Alkane Resources Ltd (ASX:ALK) has completed an engineering and financials review of its zirconium, niobium, hafnium and rare earths project, the Dubbo Project in New South Wales.
The review confirms a significant project, capable of supplying specialty metals globally as an independent source to China.
Alkane’s managing director Nic Earner said: “The project review details the considerable body of technical work that has occurred on the Dubbo Project.
“In an external environment of rising commodity prices, interest in the project’s products is increasing as global manufacturers look for both material sources and supply chains outside China.”
$4.7 billion free cash flow
Using base case assumptions, the project could generate $4.7 billion free cash flow over the 20-year life with a forecast capital cost of $1.3 billion or $808 million for the stage I build.
The internal rate of return (IRR) is estimated between 16.1% and 17.5% depending on if the project is developed in a single stage or across modular stages.
Similarly the forecast net present value (NPV) for the project using an 8% discount rate and pre-tax ranges from $909 million to $1.297 billion depending on the chosen development process.
Market for project minerals evolving rapidly
The global market for the Dubbo’s products is undergoing considerable change and continues to evolve rapidly.
Magnet rare earths are forecast to grow at a 6‐10% compounded annually through to 2030, primarily driven by demand for electric vehicles.
Raw material for zirconia products is undergoing significant price rises, with zirconium oxychloride (ZOC), a potential Alkane product, having gone up 80% in the past 18 months.
Finally, there is little rare earth supply entering the market outside of China, even as prices rise, and the forecast demand curves show an ever‐widening gap from existing supply options.
Project review intended to advance project development
The project review is intended to sharpen current discussions globally with industry participants and funding bodies in Australia, Japan, Korea, US, Europe and China, with a view to enhancing prospects for a project start.