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Search reports positive economics for Labrador rare earths project

17th February 2016

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – Canadian explorer and project developer Search Minerals has updated a preliminary economic assessment (PEA) on its Foxtrot rare earth element project, located in south-east Labrador, reconfirming robust economics and the potential to become a profitable producer of rare-earth elements (REE), particularly dysprosium, neodymium, praseodymium and terbium.

The revised PEA was prepared by Roscoe Postle Associates (RPA), with the objective to incorporate the mineral processing engineering study prepared by SNC-Lavalin for the company in June 2015.

As previously disclosed, the study reported the estimated construction and operating costs for an REE plant that applied Search's proprietary process for treating REE ores from the Foxtrot deposit. The proprietary process comprised a direct leach on crushed material, thereby eliminating grinding, flotation, gravity and magnetic separation and, as a result, produced a dry stackable waste product, eliminating the need for wet tailings ponds.

The latest economic model calculated an after-tax net present value, at a 10% discount, of C$48-million, and an after-tax internal rate of return (IRR) of 16.7%.

The project would cost C$152-million to build, including a C$33-million contingency.

The plant was estimated to process 1 000 t/d over a mine life of 14 years, split between eight years in the openpit and six years underground.

The operation would have an average unit operating cost of C$238/t and the processing facility could turn average unit revenue of C$353/t, net of pay factors and third-party separation charges.

Search reported feed grade weighted average REE recovery of 76.8%, for total life-of-mine production of 44 129 t of total rare earth oxides (TREO), or 3 300 t/y at peak production. This included about 7.1-million kilograms of critical rare earth element (CREE) neodymium oxide and 836 000 kg of dysprosium oxide.

CREEs, including neodymium, europium, terbium, dysprosium and yttrium, were increasingly valued because of growing demand, constrained or restricted supplies and their growing applications in innovative technologies.

“The Foxtrot project supports low initial capital costs, a good IRR, a short payback period, and is scalable. A feature of the Foxtrot deposit geology allows Search to commence mining in mineralised material for early cash flow. The processing facility for this PEA would be located at the proposed Foxtrot mine site. However, further development in the district may determine that an alternative location may be more beneficial.

“Advancement in separation technology continues and could provide the same or lower separation pricing at current proven solvent extraction pricing. The PEA outlines our current business model as Search continues to seek potential strategic and offtake partners,” stated president and CEO Greg Andrews.

RPA also updated the compliant mineral resource estimate using the same drill hole database, and some new surface channel samples. Indicated resources totalled 7.4-million tonnes at a grade of 1.09% TREO. Inferred resources totalled two-million tonnes, grading 1.17% TREO.

Search advised that, despite the underlying data set being similar to the previous 2012 mineral estimate, the resources comprised generally lower tonnage and higher grades than previously reported, owing to increased cutoff grades and a tighter geological interpretation.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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