence Q1 2011.

Commencement of drilling will depend upon the timing of the assessment the amount of remediation work required, but the company hopes to be drilling by the middle of Q1 2011.

This would leave three to four months for drilling before the return of the rains, which is expected to be more than sufficient for the resource drilling program that is being planned.

Discussions are now being held with various engineering groups to commence the full metallurgical design process with the awarding of contracts is expected in December, following the completion of preliminary metallurgical tests.

Work is expected to commence in the New Year.

Drill databases are being recompiled now and a comprehensive drill program is being designed to infill the existing resource, push the resource depth below the current 80 metres and to extend the strike of the known mineralisation into anomalous areas that could not be accessed in the last drill program.