Quantum Rare Earth Developments Corp.

Quantum Rare Earth Developments Corp.

March 08, 2010 11:06 ET

Quantum Proceeds With Acquisition of Silver Mountain

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 8, 2010) - Quantum Rare Earth Developments Corp. (TSX VENTURE:QRE) ("Quantum", the "Company"), is pleased to provide an update that the previously announced agreement to acquire Silver Mountain Mines Corp. ("Silver Mountain"), a private Nevada corporation, is proceeding. On October 7, 2009, the Company announced the deferral of the proposed transaction to acquire Silver Mountain until such time as the Company had successfully graduated to Tier 2 of the TSX Venture Exchange. As stated in the original news release (see NR September 11, 2009), the Company announced the entering into of an agreement to acquire Silver Mountain. Since the time of the original announcement, Silver Mountain has closed a private placement and entered into two transactions to acquire additional property interests as described below.

On December 20, 2009, Silver Mountain entered into a Letter of Intent ("LOI") to acquire North East Minerals Pty. Ltd. ("North East"), a private Australian company, that owns a 100% interest in West Australian Tenement E29/679 (fully granted), known as the Jungle Well Project, and a 100% interest in West Australian Tenement E38/2374 (pending grant), known as the Laverton Project. Both the Jungle Well and Laverton projects are considered prospective for the occurrence of rare earth elements (REE).

The projects are located in the same mineral field where Lynas Corporation Limited's (ASX:LYC) Mt. Weld rare earth deposit is being developed. The Mt. Weld project is a significant world class deposit with a reported resource of 7.7Mt at 12% for 917,000t rare earth oxides. Lynas Corporation Limited is solely focussed on the deposit with a current market capitalization of A$280 million. Lynas has recently announced a A$522m funding package with China Non-Ferrous Metal Mining Group. Development of the deposit has commenced with the first mining campaign at Mt. Weld and surface ore stockpiles are completed. Readers are cautioned that any similarities between the Mt. Weld deposit and the Jungle Well or Laverton projects is speculative and has not been proven until such time as additional work is performed on the property.

The Jungle Well Project is hosted within granted exploration licence EL 29/679 and located 150km west of the Mt. Weld deposit. The tenement covers over 7,500 hectares and recent rock chip samples from a historical trench that was excavated for the evaluation of diamonds in the late 1990's has returned REE results. The results for the rock chip samples are detailed in Table 1.

Table 1 – Rock Chip samples

Name Cerium Dysprosium Erbium Europium Gadolinium
UNITS Ppm Ppm ppm ppm ppm
09_RD_01* 29,300 560 349 130 634
09_RD_02** 31,200 429 173 210 772
Name Lanthanum Neodymium Praseodymium Yttrium Ytterbium
UNITS Ppm Ppm ppm ppm ppm
09_RD_01 12,700 6,630 2,120 3,550 292
09_RD_02 26,800 14,600 4,990 2,010 129

*Sample obtained from an observed dyke within floor of trench. The true width of the dyke could not be determined.

**Soil sampling from excavated trench (true width unknown).

Based on the data compilation, the project presents Silver Mountain with a drill ready target. However, assuming acquisition of Silver Mountain by the Company, it is the Company's intention to carry out ground geophysical surveys to define the strike extent and delineate further targets before drilling programmes are carried out.

The Laverton Project is hosted within exploration licence application EL 38/2374 and located 45km north of the Mt. Weld deposit. The tenement covers over 9,600 hectares and contains a magnetic feature that the Company believes warrants field evaluations.

Terms of the LOI include the payment of $50,000 on signing (paid), with an additional $50,000 payable on approval of the final agreement, and the issuance of 1,500,000 common shares upon entering into a formal share purchase agreement with North East. The Company anticipates Silver Mountain will sign a definitive agreement with North East prior to the Company's proposed acquisition of Silver Mountain.

Acquisition of Thunder Bay Claims – Silver Mountain

On November 6, 2009, Silver Mountain entered into an option agreement to acquire certain mineral claims in the Petry Station, Carre Lake Area and Wawang Lake area, Thunder Bay Mining Division, of Ontario. The claims encompass 4 separate claim blocks totaling 590 claim Units (23,600). As quoted from Ontario Geological Survey Open File Report 5940, (authored by Dyer, R.D. and Breaks, F.W. 1996) "Preliminary results of the survey show the presence of several multi-element anomalous areas. This geochemical signature is prospective for rare-earth element pegmatites…"

Terms of the acquisition to acquire a 100% interest in the claims include payment of $67,000 on signing (paid), and payment of $12,000 on or before November 6, 2010, $16,000 on or before November 6, 2011, $25,000 on or before November 6, 2012, and $35,000 on or before November 6, 2013. In addition, Silver Mountain agreed to issue to the vendors a total of 300,000 shares, with 100,000 shares issuable on Exchange approval of the proposed acquisition of Silver Mountain by the Company, 100,000 shares on or before the first anniversary of Exchange approval and 100,000 shares on or before the second anniversary of Exchange approval. The Company intends to assume the obligation to pay such amounts and issue such shares following the acquisition of Silver Mountain. The vendors in this transaction will retain a 1.5% Net Smelter Royalty, which may be reduced to 0.75% by paying the vendors the sum of $1,000,000.

Red Lake Claims – Silver Mountain

Silver Mountain currently holds an option to acquire a 100% interest in and to 7 mineral claims consisting of 100 claim units, covering an area of approximately 4,000 acres, located in the Red Lake Mining District, Ontario, known as the Tait Lake property. Terms of the acquisition call for the payment of $10,000 on signing which was July 31, 2009 (paid), and $129,000 payable as follows: $24,000 on or before first anniversary, $30,000 on or before second anniversary, $35,000 on or before third anniversary and $40,000 on or before fourth anniversary of signing. In addition, a total of 150,000 shares are issuable, with 50,000 shares on signing (issuance deferred until the acquisition of Silver Mountain closes), 50,000 shares on the first anniversary of the agreement, and 50,000 shares on the second anniversary of the agreement.

Private Placement – Silver Mountain

Silver Mountain completed a private placement in the fall of 2009, consisting of the issuance of 2,565,000 shares at a price of $0.075 (US funds), for gross proceeds of $192,375 (US funds). In connection to the private placement, Silver Mountain agreed to issue a total of 215,000 shares to an arm's-length individual as a finders fee in assisting in the placement of a large portion of the financing.

Acquisition of Silver Mountain by the Company

Pursuant to the terms of the September letter agreement, and following entry into a definitive agreement, Quantum, a wholly-owned Nevada subsidiary of Quantum ("Acquisition Co.") and Silver Mountain have agreed to carry out a merger, whereby, on the effective date of the merger, Silver Mountain will be merged with and into Acquisition Co., with Acquisition Co. carrying on as the surviving corporation under the name "Silver Mountain Mines Corp." On the effective date of the merger, all of the Silver Mountain shares will be cancelled and the former shareholders of Silver Mountain will receive one share of the Company for each share of Silver Mountain formerly held by such persons. As a result of Silver Mountain entering into the two transactions described above and the closing of the private placement, Silver Mountain now has a total of 7,527,174 shares issued and outstanding, with obligations to issue an additional 1,950,000 shares under terms of the three agreements, for a total of 9,477,174.

Subject to approval from the Exchange, the Company intends to issue finders' fees in accordance with TSX Venture Exchange guidelines for services provided by the finder with respect to the transaction. The finder is not a Non-Arm's Length Party and such common shares will be issued pursuant to an exemption under applicable securities laws and will be subject to a hold period as required by applicable securities laws.

The technical information in this news release has been prepared in accordance with the CIM guidelines for the disclosure of mineral properties as set out in National Instrument 43-101 and reviewed on behalf of the company by James McCrae, P.Geo, a qualified person as defined by National Instrument 43-101.

On Behalf of the Board,

Peter Dickie, President

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events such as: (i) the closing of the merger with Silver Mountain, (ii) Silver Mountain entering into a definitive agreement with New West; (iii) the intention to carry out a ground geophysical survey on the Jungle Well Project; and (iv) the belief that the Laverton Project's magnetic feature warrants field evaluation. Such forward-looking information can include statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Company such as the willingness of the parties to close the transactions, satisfactory results of the due diligence investigation on the parties to the transactions, Exchange approval of the transactions and current economic conditions and the state of mineral exploration and mineral prices in general. These risks and uncertainties could cause actual results and the Company's plans and objectives to differ materially from those expressed in the forward-looking information. Due to conditions precedent to closing, and the risk that these conditions precedent will not be satisfied, the Company can offer no assurance that it will close the merger. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice. Except as required by law, the Company assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Quantum Rare Earth Developments Corp.
    Peter Dickie
    President and CEO
    (604) 669-9330