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