South Africa – Frontier Rare Earths has announced the results of a pre-feasibility study (PFS) on its Zandkopsdrift rare earth element (REE) project in South Africa which confirms it economically viable.
Zandkopsdrift is being developed by Frontier in partnership with Korea Resources Corporation, the wholly-owned mining and natural resource investment arm of the South Korean Government, which owns a 10% interest in the project.
The results of the PFS indicate that the proposed development of Zandkopsdrift to produce a range of high purity, separated rare earths is both technically feasible and economically robust. In addition, the production of a saleable manganese sulphate by-product has been proven both technically and economically feasible and has been incorporated into the process flow sheet and economic analysis for the PFS.
“Frontier is pleased to have completed a positive PFS on Zandkopsdrift which confirms the significant economic potential of Zandkopsdrift and the opportunity for Frontier to become a major new producer of high purity separated rare earths and manganese sulphate,” says James Kenny, President and CEO of Frontier Rare Earths.
The economic evaluation of the project resulted in the following:
- Internal rate of return of 30%, after tax and royalties;
– NPV of US$2.98 billion, after taxes and royalties, at an 8% discount rate;
– NPV of $2.2 billion, after tax and royalties, at a 10% discount rate;
– NPV of $1.58 billion, after taxes and royalties at a 12% discount rate;
- Production capacity of 8 000 tpa of high purity, separated total rare earth oxides (TREO) for the first four years of operation (Phase 1), doubling to 16 000 tpa TREO from year five onwards (Phase 2)
- Proven and probable reserves of 788 700 t TREO, sufficient for a 45 year lifespan
- Production of 48 000 tpa of manganese sulphate during Phase 1, doubling to 96 000 tpa for Phase 2
- Annual revenues of approximately $440 million at Phase 1 capacity and approx. $880 million at Phase 2 capacity
- Average operating costs of $11.87/kg TREO (pre-contingency and net of by-product revenue credit) for the first 20 years of operations
- Average annual operating margin of 69% for the first 20 years of operations
- Total Phase 1 capital expenditure (pre-contingency) of $809 million, comprising:
– Zandkopsdrift mine, excluding manganese sulphate plant – $523 million
– Manganese sulphate plant – $38 million
– Rare earths separation plant – $238 million
- Phase 2 capital expenditure (pre-contingency), which is planned to be financed from Phase 1 operating cash flow, of $645 million
- Approximately 76% of project revenues are derived from critical rare earth oxides and 75% from magnet related REOs
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