Tanzania – Cradle Resources, an ASX-listed niobium-hopeful, has identified the potential for a 30 year, 2 Mtpa operation that will produce 4 600 tpa of ferro-niobium. This equates to an estimated 8% to 10% of world production of the special, most saleable niobium product.
The pre-feasibility study (PFS), completed in 2015 and prepared by project management group MDM Engineering Projects (an Amec Foster Wheeler company), further determined that Cradle Resource’s Panda Hill niobium project can be constructed at an initial capital cost of US$158 million, including the required plant and infrastructure but excluding pre-production and working capital costs, with a payback period of only 1.5 years.
Panda Hill is located in the Mbeya district in south-western Tanzania about 650 km west of the capital Dar es Salam,
Cradle Resources MD Grant Davey says the PFS substantially de-risks the project following excellent results achieved with the resource drilling and the metallurgical test work [undertaken in 2014].
“The PFS focused on a higher grade mining schedule that delivers the optimal early cash flow for the project. With the definitive feasibility study (DFS) already under way, we are well advanced in ensuring that Panda Hill will be the next niobium producer,” he says.
In line with this, Cradle plans to produce niobium in the first 10 years, from its high recovery Angel Zone at an average grade of 0.68% niobium pentoxide with an average recovery rate of 63%. And at an average grade of 54% niobium pentoxide during Panda Hill’s 30 year life-of-mine (LoM) at an average recovery of 62%.
The average LoM operating costs are estimated at US$50.47 million, or $21.78/kg niobium, with a working capital requirement of $37 million.
Panda Hill, a highly economic project with low initial capital outlay, has a projected post-tax and royalty net present value of $470 million and post-tax internal rate of return of 56%. However based on a mature strategy the DFS will be scoped so as to achieve a smaller entry into the market taking into account anticipated demand, expansion plans of the other producers and the needs of potential off-takers.
The operation, which will be mined by conventional open cut mining, will be operated on a contract mining arrangement and will feature a primary crusher with two-stage milling, de-sliming, magnetic separation and niobium flotation, concentrate leaching circuit, concentrate drying and ferro-niobium converter, onsite heavy fuel oil power plant (leased), site access roads and a tailing storage facility.
The production scheduling work was carried out such that for the first five years of operation the run-of-mine (RoM) will be sourced solely from indicated mineral resource material, any inferred mineral resource or low grade material will be stockpiled. After the first five years the RoM will consist of a combination of indicated mineral resource and inferred mineral resource material, including stockpiled inferred mineral resource material that meets the minimum grade requirements.
The Panda Hill project has excellent nearby infrastructure including the TAZARA rail line (2 km away), a dry port located in Mbeya (26 km away), the Dar es Salaam – Tunduma highway (5 km away), Songwe airport (8 km away), the La Farge Songwe cement factory (6 km away) and a major fuel depot in Mbeya.
The Mbeya region is also a developing mining area with the established Shanta gold mine, being developed by emerging gold producer Shanta Gold, less than 100 km away and ASX-listed Peak Resources’ developing rare earths mine nearby.
Potential financing and markets
In June 2014, Cradle reached an agreement with Tremont Investments (backed by Denham Capital) to fund the Project to DFS and beyond. Tremont will earn up to a 50% in the project for a consideration of up to $20 million. To date, Tremont has acquired a 25% stake in the project through funding of $10 million.
Meanwhile, additional project financing is underway and being coordinated by the Denham-backed Pangea team.
A further mineral resource upgrade is due in May 2015 following the results of the third phase drilling campaign completed last December, for use in the DFS.
To simplify financing arrangements, the DFS will be scoped so as to achieve a more modest entry into the market (with throughput commencing at 1 Mtpa), yet will still allow for expansion of production as demand grows.
For the full story on Cradle Resources, look out for the May 2015 edition of Mining Review Africa.