PERTH (miningweekly.com) – A definitive feasibility study (DFS) into the Panda Hill niobium project, in Tanzania, has increased the project’s expected net present value (NPV) while considering an alternate development scenario.

A 2015 prefeasibility study (PFS) considered a base case production scenario of two-million tonnes a year, with the project estimated to require a capital spend of $158-million. The PFS delivered a post-tax NPV of $470-million and an internal rate of return (IRR) of 56%.

However, ASX-listed Cradle Resources on Wednesday reported that the DFS considered starting production at a rate of 1.3-million tonnes a year, and ramping up to 2.6-million tonnes a year after the fourth year of production.

In its initial four years of operation, the project would have a post-tax NPV of $542-million and an IRR of 27%, requiring a capital investment of $196-million.

Post the ramp-up to 2.6-million tonnes a year, the project’s post-tax NPV would increase to $1.02-billion.

Based on a mine life of 30 years, the project was expected to have an average life-of-mine production of 5 400 t/y of contained niobium.

“The Cradle DFS demonstrates an exceptionally strong project. The numbers speak for themselves,” said Cradle chairperson Craig Burton.

“On any analysis, this project is likely to be brought into production and deliver substantial profits for many years. This will be the first new niobium producer in 40 years and the only new project of this rare metal in the foreseeable future.”

Burton noted that the demand for niobium continued to grow strongly owing to the world-wide demand for new-age materials and associated elements.

“Panda Hill is only seeking to capture a modest portion of this ongoing demand growth.”

He told shareholders on Wednesday that during the next six months, the company would focus on offtake and debt financing discussions, after which a decision to mine was expected.

During this financing period, front-end engineering and fine-tuning of the project would continue, ensuring a rapid and smooth transition into construction.