Updated study improves Kvanefjeld’s economic metrics

PERTH (miningweekly.com) – An updated feasibility study on the proposed Kvanefjeld multi-element project, in Greenland, has significantly improved the financial outcomes, owner Greenland Minerals and Energy said on Wednesday.

A 2015 feasibility study estimated that the project would require a capital investment of $1.3-billion, based on a three-million-tonne-a-year operation, with a mine life of 37 years.

The project, which would produce rare-earth products, uranium oxide, zinc concentrate and fluorspar, was at the time estimated to have an after tax net present value (NPV) of $1.4-billion and an internal rate of return (IRR) of 21.8%.

However, Greenland told shareholders this week that incorporating modifications to the Kvanefjeld project, and using lower pricing assumptions, the project was expected to require a capital investment of $832-million.

After tax NPV had also increased to $1.59-billion, while the IRR had increased to 43.4%.

“Since closing out the feasibility study we have made some material technical improvements to the project that have allowed us to update Kvanefjeld’s economic metrics. The substantial improvement to the project’s net present value and internal rate of return are outstanding, particularly given that they are based on more conservative pricing assumptions and an increased discount rate,” said Greenland MD John Mair.

“All rare-earth prices, other than prices for the four magnet metals, for which the demand outlook is strong, have been forecast at current spot levels. Our forecast for uranium oxide has also been reduced to reflect the market impact of the slow reactor restarts in Japan.”

Mair noted that overall, the results of the updated feasibility study demonstrated the economic advantages of the project’s unique, efficient metallurgy and the advantage of multiple projected revenue streams.

He also told shareholders that Greenland had started to develop infrastructure funding concepts to benefit the project.

“In-depth reviews of the mining licence application for Kvanefjeld are progressing, with feedback on a number of key components having been received,” Mair said.