HUDSON RESOURCES INC. ("Hudson" or "the Company") (TSX VENTURE:HUD)(OTCQX:HUDRF)
is pleased to announce the updated National Instrument 43-101 compliant mineral
resource estimate for the 100% owned Sarfartoq ST1 Zone Rare Earth Element (REE)
project in Greenland. The updated resource model includes the 2011 drill
program. In total, 50 holes totaling 12,700 meters of drilling has been included
in the ST1 resource calculation. This resource estimate includes indicated
resources of 5.9M tonnes averaging 1.8% total rare earth oxides (TREO) and
inferred resources of 2.5M tonnes averaging 1.6% TREO for the ST1 zone, based on
a 1.0% cut-off grade. The resource estimate was prepared by GeoSim Services Inc.
of Vancouver. A Technical Report will be filed on SEDAR within 45 days.
James Tuer, Hudson's President, stated, "This updated mineral resource was
successful in moving a significant number of tonnes from the inferred resource
category to the indicated resource category. Using a 1.0% cut-off grade, 43% of
the 2011 inferred resources were reclassified as indicated resources. The grade
of the indicated resource increased by 15% to 1.8% TREO in comparison to the
2011 inferred resource. Importantly, using a higher cut-off grade of 2.0% the
resource includes over 1.6M indicated tonnes averaging 2.5% TREO. The goal of
the 2012 drill program at the ST1 Zone, which will commence next month, is to
increase these high-grade tonnes as these zones are still open in all
directions. Based on the indicated resource, our plan is to advance the project
to prefeasibility starting in the second half of 2012."
The updated resource was developed based on an underground mining scenario
compared with the open pit mining method utilized for the 2011 inferred mineral
resource calculation. The company has determined that an underground mine will
allow the Company to focus on the high grade zones to maximize project value
while minimizing the project footprint. Key benefits of an underground mine are
the elimination of the 10:1 strip ratio which will significantly reduce the
tailings facility, the ability to extract much higher grade material which
should generate enhanced economics and, based on a review of similar mining
projects, maintain operating costs at a level similar to open pit operating
costs.
Hudson plans to commence additional diamond drilling starting in May with the
objective of adding additional high-grade tonnes to the indicated resource
category. The Company plans to do this by targeting drilling along strike of the
known high grade zones which are still open to the north, south and at depth.
Two of the highest grade intercepts drilled in 2011, which are not included in
the current model, include four meters of 7.2% TREO (SAR11-50) and eight meters
of 6.5% TREO (SAR11-71) at the north end of the ST1 Zone.
Neodymium continues to represent the critical rare earth element on which Hudson
is focusing. It, together with praseodymium, comprises 25% of the estimated
total rare earth oxides. Neodymium is the key ingredient in neodymium-iron-boron
(NdFeB) magnets, which is one of the most important and widely used REE
applications.
The following table presents the indicated and inferred mineral resource
estimate using an underground mining scenario for the ST1 Zone at a range of
cut-off grades with the base case in bold face. The selected base case cut-off
grade of 1.0% TREO is considered consistent with other mineral deposits of
similar characteristics, scale and location. Based on internal Company analysis,
the 1.0% cut off grade also maximized the project value based on a 2,000t/day
mining operation when tonnage vs. grade is considered.
ST1 Zone Mineral Resource(1)
Indicated Mineral Resource
----------------------------------------------------------------------------
COG(2,3) Tonnes TREO La2O3 Ce2O3 Pr2O3 Nd2O3
%TREO(4) (000's) % ppm ppm ppm ppm
----------------------------------------------------------------------------
0.6 7,221 1.60 3,452 7,969 919 2,998
----------------------------------------------------------------------------
0.8 6,755 1.66 3,589 8,275 952 3,107
----------------------------------------------------------------------------
1.0 5,884 1.77 3,855 8,844 1,012 3,296
----------------------------------------------------------------------------
1.2 5,083 1.87 4,110 9,383 1,067 3,473
----------------------------------------------------------------------------
1.4 4,117 2.01 4,452 10,070 1,135 3,681
----------------------------------------------------------------------------
1.6 3,111 2.17 4,921 10,927 1,214 3,896
----------------------------------------------------------------------------
1.8 2,246 2.36 5,426 11,878 1,304 4,154
----------------------------------------------------------------------------
2.0 1,612 2.54 5,945 12,822 1,392 4,404
----------------------------------------------------------------------------
Inferred Mineral Resource
----------------------------------------------------------------------------
COG(2,3) Tonnes TREO La2O3 Ce2O3 Pr2O3 Nd2O3
%TREO(4) (000's) % ppm ppm ppm ppm
----------------------------------------------------------------------------
0.6 5,200 1.16 2,358 5,751 694 2,323
----------------------------------------------------------------------------
0.8 3,538 1.38 2,847 6,843 815 2,703
----------------------------------------------------------------------------
1.0 2,459 1.59 3,343 7,930 932 3,073
----------------------------------------------------------------------------
1.2 1,872 1.75 3,721 8,719 1,012 3,322
----------------------------------------------------------------------------
1.4 1,433 1.88 4,060 9,423 1,082 3,535
----------------------------------------------------------------------------
1.6 1,028 2.04 4,449 10,216 1,160 3,767
----------------------------------------------------------------------------
1.8 757 2.16 4,764 10,853 1,222 3,948
----------------------------------------------------------------------------
2.0 521 2.28 5,143 11,480 1,273 4,062
----------------------------------------------------------------------------
Indicated Mineral Resource
----------------------------------------------------------------------------
COG(2,3) Tonnes Sm2O3 Eu2O3 Gd2O3 Tb2O3 Dy2O3 Y2O3
%TREO(4) (000's) ppm ppm ppm ppm ppm ppm
----------------------------------------------------------------------------
0.6 7,221 294 66 166 13 31 63
----------------------------------------------------------------------------
0.8 6,755 304 68 172 13 32 65
----------------------------------------------------------------------------
1.0 5,884 321 71 181 14 34 68
----------------------------------------------------------------------------
1.2 5,083 337 74 188 14 35 71
----------------------------------------------------------------------------
1.4 4,117 353 78 197 15 37 73
----------------------------------------------------------------------------
1.6 3,111 367 81 207 16 38 76
----------------------------------------------------------------------------
1.8 2,246 385 84 214 16 40 78
----------------------------------------------------------------------------
2.0 1,612 401 87 212 16 41 80
----------------------------------------------------------------------------
Inferred Mineral Resource
----------------------------------------------------------------------------
COG(2,3) Tonnes Sm2O3 Eu2O3 Gd2O3 Tb2O3 Dy2O3 Y2O3
%TREO(4) (000's) ppm ppm ppm ppm ppm ppm
----------------------------------------------------------------------------
0.6 5,200 234 51 118 10 25 55
----------------------------------------------------------------------------
0.8 3,538 272 60 140 11 29 60
----------------------------------------------------------------------------
1.0 2,459 310 69 162 13 33 67
----------------------------------------------------------------------------
1.2 1,872 333 75 174 14 36 72
----------------------------------------------------------------------------
1.4 1,433 352 78 183 15 38 76
----------------------------------------------------------------------------
1.6 1,028 371 82 194 16 40 80
----------------------------------------------------------------------------
1.8 757 385 85 204 16 42 85
----------------------------------------------------------------------------
2.0 521 390 87 208 17 44 89
----------------------------------------------------------------------------
1. The resource estimate is classified as Indicated and Inferred Mineral
Resources as defined by CIM and referenced in NI 43-101. A Technical
Report with the estimate will be filed on SEDAR within 45 days.
2. COG - Cut-off Grade.
3. GeoSim considers a cut-off grade of 1.0% TREO to be reasonable in
preliminary estimation of potentially economic resources extractable by
underground mining methods.
4. TREO - Total Rare Earth Oxides refers to the elements lanthanum through
lutetium plus yttrium expressed as oxides in the form REE2O3.
The mineral resource was estimated using the inverse distance squared method in
two passes with incremental maximum search distances of 30 and 80 m. Samples
from at least two drill holes were required to estimate block grades. Individual
rare earth oxides were estimated and combined to determine the final TREO
estimate. Block dimensions were 5 metres by 5 metres horizontal and 5 metres
vertical. Grade estimation was based on analyses of core samples from 50 diamond
drill holes (12,705 metres) completed between September 2009 and September 2011.
Assays were composited in two metre down-hole intervals. It was concluded from
statistical analysis of the raw sample data that grade capping or special
treatment of outliers was not warranted.
Wireframe models of the major lithologies were developed to constrain the grade
estimate and for assigning density values. The density values were assigned to
the carbonatite and gneiss lithologies based on 1785 specific gravity
measurements of drill core. Grade estimation was constrained by a solid model of
the carbonatite intrusive and constrained beyond this domain by a 0.5% TREO
grade shell. Hard boundaries were used between the carbonatite domain and
surrounding gneiss complex.
Estimated blocks were classified as 'Indicated' if they were within the
carbonatite domain gradeshell and estimated in the first pass with a maximum
search distance of 30 metres and minimum of 2 drill holes. All other estimated
blocks were classified as 'Inferred'.
Assumptions used to establish the base case underground cut-off grade were:
-- A weighted average bulk concentrate price of $32/kg corresponding to a
54% discount on the three-year trailing average REO prices as of April,
2012.
-- The three year trailing average for REE prices (per kilogram) as of
April 2012: La2O3$46.40; Ce2O3$44.60;
-- Pr2O3$99.00; Nd2O3$112.80; Sm2O3$47.70; Gd2O3$67.70; Tb2O3$1287.60;
Eu2O3$1586.10; Dy2O3$713.10; Y2O3$67.80.
-- TREO cut-off grades of 0.6%, 0.8%, 1.0% and 1.2% were considered
potentially viable at break-even mining costs (General & Administration,
Processing and Ore Mining costs) of $125/tonne, $166/tonne, $208/tonne
and $250/tonne, respectively.
-- A recovery of 65% has been assumed and will be revised when
metallurgical test results are available.
Positive progress continues to be made on the metallurgical flowsheet for the
ST1 Zone which hosts the rare earths in bastnasite and monazite mineralization.
The company has consolidated the major testwork components at SRC in Saskatoon
under the direction of John Goode, P.Eng. John has extensive experience in the
rare earth extractive industry in North America and China. Earlier testwork at
SRC demonstrated that recoveries of over 90% were achievable utilizing acid
baking and leaching. Preliminary flotation and gravity testwork to date has
demonstrated the ability to upgrade the ore and more work is ongoing. Additional
beneficiation and hydrometallurgical testwork is continuing at SRC.
Metallurgical updates will be provided as results become available.
Dr. Michael Druecker is a qualified person as defined by National Instrument
43-101 and reviewed the preparation of the scientific and technical information
in this press release.
Ronald G. Simpson, B.Sc., P,Geo., President of Geosim Services Inc., is an
independent Qualified Person as defined by NI 43-101 and is responsible for the
resource estimate on the ST1 Zone and has verified the data disclosed in this
release.
ON BEHALF OF THE BOARD OF DIRECTORS
James Tuer, President
Forward-Looking Statements
Except for statements of historical fact, certain information contained herein
constitutes forward-looking statements. Forward looking statements are usually
identified by our use of certain terminology, including "will", "believes",
"may", "expects", "should", "seeks", "anticipates", "has potential to", or
"intends" or by discussions of strategy or intentions. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results or achievements to be materially different
from any future results or achievements expressed or implied by such
forward-looking statements. Forward-looking statements are statements that are
not historical facts, and include but are not limited to, estimates and their
underlying assumptions; statements regarding plans, objectives and expectations
with respect to the effectiveness of the Company's business model; future
operations, products and services; the impact of regulatory initiatives on the
Company's operations; the size of and opportunities related to the market for
the Company's products; general industry and macroeconomic growth rates;
expectations related to possible joint and/or strategic ventures and statements
regarding future performance.
Forward-looking statements used in this discussion are subject to various risks
and uncertainties, most of which are difficult to predict and generally beyond
the control of the Company. If risks or uncertainties materialize, or if
underlying assumptions prove incorrect, our actual results may vary materially
from those expected, estimated or projected. Forward-looking statements in this
document are not a prediction of future events or circumstances, and those
future events or circumstances may not occur. Given these uncertainties, users
of the information included herein, including investors and prospective
investors are cautioned not to place undue reliance on such forward-looking
statements.
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