Rare earth separation plant planned for Saldanha Bay
Toronto-quoted Frontier Rare Earths on Tuesday announced the positive results of a scoping study at its Zandkopsdrift project in South Africa’s Northern Cape, which gave the asset a $3.65-billion after-tax net present value at an 11% discount rate.
According to the preliminary economic assessment (PEA), the project would have a two-year payback period from the start of production, set to average 20 000 t of separated rare-earth oxides yearly.
The news sent Frontier’s stock as much as 16% higher on the TSX, before easing to end the day 8.7% up at C$1.25 apiece.
“Frontier is now well-positioned to achieve our objective of becoming one of the first significant new producers of separated rare earths outside China by 2015,” CEO James Kenny said in a news release.
China accounts for around 95% of global rare-earth supplies, and company’s such as Molycorp and Lynas Corp have been rushing to bring external supplies into the market.
Colorado-based Molycorp on Tuesday said it would start the staged commissioning of its plant at the Mountain Pass mine the company is reopening in California, while Lynas received a temporary operating licence for its rare earths refinery in Malaysia at the start of February, paving the way for it to start producing by the end of the year.
Frontier’s PEA, which Venmyn conducted, forecast a $910-million capital figure for the mine, concentration and rare-earth separation plant facilities – less than the project’s anticipated $1.1-billion in yearly revenues.
The company plans to build the separation facility at Saldanha Bay on South Africa’s West Coast, located about 300 km from the mine.
Based on the PEA, Frontier said it would be the second-biggest producer of scarce heavy rare-earth oxides outside China.
Analysts have forecast there may be a supply glut of light rare-earth elements such as cerium and lanthanum once Molycorp and Lynas reach full production, but heavy rare-earths are expected to remain in tight supply.
Frontier said it would complete a prefeasibility study for Zandkopsdrift by the end of the year.
South Korea’s government-owned Korea Resources in December signed an agreement to partner with the company at Zandkopsdrift, giving it a 10% stake in the operation and the option to lift this to 30% around 2016.
Source miningweekly.com
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