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Arafura lowers NT rare earth project’s capital costs

Arafura lowers NT rare earth project’s capital costs

Photo by Bloombeg

18th November 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – Rare earths developer Arafura Resources has reduced the capital cost estimate for its Nolans rare earths project, in the Northern Territory, by A$244-million.

The company told shareholders on Wednesday that independent engineering studies to review capital costs had identified the savings, which lowered Nolans’s projected capital expenditure (capex) to A$1.19-billion.

However, these savings have been partially offset by A$55-million costs resulting from the Australian-US dollar exchange rate movements.

Arafura MD Gavin Lockyer noted that further upside existed with the potential for additional capital cost savings of about A$30-million, reducing the project’s capex to A$1.13-billion.

Lockyer explained that not all the optimisation opportunities identified in the rare earth extraction programme had been factored into the revised estimates. There were also cost reduction opportunities identified in the independent review that were not adopted, owing to long lead times required for the investigation.

He added that the initial capital investment for the establishment of the Nolans project could be further reduced through ongoing value engineering, including modularisation, review of plant layout to reduce construction costs associated with concrete, piping and electrical, and financial packaging, including build, own and operate of the more conventional plant infrastructure requirements such as contract crushing.

Arafura in June this year reduced operating costs at the Nolans project by about 7.4% following a review of an optimisation programme. At nameplate production, the Nolans project is expected to produce at an operating cost of A$14.51/kg, compared with the previous estimate of A$15.67/kg.

Arafura is hoping to start production at Nolans in 2019, with production targeted at 20 000 t/y of rare earth oxide equivalent.

Edited by Mariaan Webb
Creamer Media Contract Publishing Editor

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