Stans Closes Acquisition of KCMP Heavy Rare Earth Processing Complex

Stans Energy Corp. (TSX-V: RUU, OTCQX: HREEF) (“Stans” or “the Company”) has completed its $5,500,000 USD transaction for 100% ownership of the Kyrgyz Chemical Metallurgical Plant (KCMP) Rare Earth Processing Complex and Private Rail Terminal, pursuant to the agreement signed on January 13th, 2011, and further approved by the KCMP shareholders on February 18th, 2011. TSX-V approval for this acquisition was obtained on April 29, 2011. The Complex has been legally renamed, “Kashka REE Plant Ltd. (KRP)”.

Stans has hired Mr. Leonid A. Bulyonkov as a Director General of KRP. Mr. Bulyonkov started his engineering career at KCMP. During his career, Mr. Bulyonkov worked closely with the Russian Institutes VNIIHT, VIMS, GIREDMET, and IHHT. He has coordinated large scale rare metal processing operations, while supervising up to 1000 people. From 2008 to 2010, Mr. Bulyonkov worked at the Karabalta Ore Mining Complex OJSC in Kyrgyzstan, acting as Chief Engineer – Deputy Director General. Amongst his peers, Mr. Bulyonkov is recognized as a rare metals and radioactive processing specialist.

Robert Mackay, President and CEO of Stans Energy stated, “The completion of this transaction is a crucial step towards achieving our goal of becoming a near term producer of Heavy Rare Earth Elements (HREEs). We are very fortunate to add Mr. L. Bulyonkov to our team as our Head of Operations at KRP and we are confident that he will be able to use his extensive experience to efficiently reestablish a rare earth production line at the Facility. Mr. L Bulyonkov has already initiated plans for design and capacity upgrades to KRP.”

KRP Details and Historical Production Flow Sheet

For almost three decades the KCMP Rare Earth Processing Complex produced 80% of the former Soviet Union’s RE products. The facilities and the rail terminal were used to produce and transport materials, equipment, chemicals and final product to and from markets when the Kutessay II RE mine was last in production. The Kutessay II mine is now 100% owned by Stans Energy. When the KCMP Rare Earth Processing Plant was last in operation the processing facilities comprised of four individual plants that were part of a much larger industrial complex.

Plant 1

Plant 1 has been decommissioned and will not be used in Stans’ new design. This is because much of the past technology used in Plant 1 would not be used today, as newer Sorption technology has proved to be more efficient and less damaging to the environment when removing radioactive materials.

Historically, RE feed from the Kutessay II mine was brought to Plant 1 to be refined into a new, higher grade concentrate. At this stage, the radioactivity was removed through roasting. Modern technologies have made this step redundant.

Plant 2

Plant 2 separated the mixed rare earth solution from Plant 1 and produced light rare earth (LRE) concentrate (La, Ce, Pr, Nd), middle rare earth (MRE) concentrate (Sm, Eu, Gd), heavy rare earth (HRE) concentrate (Tb, Dy, Ho, Er, Tm, Yb, Lu) and Yttrium Oxide (Y2O3). The equipment in Plant 2 is intact, but has been removed from the building and stored at a location 4 km away for security purposes. Stans intends to refurbish and reassemble Plant 2.

Plant 3

Plant 3 separated the MRE and HRE concentrates into final oxides, metals, alloys, nitrate solutions, and final oxides and metals of the LREEs Lanthanum (La) and Cerium (Ce). This Plant was where the various complexing, elutriation, and regeneration solutions were prepared. The process was carried out on a batch system where the conditions in the ion exchange columns (linear flow, solution, complexing, elutriating solution concentration solution, etc.) were specific for each REE. The Rare Earths were then precipitated as the oxalate (carbonate), filtered and washed and then dried and calcined to rare earth oxide (REO). The RE metal section involved the production of metals from the REOs through various electrical, induction and arc furnaces.

The Soviets never used Plant 3 to its full capacity as uses for HREEs were limited between 1965 and 1990. In the late 80s, the Soviets initiated plans for the Plant’s expansion to process 3 to 4 times the amount at which it had previously operated. The industrial building expansion was completed when the Plant ended operations in 1991. Some new equipment was delivered to and stored on site but this equipment has not yet been installed.

The Plant continued to process small amounts of remaining HRE concentrate into final metals up until 2009. The last of its HREE concentrate and final products were sold in 2010. Plant 3 is in good working condition.

Plant 4

Plant 4 separated light rare earth concentrate from Plant 2 into individual rare earth oxides. Like Plant 2, much of the equipment from Plant 4 was removed and stored at a secure location. A feasibility study will determine whether Stans Energy will produce and sell light rare earth concentrate derived from Plant 2, or reassemble Plant 4 to produce final oxides.

Rail Terminal

The newly purchased rail terminal connects to the Central Asian Rail Network, which connects to Russia and all countries in Asia including China, Korea, and by ferry to Japan. The purchase of the Rail Terminal includes a gantry crane, two warehouses, two offices, and a weigh station. The land purchased with the rail terminal amounts to 143,500 m2. The rail terminal is roughly 15 km from the KMCP Processing Plants by paved road, and is roughly 35 km away from the Kutessay II mine by paved road.

Equipment Inventory and Industrial Space

In an independent assessment of the equipment, it was determined that 97% of the equipment purchased which had been previously used for processing rare earths were in either good, or satisfactory operating condition, and only 3% required repair. Stans has published a full list of the inventory included in the purchase and can be found at www.stansenergy.com/rare-earth-processing. The total industrial space in Plants 2 and 3 totals 21,812 m2.

Capacity Old & New

Previously, the entire REE processing facility operated at approximately 500 mt/annum of final rare earth product. During its time in operation, its capacity varied depending on which products were needed and at what purities. 120 different final rare earth products were produced, including oxides, metals and alloys of all lanthanides with purities up to 99.99%. In the late 80s, the Soviets initiated plans to expand the operating capacity to 1500 mt, but never finished the expansion. A feasibility study will determine the optimal scale at which to bring Kutessay II back into production.

Stans Energy has engaged the Russian Institutes that initially designed and built KCMP to help redesign and refurbish the Facilities to create a new and more efficient source of rare earth supply. New technologies and solvents that were unavailable during the Soviet era will be tested in an effort to further improve the Plant’s efficiency.

For additional information, please contact:

Robert Mackay
President and CEO, Stans Energy Corp.
Ph. 647 426 1865
Email: robert@stansenergy.com

David Vinokurov
Manager Investor Relations, Stans Energy Corp
Ph. 647 426 1865
Email: david@stansenergy.com

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