JOHANNESBURG (miningweekly.com) – Rare earth project developer Northern Minerals has delayed the timetable for first production from its Browns Range project, in northern Western Australia, to the second half of 2017, from 2016.
The ASX-listed company confirmed the new production target in the project’s definitive feasibility study (DFS), which it released to the market on Monday. The DFS confirmed that the project could be the world’s first dysprosium supplier outside China, MD George Bauk said in a statement.
“The outcomes of the DFS put us firmly on the pathway to production. We have our primary environmental approvals, secure tenure and community support for the project, and as recently announced, a new funding partner in Jien Mining for up to $49.5-million to drive the project forward.”
Commenting on the ten-month delay in reaching first production, Bauk said that the previously scheduled timetable was in conflict with the region’s wet season. “With the challenges and risks of constructing during the wet season, for potentially only limited benefit, we believe it is prudent to reset our production target to 2017. This will have us supplying into the market at what is forecast to be a time of improved rare-earth pricing.”
Bauk added that, despite the delay, the project would still advance from first drill hole to production in less than seven years. “This is well ahead of industry standards.”
Northern Minerals is also continuing discussions with a number of sources for funding. The company said it was considering a range of strategies, including possible joint ventures, equity, debt and pre-sale of product.
The DFS has improved Northern Minerals’ overall project economics from the prefeasibility study (PFS), completed in June 2014. The net present value has increased by $106-million to $552-million, with an internal rate of return of 34% and a payback period of 3.2 years.
Capital costs have increased by $15.7-million, or 5%, largely owing to the start of the Wolverine decline earlier than scheduled in the PFS. The increase in capital cost would be offset by lower operating costs throughout the life of mine (LoM), with the overall cash operating costs reduced by an average of $6.2-million a year, or $2.20/kg total rare-earth oxide (TREO).
A mineral resource upgrade at Wolverine of 4 291 000 kg TREO, the release of a maiden mineral resource estimate at Banshee and an improved mining method have resulted in a 16% increase in LoM to 11 years since the PFS.
Northern Minerals said that the key market driver for dysprosium, which would account for about 60% of the project’s revenue, was the growing demand for neodymium-iron-boron permanent magnets, which were used in applications such as wind turbines and hybrid vehicles. Demand for these magnets was expected to increase at a cumulated yearly growth rate of 7.1% to 2020. As a result, it was forecast that dysprosium demand would increase at a compound yearly rate of 4.1% during this period.
The demand growth, and the steady reduction in illegal mining in China, was forecast to result in a cumulative under-supply of dysprosium oxide from 2015 through 2020. The deficit was expected to increase to 1 085 000 kg in 2020 unless a stable legal supply came on line.
“This presents a significant opportunity for the project to become a stable and legal new source of supply,” Northern Minerals stated.