PERTH (miningweekly.com) - A definitive feasibility study (DFS) into ASX-listed Alkane Resources’ Dubbo zirconia project, in New South Wales, has proven the viability of a 400 000 t/y operation, over an initial 20-year life-of-mine.

Capital costs for the 400 000 t/y operation have been estimated at A$470-million, generating revenue of around A$189-million, at operating costs of A$97-million a year.

However, Alkane said on Monday that as a result of the dramatic changes in the market for the product from the Dubbo project, since the DFS was initiated, the company has also reviewed the impact of starting the project at a one-million-ton-a-year base.

Under this case, a total capital investment of A$893-million would be needed, with the Dubbo project generating around A$508-million in revenue each year, at a cash cost of A$196-million.

Alkane said that the one-million-ton-a-year project offered significant financial upside, adding that the detailed analysis to take the project to feasibility study standard has now started, and would be completed in the first quarter of 2012.

In parallel, process and product development was also continuing and several upside scenarios were being advanced, including the production of ferro-niobium from Dubbo, and the remaining significant potential to improve the rare-earth circuit and overall recoveries of individual rare earths.

The Dubbo project would also undergo an environmental assessment (EA), with the final EA to be lodged by the end of the March quarter in 2012, while the review and consent project would take around six months.

Alkane noted that depending on suitable financing being secured for the project, the development timetable would also be contingent on achieving project approval from the New South Wales Minister for Planning and Infrastructure.

Total construction time has been estimated at around 24 months, and first commercial production from Dubbo was scheduled for the middle of 2014.

Meanwhile, Alkane has undertaken three memoranda of understanding (MoU), accounting for 100% of the zirconium output for the one-million-ton-a-year project.

A MoU to take all the niobium output was also nearing completion, and several opportunities for the rare-earth concentrates were also being discussed, Alkane said.

The developer noted that the latter was focused on either a joint venture or a toll treatment operation that would enable a suite of separated rare-earth products to be recovered and sold to specific customers.

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