PERTH (miningweekly.com) – ASX-listed Arafura Rare Earths on Friday confirmed the economics of the Nolans neodymium-praseodymium (NdPr) project, in the Northern Territory, following the signing of a binding offtake agreement with Hyundai Motor Company and Kia Corporation earlier this week.

Capital costs for the project have been confirmed at A$1.39-billion pre-production, and a A$196-million contingency, with the project expected to produce 4 440 t of NdPr oxide over a mine life of 38 years.

Operating costs have been estimated at A$61.60/kg of NdPr.

Arafura also confirmed that the project’s net present value, after tax, had been estimated at A$48.52-billion, while the internal rate of return was estimated at 19.3%, based on an NdPr price of $125.50/kg over the offtake period and $130.10/kg over the life-of-mine.

Annual expected earnings before interest, taxes, depreciation and amortisation have been estimated at A$573-million.

“This update re-confirms Nolans as an exceptionally valuable world-class NdPr rare earths project, with the capacity to deliver strong financial returns over an initial long mine life of 38 years. With NdPr offtake progress at the binding contract stage and the opportunity for strategic investment, particularly from quality partners such as the Hyundai Motor Company, we anticipate that project financing will continue to gain momentum,” said Arafura MD Gavin Lockyer.

“The Nolans NdPr project is one of the only construction ready rare earth oxide projects of scale in the western world. The significant size of the Nolans deposit provides customers with improved security of supply for critical raw materials.

“Our ore-to-oxide process at a single site provides comfort that the product is being derived from processes aligned with those customers’ environmental and social governance priorities. Forecast long-term sustained demand growth for NdFeB magnets, required to support the manufacture of electric vehicles and wind turbines, is being driven by global commitment to a net zero future.

“Also, given the lack of alternative NdPr sources outside of China, there is the rising imperative for nations to secure sustainable diverse supply chains. This market environment provides a supportive platform which positions Arafura as the next global rare earth oxide producer and the immediate impetus to move ahead with greater confidence than ever before,” said Lockyer.

Arafura told shareholders on Friday that planning is on track for long lead procurement and construction in early 2023, while a final investment decision is scheduled for March next year.