Peak ramps up offtake, financing talks for rare earths project

PERTH (miningweekly.com) – Australian project developer Peak Resources is moving forward with financing discussions and mining licence applications for its planned Ngualla rare earths project, which is estimated to cost $356-million.

The integrated project comprises the Ngualla mine, in Tanzania, and a refinery in the UK.

Peak on Wednesday unveiled the results of the bankable feasibility study (BFS) for the project, which MD Darren Townsend said showed that Ngualla had the potential to be one of the world’s lowest-cost neodymium-praseodymium (NdPr) integrated rare earth producers.

The BFS has lowered the projected operating costs for the project to $34.20/kg NdPr rare-earth oxide. Yearly operating costs have also reduced by $35-million, compared with the 2014 prefeasibility study (PFS), to $83-million.

The project’s capital costs have increase somewhat from the $330-million estimated in March last year, to $356-million, for the Ngualla and UK refinery project combined, with Peak pointing out that the BFS included a third solvent extraction circuit, which is expected to improve margins by separating cerium and lanthanum.

The BFS envisaged a mine life of only 30 years, compared with the 50 years considered in the 2014 PFS, and was based on the weathered Bastnaesite Zone mineralisation which comprises only 22% of the total Ngualla mineral resource estimate, at a 1% rare-earth oxide lower grade cutoff.

Over the mine life, Ngualla is expected to deliver 2 420 t of NdPr rare earth oxide, 530 t of mixed samarium, europium and gadolinium rare earth carbonate, 3 005 t of cerium carbonate and 6 940 t of lanthanum carbonate.

Yearly revenues have been estimated at $228-million.

The BFS estimated that the project will have a pre-tax net present value of $676-million and a pre-tax internal rate of return of 25%, delivering a free cash flow of $104-million a year, post tax and royalties.

Peak told shareholders that as a result of the low operating cost position, the Ngualla project was financially more robust and would be able to handle periods of softness in rare-earth prices.

“We see this as an important distinguishing feature of the Ngualla project,” the company stated.

With the completion of the BFS and the recent grant of the environmental certificate for the Ngualla project, Peak is able to ramp up discussions with potential offtake, debt financier and strategic partners with the aim to move into front-end engineering and design, once funding has been identified.

In parallel, the company will also move forward with an application for a mining licence at the project area, with the aim of having the Ngualla project ready for execution in time to be exposed to the predicted increase in neodymium and praseodymium prices.