Rare-Earth Material Grades & Value Metrics – A Rule Of Thumb

by Gareth Hatch on January 8, 2011 ·

When reviewing reported data on any given rare-earth project, it’s useful to be able to double-check the consistency of some of the most basic information on the project, or to fill in a blank if a particular value is missing. There’s a handy rule of thumb that you can use when looking at the following parameters:

• The size of the defined mineral resource or reserve associated with the project (in metric tonnes (t));
• The total quantity of rare-earth oxides (TREO) present in the mineral resource or reserve (t);
• The material grade of rare earths present (wt %);
• The in-ground value, or the gross value of a unit mass of mineral resource or reserve, by virtue of the presence of rare earths ($US/t);
• The basket price, or the market price for a theoretical unit mass of separated rare-earth oxides, mixed in proportion to their presence in the mineral resource or reserve ($US/kg);

The rule of thumb is simply this…

In-ground Value × Mineral Resource = 1,000 × Basket Price × TREO

which of course means that

In-ground Value = 1,000 × Basket Price × (TREO ÷ Mineral Resource)

and therefore

In-ground Value = 1,000 × Basket Price × (Material Grade ÷ 100)

thus

In-ground Value = 10 × Basket Price × Material Grade

As an example: as of December 2010, the Mount Weld deposit in Western Australia has the following characteristics:

• Basket Price = $US70.57/kg
• Material Grade = 8.1 wt%

Therefore

In-ground Value = 10 × 70.57 × 8.1 = US$5,716/t

Simple algebra allows us to determine the value of any one of these parameters, if we know the values of the rest.