Alkane Resources Ltd (ASX:ALK) is trading up over 160% year to date, driven by its two flagship projects, the Tomingley Gold Operations (TGO) and the 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.