EANS-News: Tantalus Rare Earths AG / Drilling Update (with document)

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Company Information/Drilling Update

Düsseldorf (euro adhoc) - Tantalus Rare Earths AG
Drilling Update

(Tantalus Rare Earths AG, Düsseldorf, June 28th 2011) The Directors
of Tantalus Rare Earths AG ("TRE"), the German exploration company
exploring a primary bedrock rare earth mineralisation and a very
extensive, secondary rare earth mineralisation at surface in
north-western Madagascar (the "TRE Project"), are pleased to provide
the following update on its exploration activities.

Highlights:

• Latest drilling results confirm the top surface layer contains continuous
rare earth ("REE") mineralisation.

• The ratio of more valuable heavy rare earths to light rare earths is
consistently in the range of 20:80.

• China Nonferrous Metal Industry´s Foreign Engineering & Construction Co.
LTD recently conducted a field visit and sampled the REE bearing argillaceous
laterites. The samples are currently being analysed and processed in China.
China Nonferrous Metals´ technical staff believe these argillaceous laterites
are potentially comparable to the heavy REE ("HREE") bearing clays mined in
southern China. As previously announced, TRE entered into a memorandum of
understanding with China Nonferrous Metals.

• TRE is conducting metallurgical testwork in three separate laboratories,
one in conjunction with China Nonferrous Metals in China, one in Germany and one
in South Africa. The aim of the test work is to identify as soon as possible a
low-cost extraction process through leaching or combined magnetic/gravity
separation. Initial test work suggests a combined magnetic/gravity concentrate
of mineral phases containing REE, plus tantalum, niobium, zirconium, tin and
perhaps gallium can be extracted, which has potential to add significant value
to the project.

• Pitting on Target 4, which potentially has REE bearing argillaceous
laterites over 30 sq km, is progressing well. To-date, 113 pits have been
excavated, with another 14 in progress.

• The first of five `man portable´ drill rigs ("window samplers") have
reached the site, with the remaining four expected to arrive in early July 2011.

• Diamond drilling has continued on the hard rock REE target sites. At
Target 1 - Ampasibitika, a total of 11,151 m has been drilled to date.

• The Group recently hired eight Malagasy junior geologists in order to
accelerate its exploration activities and now employs a total of two senior
geologists and 12 junior geologists.

Background:

The TRE Project is an exploration project located in north-western
Madagascar and comprises rare
earth-tantalum-niobium-zirconium-hafnium enriched dykes and sills and
REE bearing argillaceous laterites derived from the weathering of
underlying alkaline intrusives. Previous exploration, most notably an
airborne geophysical survey, has defined three main zones with
bedrock REE mineralisation, which TRE has targeted as separate
prospects. These have been identified as radiometric anomalous areas
as well as from surface mapping and sampling. The three main
prospects for bedrock REE mineralisation are:

Target 1 - Ampasibitika - approximately 6 km long this target is
located on the north eastern coastal regions of the Ampasibitika
intrusion; drilling to date has concentrated here,

Target 2 - Ambaliha - around 3 km long this target has three
sub-parallel anomalous areas to the north west of Ampasibitika; and

Target 3 - Befitina - two sub-parallel, approximately 3 km long zones
of minor dykes and REE mineralised argillaceous laterites to the west
and south west of the Ampasibitika intrusion.

There are early indications that in fact most of the alkaline
intrusive bodies are overlain by REE bearing argillaceous laterites.
TRE is therefore considering the whole area underlain by alkaline
intrusives (150 to 170 km²) as prospective for secondary REE
mineralisation in the weathering crust. In a first step, TRE has
subdivided the following target zones:

Target 4 - Caldera, the centre of the Ampasibitika intrusion with a
surface area of approximately 31 km²;

Target 5 - Ampasibitika South, the southern 6 km long extension of
Target 1; besides REE bearing argillaceous laterites this prospect
could also hold primary, i.e. bedrock hosted REE mineralisation.

Target 6 - Antsirabe North, the area south of the main intrusion with
a surface area of approximately 8.5 km².

The Argillaceous Laterites

Results for a further 38 diamond drill holes from Target 1
(Ampasibitika) have been received (see Table 1 below). All drill
holes intersected REE mineralisation in the overlaying layer of
argillaceous laterites. This further confirms the occurrence of a
widespread, continuous REE mineralisation in the top surface layer.

The latest results indicate average total rare earth oxide ("TREO")
grades (771 ppm) and the percentage of heavy rare earth oxides (17%
of TREO) of the mineralised surface layer is slightly lower than in
the previous sample batch. However, the average thickness of the
surface layer is considerably higher, adding more tonnage of
potential ore. The average thickness of these mineralised
argillaceous laterites is approximately 9 m, whereas earlier results
indicated an average thickness of 7.62 m.

Average thorium and uranium grades remain low, with 51 ppm for ThO2
and 10 ppm for U3O8. Gallium grades were again on average 38ppm Ga in
the argillaceous laterites.

Core Drilling

Diamond drilling has continued on Target 1. To date, a total of
11,151 m has been drilled. A large number of holes have intersected
primary (i.e. vein and skarn hosted) REE mineralisation. Several
drill holes have intersected multiple mineralised zones, some of
which are the widest mineralised zones so far encountered, reaching
locally 29 m drilled width. The percentage of heavy rare earth oxides
("HREO") is constantly around 20% of TREO. Although the
mineralisation is relatively low grade, the higher proportion of more
valuable HREO suggests potentially high revenue per tonne if the ore
proves amenable to a low cost extraction process.

Metallurgical Testwork

Detailed mineralogical work on the REE bearing argillaceous is
ongoing and the primary REE-Ta-Nb-Zr-mineralisation has already been
studied in detail. The secondary REE-(Ta-Nb-Zr) mineralisation of the
argillaceous laterites is undergoing detailed metallurgical testwork
by both China Nonferrous Metals and TRE´s independent metallurgical
consultants, Metallicon in South Africa. These studies aim to
demonstrate as soon as possible that a low-cost leaching process to
recover the rare earths contained in the argillaceous laterites is
possible.

In addition to the leaching testwork, another sample has been
submitted to a third laboratory in Germany to test mineral separation
by gravitational and magnetic methods. First results indicate the
possibility to recover not only the rare earth bearing phases but
additionally the tantalum, niobium, zirconium, tin and perhaps
gallium bearing phases by gravity and magnetic methods. TRE considers
this method has the potential to add significant value to the
project.

Pitting Progress

Pitting on Target 4, the central part of the main south-eastern
intrusion, is progressing well. An earlier reconnaissance geochemical
soil sampling survey has indicated the potential presence of REE
bearing argillaceous laterites. With a total surface area in the
range of 30 sq km, this target may become one of the major prospects
of the Tantalus concession. In a first step, pitting has been done
on a 100 m x 200 m grid. In the outer parts pitting is done either
on a 200 m x 200 m or 400 m x 400 m grid. To-date 100 pits have been
excavated, 17 more are in progress. The maximum depth of the pits is
10 m. In total, it is planned to excavate some 365 pits.

On Target 3, Befitina, pitting will start this week. For this
purpose, a second fly camp is currently built near the village of
Befitina. On this prospect, earlier trenching, pitting and soil
geochemistry has revealed the presence of continuous REE
mineralisation in argillaceous laterites which is to-date the highest
grade mineralisation of this kind on the concession area. TRE plans
to dig a total of 450 pits in order to evaluate its economic
potential.

Man Portable Drill Rigs

The first of five window samplers has reached the camp site near
Ankatafa. The remaining window samplers are expected to arrive in
early July 2011. The `man portable´ window samplers allow shallow
drilling to a maximum depth of 20 m, producing a continuous core of
argillaceous laterites, which will be sampled on 1m intervals. These
drill rigs will partly replace the pitting operations as they are
faster and less invasive.

New Staff to speed exploration work

The Group has recently retained the services of an additional eight
Malagasy junior geologists in order to speed up the exploration
activities. Four of whom are currently working on Target 4, and the
four others will work on Target 3. All Malagasy geologists will
receive on the site training on the window samplers by the director
of the manufacturing company.

Another six geologists will be hired in July 2011. Apart from window
sampling/pitting on already identified prospects, these geologists
will also work in the more remote but prospective areas of the
concession. In total, the Group currently employs two senior
geologists and 12 junior geologists.

Commenting on the results, Ivan Murphy, Executive Director of
Tantalus Rare Earths said:

"This drilling update sets out the significant progress we have made
with this potential world class rare earth project.

In addition to the test work being undertaken by China Nonferrous
Metals, our own testing partners continue to make progress on
defining and understanding the separation process for this very large
potential resource, with the latest results from gravitational and
magnetic treatments being particularly encouraging, as this would be
extremely advantageous, both economically and environmentally.

Our latest drill results continue to show a high proportion of the
higher value, strategic heavy rare earths. Together with the
encouraging extraction results, we remain confident that this asset
has the potential to be one of the most important rare earth assets
in the world. The eight new Malagasy geologists joining our existing
local team will support our exploration programme going forward and
we are delighted to have them on board."

Detailed information on the drilling results and the target areas are
available at the following link.

Attachments with Announcement:
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http://resources.euroadhoc.com/us/k1wOkBGm

Further inquiry note:
Ivan Murphy, executive director Tel: +44 (0) 208 566 1579
Ana Ribeiro Tel: +44 (0) 207 138 3206
Blythe Weigh Communications or +44 (0) 7980 321 505

end of announcement euro adhoc
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Attachments with Announcement:
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http://resources.euroadhoc.com/us/k1wOkBGm

company: Tantalus Rare Earths AG
Berliner Allee 12
D-40212 Düsseldorf
phone: +49 (0)211 52391 430
FAX: +49 (0)211 52391 200
mail: contact [at] tre-ag.com
WWW: http://www.tre-ag.com
sector: Holding companies
ISIN: DE000A0SMSL4, DE000A1KRQE7
indexes:
stockmarkets: free trade/entry standard: Frankfurt
language: English