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Alkane Resources sends samples to potential customers of DZP

The DZP is a large polymetallic resource containing zirconium, hafnium, niobium, yttrium and rare earths.
Alkane Resources sends samples to potential customers of DZP
Alkane is in the process of securing off-take arrangements.

Alkane Resources (ASX:ALK) recently dispatched high purity samples of zirconia and hafnia to several key potential customers of the Dubbo Zirconia Project (DZP) located in New South Wales.

The DZP is a large polymetallic resource containing zirconium, hafnium, niobium, yttrium and rare earths.

Alkane is in the process of securing off-take arrangements for all of its products, with expected outcomes ranging from full contracted sales to letters of intent.

In addition, the company is continuing its efforts to advance the financing for the development.

Following the November annual general meeting, Alkane completed several shareholder briefings in Sydney, Melbourne and Perth.


Background

Alkane has two key assets both in New South Wales, the cash generating Tomingley Gold Operations (TGO) and the construction-ready Dubbo Zirconia Project (DZP).

While the TGO continues to generate cash inflow for the company, the development of the DZP valued at US$0.92 billion represents a significant opportunity for Alkane.

The DZP is located 400 kilometres northwest of Sydney and is a large polymetallic resource containing zirconium, hafnium, niobium, yttrium and rare earths.

The project is construction ready with financing negotiations currently in progress and production anticipated to commence in 2018.

Securing financing for the DZP is a key milestone for Alkane.

The DZP has been referred to by market commentators as the most advanced and arguably best rare earth elements and specialty metal project in the world.

Alkane recently conducted an internal review that found an opportunity to lower capital costs through construction on a two-stage modular basis.

A study from 2015 concluded a capital cost estimate of US$930 million was required.

The new two-stage construction proposal would break up the capital costs into US$480 million for stage 1 and US$360 million for stage 2 for a total capital cost of US$840 million.

This not only significantly lowers the initial capital cost required to develop the project but also the overall cost.

Revised financials will be released following completion of a detailed assessment of this concept in the 2017 March quarter.

Furthermore, a review of FY17 guidance on production and costs from TGO will be available for the December quarterly report in January 2017.


Sample dispatch details

Alkane recently dispatched high purity samples of zirconia and hafnia (hafnium oxide) to several key potential customers. 

Samples came from the August-September demonstration pilot plant run and were a condition precedent to further discussions with these customers.

Of particular interest are the ongoing investigations and market contacts which have confirmed the company’s view that the market for hafnium materials has substantial growth opportunities, reinforcing the potential for the DZP to be a major supplier over many years.

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