The Rare Earth Mineral Sands Inc. Story

Rare Earth Mineral Sands Inc. controls all the mineral rights of the titanium, zircon and monazite-based rare earth elements (REE) deposit located in the Shubenacadie River - Cobequid Bay area in Nova Scotia, Canada. Since the initial Shubenacadie River deposit was founded in 1997 by Titanium Corporation, significant geological studies/assays, environmental assessments and public consultation have been conducted. Almost than Cdn $10 milllion has been spent to date validating the size of the deposit in the River.

Company Ownership

Rare Earth Mineral Sands Inc. (REMSI) is controlled by four Nova Scotia businessmen. Mr. Elwood Dillman, a leading Nova Scotia business executive with years of experience in the environment sector, Dr. Mark Kazimirski, physician and businessman, Mr. James J. White, lawyer and businessman and Fred Hansen, a successful businessman and founder of a number of companies, including mining companies.

The Opportunity

REMSI owns the mineral rights for heavy mineral sand deposits in the Shubenacadie River and Cobequid Bay in Nova Scotia, Canada. Titanium Corporation Inc., which held the Shubenacadie River rights previously, performed a number of studies from 1997 to 2004 in the Shubenacadie River. REMSI following on the previous pilot work untaken by Titanium Corporation and securing the Cobequid Bay area mineral rights conducted recent geological studies which concluded an overall heavy mineral concentration substantially in excess of previous estimates discovered by Titanium Corporation in 2004. Based on these studies, the deposits contain reserves of 330,941,945 tonnes of sand at containing commercially significant deposits of heavy minerals. The heavy minerals present include ilmenite (16.27%), leucoxene (16.51%), rutile (19.57%) and zircon (1.67%). The picture below highlights (areas in dark color) the heavy mineral concentrations in the Shubenacadie River-Cobequid Bay Mineral Sands. The additional Cobequid Bay sands could account for an estimated additional 600-800 million tonnes of mineral sands.

The river deposits have been approved by the Canadian stock exchanges via the 43-101 process.

According to current estimates, recovery will continue for 15 years at 21,600,000 tonnes of sand per year. These figures assume that a wet plant will operate 3,600 tonnes per hour and 250 days per year, closing in the winter because of ice. Previous studies estimated a net present value of $214,034,042 and annual revenues of $48,866,856 (adjusted for inflation from 2001). This business plan provides updated projections with a net present value (earnings after tax) of $216,317,964. These figures do not take into consideration the additional Cobequid Bay sands or the value of the monazite REE.

Uses of Titanium and Zirconium

Ilmenite, leucoxene and rutile can be processed to produce titanium and titanium dioxide. Approximately 95% of titanium is consumed in the form of titanium dioxide pigment to produce paint, plastics and paper. Titanium metal, because of its strength, light weight and resistance to corrosion, is commonly used for aircraft, ships, medical implants and sports equipment. Zircon can be used to produce ceramics, refractories and foundry sands. It also may be processed into zirconia (zirconium dioxide), used as gemstones and diamond simulants, or zirconium metal, used for nuclear fuel cladding and specialty alloys.

The Titanium and Zirconium Industry

The worldwide titanium and zirconium mining industry is a massive one. In 2009, companies produced 5,190,000 tons of ilmenite, 529,000 tons of rutile and 1,230,000 tons of zircon. Australia and South Africa are the largest producers. The global economic slowdown decreased demand for products that contain titanium and zirconium. Production of minerals in 2009 dropped below 2008 levels. However, it is expected to recover and increase steadily during the coming decade. Canada is a net exporter of zirconium products and will likely become a net exporter of titanium products. Titanium is processed in Quebec from feedstock from Africa. The majority of its exports are purchased by customers in the United States.

Competitive Analysis

Companies such as DuPont, Exxaro, Iluka and Rio Tinto account for a large portion of the world's market share. Barriers to entry, including exploration costs, government regulations, economies of scale and technical learning curves prevent a large number of companies from entering the industry. There is little differentiation between companies' products and little price competition. Other metals, alloys and minerals can act as substitutes, but will not necessarily provide the same quality.