Matamec advances timely Kipawa deposit toward supplying hungry rare earth market

Matamec advances timely Kipawa deposit toward supplying hungry rare earth market

Booth # 3242 matamec.com 514.844.5252

Andre Gauthier

President

Andre Gauthier, President of Matamec Explorations Inc (TSXV: MAT) discusses the upside possibilities for the Kipawa Deposit on the Zues Project. This compact deposit offers unique advantages in a market that is highly favourable for rare earth metals. Matamec plans to capitalize on the opportunity.

Resource Intelligence: Matamec explorations can be best described as a polymetallic and multi-jurisdictional exploration company. Between Quebec and Ontario you've got rare earths, gold, silver, copper, nickel and uranium plays. These are all metals that have seen tremendous growth in the past year. Which of your projects is getting the most attention today?

Andre Gauthier: The Zeus property with its Kipawa heavy rare earths-yttrium-zirconium-tantalum-niobium deposit is the most interesting project and main asset for Matamec in terms of the

current market.

RI: Matamec announced a 42% increase in TREO Indicated Resources at its Zeus Property in June 2010. You also just completed another resource calculation. Can you comment on those results?

AG: We completed a drilling program last summer and released an update on the resource calculation in January 2011. Much of the inferred resources moved to the indicated category. Last week we announced that we finished a second drilling program, which we began in December 2010. We expect that all of the inferred will move to the indicated and probably part of the indicated will move to measured. We will have the new resource calculation done by the end of March or beginning of April 2011.

RI: The deposit is located between surface and a depth of 90m and is continuous over a distance of 1.45km, a width of 200 metres and a thickness of 50 metres. How will the dimensions of the deposit reduce your environmental footprint as well as lower operating costs?

AG: Compared with the Chinese deposit in Inner Mongolia, which currently produces 95% of heavy and light rare earths in the world, our deposit is compact. Just within this small area we can produce a lot of heavies without the negative environmental impact that the South China clays have. In South China the TREO grade is only 0.03%, so they have to flatten whole areas, raze many trees and use chemicals to produce. These chemicals unfortunately find themselves in surrounding wells and rivers due to lax environmental protection regulations. Again, since our deposit is compact and given that we have great concern for conservation, our environmental impact would be much smaller than in China.

RI: What is the size of the resource and what could it be worth?

AG: Drawing from the results of the June 2010 resource calculation, using a cutoff of 0.016% dysprosium, we have around 9 million tonnes of TREO enriched zones with 2,100 tonnes of dysprosium as well as other heavy and light rare earths. After discussions with end-users, we know that we have sufficient resources to fit their needs. Basically, the market does not need a high volume deposit that end-users cannot absorb into their production. The recovery and the concentration are also critical for these end-users. We're on the way to demonstrate that we can provide what end-users need within the projected market. The key point is the size of the demand for rare earths in the years to come. Whether the demand is high or low, our production can supply the demand without flooding the market with undesired rare earth elements.

RI: Based on your current trajectory, when do you plan to be able to begin construction of a mine?

AG: We are currently working on a three year program. During 2011, we plan to do the PEA study, or scoping study. In 2012 we plan to have the pre-feasibility study and in 2013 the feasibility study. At the end of 2013 we will make a decision to build a mine on the Zeus property on the Kipawa Deposit.

RI: Metallurgy is very important in rare earths and you've had some very good news in that respect.

AG: Before 2008, nobody in the world knew if it was possible to recover rare earths from our main mineral eudialyte. In 2008, our main chemical engineer, Mr. Les Heymann, wrote in our 43-101 file in June or July 2009 that if we solved the silica gel or silicate, we could compete with the South China clays deposit. In October of 2010 we launched a press release announcing that we recovered 89% TREO from the Eudialyte Zone from the ore. That's a world premiere for that kind of mineral with standard processing. We will publish another press release soon with more good news about the mineral processing and hydrometallurgical testing.

RI: A PEA is key to demonstrating the value of this project. You're working on one now. When is it due out?

AG: We think we'll have a PEA study between June 2011 and December 2011.

RI: What else is coming up that will add to your share value?

AG: When we complete the PEA study on the Kipawa deposit project, analysts will be able to compare our deposit with Quest's Strange Lake deposit or Avalon's Thor Lake deposit in the Northwest Territories. Also, on the Zeus Project we have other showings where the heavy content is very, very high, like the Surprise showing. Lastly, we are currently in discussions with big partners in North America and Japan. We think that if we can sign an agreement with one of those partners it will be great value for Matamec.

Investor Highlights:

Our deposit is timely, compact, inexpensive and economical

With the Chinese decreasing the exports of rare earths, many end-users think that they will have no supply from the Chinese after 2014. We aim to be in production around 2014/15 depending on the success of our PEA study

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