ASX:PEK | A¢10 | US$37m
Trenching Returns High-grade Fluorite at Ngualla Rare Earth Project
Peak Resources has announced that trenching at its Ngualla Rare Earth Project in Tanzania has returned up to 78m @ 37% fluorite from an alteration zone that surrounds the central carbonatite zone; this has a diameter of around 3km, the central portion of which hosts the project’s neodymium- and praseodymium-rich core.
COMMENT: The high-grade fluorite assay results reinforce the multi-commodity potential of the Ngualla complex. Although it is early days for the evaluation of its economic potential, the results indicate the potential for Ngualla to host significant quantities of fluorite, which can be used as a flux in smelting and is also used in the manufacture of hydrofluoric acid.
Peak remains focused on the completion of a bankable feasibility study (BFS) on the neodymium- and praseodymium-rich Ngualla Project, which is expected around the end of 1Q17.
Peak Resources is focused on delivering an integrated rare earths project — The company’s 75%-owned project combines the Ngualla rare earth deposit in western Tanzania with downstream processing in a solvent extraction separation plant in the UK, producing a range of rare earth products. Approximately 85% of the value of the final product is associated with a high-purity neodymium and praseodymium oxide. Peak completed an updated pre-feasibility study (PFS) in March 2016 and plans to complete a BFS on the project around the end of 1Q17.
Ngualla deposit one of the world’s largest Nd/Pr deposits — Ngualla is one of the world’s largest neodymium and praseodymium (Nd/Pr) deposits, with total resources containing 4.6Mt of REO. The deposit is host to a thick blanket of weathered, high-grade mineralisation from surface. This weathered bastnaesite zone at a cut-off of 1.0% REO comprises total resources of 21Mt grading 4.7% REO, containing 1.0Mt of REO, of which 90% was in the Measured category.
Tanzanian operations to produce 27,900tpa of beneficiated REO concentrate grading 45% REO — The updated PFS of March 2016 outlined a mining inventory of 18Mt grading 4.9% REO, containing 900,000t REO. The company plans to process 556,000tpa of dry ore through a flotation-based beneficiation process to produce 27,900tpa of high-value, 45% REO concentrate containing 12,555tpa of REO.
UK-based rare earth leach recovery and separation processing to produce final products — Having investigated a number of different leach recovery flowsheets and following positive trials on concentrate from the project, the BFS will use an alkali roast processing route to produce a rare earth solution that will be fed to a solvent extraction-based separation process. In this, the material is firstly roasted with alkali, then washed and filtered before being leached using a low-strength hydrochloric acid, a process that selectively targets Nd and Pr. The project benefits from the relatively low rate of acid consumption, owing to the low levels of acid consuming carbonate and phosphate in the gangue minerals and the relatively low levels of iron in the concentrate. Final products from the project are planned to be:
• 2,300tpa of Nd/Pr rare earth oxides;
• 250tpa of mixed samarium, europium and gadolinium rare earth oxide; and
• 5,900tpa of cerium/lanthanum carbonate (equivalent to 4,240tpa of contained REO).
Key project parameters — The updated PFS of March 2016 estimated capex for the project at US$330m (including a 25% contingency), comprising US$194m and US$120m for the Tanzanian- and EU-based operations respectively, and US$16m owners’ costs. The project was planned to operate for a total of 31 years and to have operating costs of US$97m pa. The updated study did not present NPVs or IRRs for the project; however, we estimate that at current prices of around US$39/kg for a Nd/Pr mixed oxide, the project would be around breakeven at the operating level.
Neodymium and praseodymium exposed to high-growth permanent magnet demand — Nd/Pr are used in combination to create high-power permanent magnets. Prices of rare earths, including those for Nd/Pr oxides, peaked in 2011 and have since fallen back to pre-bubble levels. Owing to the increased use of high-power magnets in electrical motors and generators, particularly in electric cars and bikes, the outlook for demand for Nd/Pr is very positive, suggesting that current price levels could represent a cyclical low.
Appian and IFC own direct stakes in the Ngualla Project and are also significant shareholders in Peak — Peak owns 75% of the project and Appian owns 20%, with the IFC owning the remaining 5%. Appian and the IFC also own 16.1% and 6.7% of Peak. The company had A$5.1m in cash and debt of A$4.4m (a three-year, 15% term loan from Appian) at the end of December 2016 and is fully funded for the completion of the BFS.