The rare earths sector has been relatively quiet in recent years – with little activity or new production generated – which can naturally be attributed to a lower price environment.
Thanks to the unique mineralisation at its 100% owned Lofdal rare earths project in north-west Namibia, TSXV-listed Namibia Critical Metals broke through a major barrier in January having secured funding and potentially access to offtake agreements with one of Japan’s high profile natural resources companies.
LAURA CORNISH spoke to CEO PINE VAN WYK and principle geological advisor RAINER ELLMIES on the sidelines of Mining Indaba to find out more.
The Lofdal journey has been a long and steady one. Mineralisation at the project’s Area 4 deposit was first uncovered in 2010 and work to explore, define and confirm its viability as a mining operation has been ongoing ever since.
Now, 10 years later, Namibia Critical Metals’ (formerly Namibia Rare Earths) understanding of the ore body’s mineralogy and how best to exploit it has seen it secure an agreement to develop the project with Japan Oil, Gas and Metals National Corporation (JOGMEC) – providing the company with a massive boost to move Lofdal up the value chain and soon into production.
The attraction of Lofdal
While the heavy rare earths mineralisation has been mapped on a district scale on the Lofdal tenement, Namibia Critical Metals’ primary focus for now is the Area 4 deposit, which has an estimated 2.88 Mt of indicated mineral resources at a grade of 0.32% TREO (total rare earth oxide), yielding 9 230 t of REO (rare earths oxide), of which 7 050 t are estimated to be heavy rare earth oxides (HREO).
Area 4 further includes an additional 3.28 Mt of inferred mineral resources at a grade of 0.27% TREO, yielding 8 970 t of REO, of which 6 700 t are estimated to be HREO.
Ellmies highlights that the mineralisation is dominated specifically by the mineral xenotime (containing dysprosium), a heavy rare earth mineral which is relatively simple to process.
Lofdal is one of only two known significant heavy rare earth deposits with simple mineralogy, grade and tonnage potential outside of China, the other located in Australia. About two thirds of the value of the resource is tied to dysprosium.
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Japan currently consumes about 9% of global dysprosium production, and is the largest user after China which according to Ellmies is under pressure to cut production from illegal ionic clay mining operations.
This may place constraint on supply and further enhance Lofdal’s economic attractiveness. Dysprosium is a key metal in the production of “super magnets” for electric vehicles and wind turbines, so the offtake opportunities at Lofdal are widespread.
“In addition to the high value HREO enrichment, Lofdal’s Area 4 benefits from a simple geometry, with the current resource extending from surface to at least a depth of 125 – 225 m.
“Our next phase of drilling is now planned to a depth of 300 m (investigations into the operation’s underground potential is also on the cards), being the lowest hanging fruit in terms of increasing our resource numbers.”
“Our new partner clearly sees the bigger potential in the Lofdal district, considering the Area 4 dysprosium deposit is just the beginning. Our exploration activities to date have confirmed the upside potential in the wider Lofdal district to significantly increase the resource, having already defined a few areas where mineralisation has both grade and size,” Ellmies outlines.
The JOGMEC deal
Namibia Critical Metals signed an agreement with JOGMEC in January to jointly explore, develop, exploit, refine and/or distribute mineral products from Lofdal.
The agreement provides JOGMEC with the right to earn a 50% interest in the project by funding C$20 million in exploration and development expenditures.
Once JOGMEC has completed and exercised its 50% earn-in and a feasibility study has been completed on the project, JOGMEC has the right to purchase an additional 1% interest in the project from the company for $5 million and thereafter to exclusively provide funding to develop the project, subject to Namibia Critical Metals’ interest in Lofdal not being diluted below 26%.
Van Wyk explains that the agreement with JOGMEC contemplates that the company’s Lofdal rare earth project will be held in a subsidiary of the company (ProjectCo) and JOGMEC will have the right to earn up to a 50% interest in ProjectCo by contributing a total of C$20 million for exploration and development expenditures on the project in three phases. JOGMEC further has the right to accelerate funding at any point during the earn-in period.
“The first term, which includes a $3 million investment will see the company complete a 7 700 m drill programme at Area 4 with the objective to double the current mineral resource and deliver an updated NI43-101 report. It further includes the completion of 1 500 m of exploration drilling on two untested satellite targets and lastly to undertake further metallurgical test work on sorting, magnetic separation, flotation and gangue acid leaching to refine the process flow sheet which aims to produce a carbonate concentrate.”
The Term 1 work programme commenced in February 2020 and will run to March 2021 – solely funded pursuant to a firm non-refundable commitment by JOGMEC.
Following completion of the Term 1 programme, JOGMEC has the right to earn a 40% interest in the project by funding an additional $7 million in exploration expenditures in Term 2 (starting April 2021, ending March 2024) and may earn an additional 10% interest by funding an additional $10 million in exploration expenditures in Term 3 (starting April 2024, ending March 2028).
Should JOGMEC elect not to provide the third term funding, Namibia Critical Metals has the right to acquire JOGMEC’s 40% interest in ProjectCo for $7 million. Alternatively, once the third term work has been completed, JOGMEC is entitled to receive an additional 10% of the shares of ProjectCo.
In the final phase, after completion of the earn-in expenditures and a feasibility study, JOGMEC is entitled to increase its ownership in ProjectCo to 51% by acquiring an additional 1% of ProjectCo for $5 million. JOGMEC is also entitled to elect to exclusively fund development of the project provided that the company’s interest will not be diluted below 26%.
“In essence, JOGMEC is acquiring the right through a staged process, to fully fund this project through to production. Our intention through the various terms is to continuously double our resource.
“We are ultimately targeting about 32 Mt. From this we would look to treat about 1.68 Mtpa, giving us a 22-year lifespan and approximately 3 850 t of TREO mixed carbonate,” Van Wyk explains.
If JOGMEC injects a fast-track approach, Lofdal could be producing in 2025, he adds.
“Most importantly,” Van Wyk concludes, “Namibia Critical Metals will throughout this process with JOGMEC remain the operator of the project – right up until the point they own a majority stake.”