Earlier this month I had the opportunity to visit Round Top, the rare-earth-element (REE) project being developed by Texas Rare Earth Resources Corp.  (OTCQX:TRER). While in the Lone Star State I also paid a visit to the University of Texas at El Paso (UTEP), where much of the processing and analysis work on the project has been undertaken.
The project is located in Hudspeth County in the far west of Texas, USA, approximately 85 miles southeast of the city of El Paso. The nearest town is Sierra Blanca, 8 miles to the southeast of the deposit, with a population of around 560 people and where Texas Rare Earth Resources (TRER) has an office. The border with Mexico is nearby, some 10 miles to the south.
Round Top is one of five peaks that make up the Sierra Blanca range, the others being Triple Hill, Sierra Blanca Peak, Little Blanca and Little Round Top. According to TRER’s most recent Preliminary Economic Assessment (PEA) report (published in December 2013), these peaks are rhyolite laccoliths – intrusions of magma that have welled up between layers of Cretaceous sedimentary rock to formed domed structures. The topmost layer of sedimentary rock has eroded over time, resulting in the present exposed rhyolite formations.
The deposit is just 3 miles north of I-10, the interstate highway that starts in Santa Monica, California in the west and which finishes in Jacksonville, Florida in the east, passing through El Paso, San Antonio and Houston in Texas along the way. Round Top is therefore highly accessible by road. Sierra Blanca sits at the intersection of two branches of the Union Pacific railroad. There is an active rail spur that terminates less than three miles from the base of Round Top Mountain, serving a local company, RCL Rock, which mines an average of 6,000 t / day of similar rhyolite for railroad ballast.
My hosts for the visit were Dan Gorski, CEO and director of TRER, and Tony Marchese, chairman of the company’s board of directors.
Round Top is more than a mile across at its base, with a peak approximately 300 m (1,000 feet) above the desert plateau, which is itself approximately 1,300 – 1,400 m (4,270 – 4,600 feet) above sea level.
As part of the recent PEA report, TRER published an updated NI 43-101 compliant mineral-resource estimate for Round Top. The deposit contains an estimated 231.0 Mt of rare-earth mineral resources at the Measured level, with an average grade of 0.06 wt% total rare-earth oxide (TREO), 298.0 Mt of resources at the Indicated level, with an average grade of 0.06% TREO, and an estimated 377.0 Mt of resources at the Inferred level, with an average grade of 0.06% TREO. Each of these estimates used a cut-off grade of 0.0428% yttrium (Y).
You can see photos taken during my visit, below – just click on the thumbnails to see the full images.
In total there are an estimated 573 kt of TREOs in the Round Top deposit, with an average heavy REO (HREO) distribution of 72% of the TREOs present. In addition to the presence of REEs, the project is of interest for by-products of beryllium (Be), lithium (Li), niobium (Nb), tantalum (Ta) and uranium (U).
The first (and an admittedly blunt) question that I asked Mr. Gorski concerned the grade of the deposit. Given the low concentration of REEs at Round Top, compared to other deposits, how could future production hope to be economic – despite the proximity to infrastructure and a large pool of labor? Mr. Gorski explained that despite that relatively low grade, the distribution of the main REE-bearing mineral variety yttrofluorite was highly uniform across the deposit. Furthermore, tests at UTEP had conclusively determined that the rhyolite host rock was highly amenable to leaching, despite the fine-grained nature of the rock.
Mr. Gorski explained that once mined, the material at Round Top would be crushed into pellets, approximately 6-13 mm (0.25-0.5 inches) in diameter, before being placed onto leach pads. The pellets would then be treated with an 8 vol% dilute solution of sulfuric acid in water, which after having time to percolate through the pellet heaps, would leach the REEs and other metals of interest into solution. A series of tests at UTEP on the process achieved recoveries of over 90% of the yttrium (Y), dysprosium (Dy) and other HREEs present via this leaching process. These tests were confirmed in independent contract laboratories.
This amenability to leaching would eliminate the need for a flotation processing step, considered by a previous incarnation of the TRER management team in the initial PEA for Round Top, which was published in June 2012. Mr. Marchese commented that the updated PEA saw a dramatic drop in the estimated initial capital expenditures (capex) for the project from $2.1B to $292M, and sustaining capital from $860M to $553M. The PEA determined a pre-tax Net Present Value of $1.4B at a 10% discount, and an IRR of 67%. I note that these numbers use a conservative REO price deck that is based on current spot prices for these materials, instead of the rather optimistic prices that most REE project-development companies have used in the past couple of years.
Unit operating expenditures would be similar ($14.59 / t mined rock in the initial PEA compared to $15.16 / t mined rock in the updated PEA), despite a reduction in throughput from 80,000 t / day to 20,000 t / day of mined rock. TRER plans to produce approximately 3,200 t / year of separated REOs, with an anticipated initial mine life of 20 years. The proposed pit would focus on the northwest portion of Round Top, with rock sent to the leach pads located north of the deposit, via conveyor. This constitutes approximately 18% of the overall mineral resource, giving the project a potentially long life beyond the initial plan.
90-95% of the rock consists of the minerals quartz and feldspar, which do not react to the leaching solution. The remaining 5-10% of the rock consists of
fluorites fluorides such as yttrofluorite and cryolite. Urananite, thorite and coffinite are also present, which contain thorium (Th) and uranium (U). In the rock as a whole Th levels are approximately 179 ppm and U levels are approximately 45 ppm. The rock also contains Li-rich mica, and there is evidence of Be too, though it has yet to be determined just where in the mineral assemblage this element is located. Other accessory minerals include columbite (containing Nb and Ta) and zircon (containing zirconium and hafnium).
The iron (Fe)-bearing mineral magnetite is also present in the rhyolite rock, with some of this mineral having been altered over time to form hematite, giving some of the rhyolite a pink-red color. Hydrothermal or groundwater alteration gives other sections of the rhyolite a tan to brown color.
Once leached, the pregnant solution would be subject to a multi-stage process to remove undesirable elements such as Fe and aluminum, before being subject to solvent extraction (SX) as a means of separating and purifying the concentrate, resulting in individual REOs. According to the PEA, overall recoveries of the REEs after heap leaching, separation and purification include 80% for Y and 76% for Dy. There is little detail in the PEA about the SX processes proposed for the operation, and TRER did not get into much detail on the process, though I was told that the costs of the associated SX facility (approximately $93M) are included in the overall capex estimate.
The first documented exploration in the vicinity of Round Top took place in the 1970s, when
fluorite fluoride deposits and Be mineralization where identified near to Sierra Blanca Peak. In the 1980s Cabot Corporation and Cyprus Metals initiated exploration for Be at Round Top, Sierra Blanca Peak and Little Round Top. At this point the Texas Bureau of Economic Geology conducted its own extensive exploration of the Round Top area and vicinity. Associated studies in 1987, 1988 and 1990 identified REE mineralization for the first time, at Round Top.
In 2007, the predecessor to TRER, Standard Silver Corporation, acquired prospecting permits from the GLO and discovered large numbers of documented drill samples in an exploratory decline into Round Top, created by Cyprus Metals during their previous work. These samples were re-logged and analyzed as part of the most recent PEA for Round Top. Subsequent drill programs by TRER commenced in 2010. The core samples are currently stored in a large warehouse building in the vicinity of Round Top; we did not visit the building or examine core samples during the visit.
The Round Top deposit is located on land owned by the state of Texas. In 2011, TRER entered into renewable 19-year leases with the state General Land Office (GLO) totaling some 380 ha (950 acres) of land including Round Top and the vicinity. The associated mineral leases come with a statutory 6.25% royalty to the GLO, on the gross profits of all minerals that are commercially produced at the site. In addition, TRER owns the surface lease to approximately 22,300 ha (55,000 acres) of land around Round Top, and also holds more than a dozen prospecting permits on land elsewhere in Hudspeth County, covering approximately 2,900 ha (7,100 acres).
Close to the base of Round Top, on land accessible to TRER are abundant quantities of Del Rio clays, and Finlay limestone. Mr. Gorski explained that the former will be highly suitable for the production of the heap leach pads at Round Top; the latter will be suitable for neutralizing the acids used, once the leaching process has been completed. Their proximity will save significant costs in terms of the purchase and transportation of such materials, to the future project site.
TRER works closely with Nicholas Pingitore at the Department of Geological Sciences at UTEP, located 90 minutes northwest of Round Top. Dr. Pingitore is a professor in the department, focusing on analytical geochemistry and is Director of the Electron Microprobe Laboratory at UTEP. Dr. Pingitore is also a director of TRER. We paid a visit to his laboratory at UTEP, where he and his researchers have been working on various aspects of the Round Top deposit, and its amenability to processing.
Dr. Pingitore does a nice demonstration of just how permeable the rhyolite rock is, and thus amenable to leaching. Taking samples of the rhyolite that have been sectioned into different thicknesses, he adds a couple of drops of blue ink to the top surface. Within minutes, the ink appears on the other side of the section, with little expansion of the original diameter of the drops applied on the initial side. In other words, the ink penetrates “straight down” with gravity, to the other side, relatively quickly.
Dr. Pingitore noted that the minerals of interest in the rhyolite are very soluble, and that there is enough porosity (typically 3-5%) to allow aqueous solutions to soak through the rock with ease – but not so much porosity that it would do so too quickly, without dissolving the minerals of interest. The work now focuses on obtaining an optimum pellet size for the heap leaching process. I asked him what the rate-determining step or steps would be for the leaching process. He indicated that the key was how fast fresh acid diffuses through the thin films of leach solution that permeate and soak the rock particles, and thus dissolve more and more of the microscopic yttrofluorite grains. Likewise, diffusion of the liberated REEs in the opposite direction, out of the rock particles via those liquid films, also limits the rate at which the overall heap leaching proceeds.
Given the rather unusual composition of the rhyolite rock at Round Top, Dr. Pingitore conducted experiments at the Stanford Synchrotron Radiation Lightsource, part of the Stanford Linear Accelerator in California, to determine which mineral or minerals host the Y and other HREEs. By probing the atomic structure surrounding the Y in bulk samples of the rhyolite, with powerful synchrotron-generated x-rays, Dr. Pingitore said that it became evident that essentially all of the Y, and by proxy the HREEs, is hosted in yttrofluorite, substituting for some of the normal calcium atoms. Dr. Pingitore and Mr. Gorski were co-authors of a paper  that detailed this characterization work, in addition to the leaching experiments on the Round Top rhyolite, published in the Chinese Society of Rare Earth’s Journal of Rare Earths in January 2014.
The laboratory at UTEP houses the usual high-end analytical equipment, including an inductively coupled mass spectrometer (ICP-MS) capable of detecting metals in solution to 1 part per trillion or better. It also houses an X-ray fluorescence (XRF) analyzer, for testing solid samples. The latter is particularly useful for quantitative leach testing; XRF analysis is conducted on powders ground and pressed into pucks, from rhyolite pellets that were crushed to various sizes and then subject to different leaching regimens. The XRF profile for each sample is compared to the untreated base case; the XRF curves for each sample can be superimposed on the base case and where REEs and other metals have been removed via leaching, this shows as reduced (or eliminated) XRF peaks for the specific element in question. These peaks are proportional to the quantity of individual elements present. This method is a simple but reliable method of quickly determining the effectiveness of the various leaching parameters used (see the images below for more detail).
Under a joint UTEP-TRER research contract, TRER provides funds for supplies, equipment usage, support personnel and the like for the laboratory investigations. Dr. Pingitore does not receive a salary or other direct or indirect financial benefit in this arrangement, and TRER confirms significant findings at one or more contract laboratories.
In addition to the geochemistry of the rhyolite rock, Dr. Pingitore has also looked at the compositional data from all of the samples taken during previous drilling campaigns at Round Top, and plotted them against depth (see the images below for more detail). By using the primary data points, rather than statistics derived from them, one can quickly see that there is little geographic variation of concentration of the individual REEs in the deposit – i.e. little variation from one drill hole to another. There is also no trend with depth, either; these plots indicate that there is consistent grade of REEs from the top to the bottom of the Round Top deposit, making it unusually uniform in distribution.
At over 4,570 square miles in area, Hudspeth County is larger than the states of Delaware and Rhode Island combined, yet has a total population of only 3,500 people per the last census. During my visit I chatted with Laura Lynch, Executive VP for External Affairs at TRER and a director of the company, about the potential impact of the Round Top project on the local community.
Ms. Lynch pointed out that the county is the poorest and sparsest populated in Texas, with a median income in the country of approximately $13-15k / year. Compare this to the median salary of approximately $50k / year that TRER anticipates will be paid to employees of the future Round Top operation. Ms. Lynch commented that these jobs (up to 150 in total) are just one reason why TRER has received very significant local support to date. Mr. Gorski further commented that wherever possible they plan to hire local people for the project, such as the folks at RCL Rock, or people currently living in the town of Sierra Blanca.
As a local land owner and as someone raised on a ranch herself, Ms. Lynch said that children in these rural areas learn a wide range of mechanical and other practical skills as they grow up, which could be put to good use at the Round Top operation. Other local landowners have commented that they welcome the development of Round Top as a means of potentially attracting their children and grandchildren to return back to the area, having had to leave for other places to find work. Having their family back in the area increases the chances of the ranches staying in the respective families in the future. This is of course a natural desire for the current land owners, who wish to leave a legacy to future generations of their families, with these properties being managed and operated tomorrow, in the same traditional ways as they are today.
Ms. Lynch commented that the 6.25% royalty on GLO mineral leases is used to fund the public school system in Texas. The anticipated $500M in royalties that this represents from Round Top, over the initial 20-year life of the mine, effectively gives the state of Texas a vested interest in the success of the Round Top project. The ongoing collaborative work at UTEP may grow and become even more significant as the project progresses, too. There is strong support for TRER’s endeavors elsewhere in El Paso outside of UTEP too. During my time in El Paso we had the opportunity to meet Robert Wingo, a local El Paso businessman, entrepreneur and UTEP alumnus who recently joined TRER’s Advisory Board to help the company work more closely with the El Paso business community.
Mr. Marchese noted that as a result of the Round Top deposit being on state (not Federal) land, the route to permit approvals for the project has the potential to be more straightforward, than if the company had to deal with Federal Bureau of Land Management or US Forestry Service land.
As the name of the company implies, TRER is very much a Texas company, focused on developing a Texas resource to the benefit of its shareholders, as well as the local and regional community. A key step for the company was teaming up with UTEP as this has helped them to advance the leaching work significantly. The company continues to work with third parties such as RDI, Gustavson Associates and Lyntek in Denver on the specific design of the scaled-up leach processes, as well as to optimize the extraction and purification process for the pregnant leach solution, once produced. Obviously the most critical question for the company is whether or not they can do that heap-leach process in a cost-effective and environmentally sustainable manner. All indications are that they are on the right path to figuring that out.
During a conversation with Mr. Marchese, he commented that one of TRER’s biggest challenges is getting people past the idea that just because a REE project based on rhyolite has not been commercialized before, does not mean that it can’t be done in the future. I have to agree with him on this point. At the end of the day each project has its own unique characteristics, and will ultimately live or die on its own merits or shortcomings. The HREE industry in southern China has clearly demonstrated that low grade is not necessarily an impediment to economic production, if the processes used to extract the REEs are simple and cost effective. If you can produce a range of products for less than the market is willing to pay for them, you have yourself a business. It will be for TRER to demonstrate that it do just that, and I for one will be most interested to see how they do.
My thanks go to Mr. Marchese and Mr. Gorski and their colleagues at Texas Rare Earth Resources Corp., for facilitating the visits to Round Top Mountain and to the University of Texas at El Paso.
Disclosure: at the time of writing, Gareth Hatch is neither a shareholder of, nor a consultant to, Texas Rare Earth Resources Corp. (TRER). TMR’s Jack Lifton is a director of TRER. Neither Gareth nor Jack received compensation from TRER or from anyone else, in return for the writing of this article.