Alkane well positioned to bring Dubbo to fruition

By Kasia Patel
Published: Wednesday, 29 October 2014

Alkane look to zircon markets with the Dubbo project

In September this year, rare earths junior Alkane Resources reached a milestone in its project development as its planning application for the Dubbo Zirconia project in New South Wales (NSW), Australia, proceeded to the Planning Assessment Commission (PAC) for review.

The project application was initially lodged with the NSW Department of Planning and Environment (DP&E) in June 2013, which in September said: “At this stage, the department is satisfied that the benefits of the project would outweigh its impacts, and that it should be approved subject strict conditions.”

DP&E is set to finalise its assessment of the project by early 2015, taking into account the findings of the PAC review, after which the development application will be referred to PAC for determination.

Located 30km south of the large regional centre of Dubbo, Alkane’s production targets from the project are 16,000 tpa zirconium products; 3,000 tpa ferro-niobium; 4,660 tpa light rare earth oxides; and 1,300 tpa heavy rare earth oxides.

Processing will take place using sulphuric acid leach, followed by solvent extraction recovery and refining to produce the variety of products.

Despite numerous other rare earth junior projects in development, the company told IM that it is targeting a sub 8% market impact for any of its output.

“We only get close to that for zirconium and heavy rare earths but we do not see any issues for those with established market connections,” a spokesperson for Alkane told IM. “With the light rare earths, the deal with Shin-Etsu will take care of the key rare earths. Similarly, with niobium, with Treibacher looking after the marketing.”

Establishing a market

As the company moves towards project approval, it has been carrying out marketing trips in preparation for production.

“On rare earths we are still working to commercialise the memorandum of understanding (MoU) signed with Shin-Etsu of Japan, which would result in a toll-treatment separation agreement to produce the full spectrum of rare earths,” Alkane said.

Under the terms of the agreement, the deal would see most of the neodymium, praseodymium, dysprosium and terbium going to Shin-Etsu, but will enable Alkane to sell its other separated rare earths to customers in Europe and North America.

“We think the rare earths market is showing some signs of recovery but it is for specific rare earths like praseodymium and neodymium,” Alkane told IM.

“The zirconium market is a bit like rare earths, with a few signs of life,” the company said. “Despite the current market we believe there will be strong long term growth.”

Alkane already has an MoU with a European metal manufacturing and trading company and has been working towards securing offtake agreements in Europe, the US and Asia.

“Our partner, Treibacher IAG, has advised that they can sell our ferro-niobium into Europe and the niobium price has remained remarkably stable based on the pricing structure reported by the big Brazilian producer, CBMM,” Alkane added.

The competition

In a market such as rare earths - where existing overcapacity could be exacerbated by additional projects coming online - Alkane is confident that it is able to bring something to the table that other juniors cannot.

“[We have a] successful track record in bringing two projects (Peak Hill Gold Mine and Tomingley Gold Operations (TGO)) to successful operations, with no debt. This quarter’s results for TGO cash flow Australian dollar (A$) 14m ($12.3m*); and Alkane net cash flow was A$9.9m,” the company spokesperson explained to IM.

In terms of the Dubbo Zirconia project, Alkane has a proven flowsheet with seven years of process optimisation at a demonstration pilot plant, where nearly 200 tonnes of ore has been processed to provide customers with end products for testing and to give an indication of real capital and operating costs.

“It doesn’t matter how good your resource is if you don’t have a proven flowsheet for extracting the products economically and reliably,” the company told IM.

Alkane has also been monitoring project prices and trends in demand on a regular basis through customer contacts and industry experts, and the company is satisfied it can effectively compete within the current market.

“As the Dubbo Zirconia project has a polymetallic output, the cost to produce any one of the metals stacks up very well against single commodity producers and we feel we can compete well withÊexisting producers,” Alkane told IM.

Ploughing ahead

According to Alkane, moving through the NSW planning process for project approval has been the major challenge the company has had to face. With positive responses following its marketing trips, Alkane now expects production to begin in early 2017.

“Subject to project approval, granting of the mining lease and then construction to begin mid-2015 [are the next steps]. Financing is also important and converting MoUs to commercial agreements,” the company told IM.

In October, Alkane said it had achieved a cash balance of A$25.3m at the end of Q3, which places it in good stead to further develop its Dubbo Zirconia project.

It also achieved promising increases in heavy and light rare earth recoveries at laboratory scale and it is continuing its product and process refinement at the Australian Nuclear Science and Technology Organisation (ANSTO) in order to optimise recoveries and product qualities.

Now that the engineering design is complete for the zirconium and light rare earth circuit, the company plans to focus on the engineering design of heavy rare earths and niobium.

*Conversion made October 2014