Multi-commodity miner and explorer Alkane Resources has completed the engineering and financial review of its zirconium, niobium, hafnium and rare-earth project near Dubbo, in New South Wales, which confirmed that the project is technically sound and financially viable, generating a potential A$4.7-billion in free cash flow over its mine life.
The review, which follows a 2015 front-end engineering design study, is intended to sharpen negotiations with industry participants and funding partners in Australia, Japan, Korea, the US, Europe and China to enhance prospects for a project start.
The Dubbo project will cost between A$1.23-billion and A$1.5-billion, depending on which development option Alkane settles on.
The update is working on an one-million-tonne-a-year plant feed rate, which is its base case, and on a staged development of 500 000 t/y each.
The base case is forecasting capital expenditure of A$1.297-billion with an additional A$124-million sustaining capital over the 20 years of operational life, giving the project a net present value (NPV) of A$1.23-billion and an internal rate of return (IRR) of 17.5%.
The development will require A$808-million for Stage 1 and A$692-million for Stage 2, with sustaining capital of $39-million. This scenario delivers a NPV of A$909-million and an IRR of 16.1%.
Alkane has engaged Sumitomo Mitsui Banking Corporation to provide financial advisory services and to assist with arranging debt financing for the project. The company would appoint equity capital market specialist advisers to assist with the equity component of the required funding.
Alkane stated on Monday that formal financing discussions would start once offtake contracts had sufficiently advanced.
“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,” said MD Nic Earner.