The Peak Resources team on site
Peak Resources has completed a detailed project update (study) for its Ngualla rare earth project which has delivered substantial reductions in capex and opex.

Tanzania – This is in comparison to the preliminary feasibility study (PFS) released 19th March 2014. Peak Resources is listed on the ASX and is focused on developing its Ngualla rare earths project.

The results have confirmed Peak Resources’ belief that the Ngualla project has the potential to become one of the lowest cost, highest quality and lowest risk rare earth projects globally.

A key element of the study involved tailoring the processing flow sheet to focus on the production of Neodymium (Nd) and Praseodymium (Pr) which are key elements in the production of high powered permanent magnets.

These high strength magnets are used in high efficiency electric motors, demand for which is growing strongly due to growing demand for electric vehicles and renewable energy infrastructure such as wind turbines. This permanent magnet market represents 79% of the global rare earth market by value (Source: IMCOA) with Nd and Pr representing approximately 85% of this market by value.

With a focus on these two minerals, the study was based on extensive metallurgical flow sheet development work and pilot plant programs completed since delivery of the PFS, and included sophisticated engineering simulation and mass balance modelling conducted in conjunction with lead engineers, Amec Foster Wheeler.

The study worked on a base-case scenario envisaging production of approximately 2 300 tpa of Nd Pr rare earth oxide, 250 tpa of mixed Samarium, Europium and Gadolinium rare earth carbonate and 5 900 tpa of Cerium/Lanthanum carbonate.

Production forecasts are based on the weathered bastnaesite zone mineral resource estimate at a 1% rare earth oxide lower grade cut (Measured and Indicated portions only).

MD of Peak Resources, Darren Townsend comments: “I would like to congratulate the Peak team and our consultants on the continued excellent progress in the development of the Ngualla project. These further reductions in capex and opex help to position Ngualla as one of the world’s lowest cost rare earth projects and we look forward to the completion of the BFS and subsequent development of the project.”

KEY STUDY OUTCOMES

Low capital cost

Outcomes of the study have confirmed Ngualla is expected to have substantially lower capital cost than any comparative rare earth project and positions Ngualla at the forefront of potential new rare earth projects.

Capital cost (including 25% contingency) has reduced by 10% to US$330 million from the PFS. A number of capital cost items currently included in the revised capital cost estimate (power plant gensets: $8 million, accommodation camp: $12 million and mining fleet: $10 million) will be reviewed as part of the BFS.

It is likely some or all of these capital costs could be moved into operating costs through build, own, operate, transfer (BOOT) style contracts.

The study has already identified a number of opportunities for further reductions in capital costs and these will be examined as part of the current BFS process. The current capital costs include a base-case assumption of a European Union (‘EU’) based refinery to produce high purity separated products.

Substantive site investigation and preliminary engineering work has been completed for a number of potential EU sites for the refinery.

Low operating costs

The study has updated operating costs to $97 million per annum, an 18% reduction ($21 million per annum) compared with the PFS.

The operating cost reductions have been achieved through optimisation of the flow sheet, which has confirmed that Peak Resources’ selective Alkali Roast process allows for the early rejection of the majority of low value cerium and deleterious iron leading to significant reduction in reagent costs.

Long project life

Project mine life has been optimised to 31 years, with this mine life based on the high grade weathered bastnaesite zone which comprises only 22% of the total Mineral Resource in terms of contained rare earths.

Low development risk

Peak Resources is confident that the technical development risk of the Ngualla project remains low. This is primarily due to the following:

  • High confidence Mineral Resource (89% of the bastnaesite zone +1% REO Mineral Resource is classified in the highest JORC 2012 Measured category);
  • Low cost low strip ratio open pit mining;
  • Conventional multi stage processing plant on site at Ngualla;
  • Location of refinery in European Union;
  • Peak team have extensive experience in commissioning and operating rare earth projects;
  • Low capex/opex requirement;
  • Very low uranium and thorium mineralisation (15 ppm U and 53 ppm Th);
  • Proven and demonstrated extraction process; and
  • Advanced development study.

The relatively simple nature of the operation and use of conventional, proven technology demonstrates that Ngualla should avoid the lengthy start-up periods and costs experienced by some new rare earth projects leading Peak Resources to remain confident it can deliver the project for substantially lower capital cost than any other comparative rare earth project and become one of the lowest operating cost rare earth developers.