Steenkampskraal Holdings (SHL) will now proceed with a bankable feasibility study (BFS) at its Steenkampskraal rare earths mine, in the Western Cape, following the conclusion of a court case between SHL and contractor ERES Engineering Projects.
The High Court last week rescinded the contracts between SHL and ERES and dismissed ERES’ counter claim against SHL.
The judge also ordered ERES to repay SHL a R2.5-million deposit.
ERES was contracted to complete rehabilitation and reinstatement of infrastructure services, as well as to provide bulk earthworks at the project in 2012, but a multilayered dispute arose between the parties and a trial started in May 2017.
SHL chairperson Trevor Blench commented that the litigation had made it difficult to raise finance and conclude a BFS.
The BFS will confirm the capital requirement for the construction of the mine, processing facilities and the operating cost for the duration of the mine build, which the company anticipates will take a year to compelte.
SHL pre-emptively estimates a capital cost of R500-million, and an operating cost of $10/kg rare earth oxide produced, including separation and purification.
Further, SHL estimates that the cost to produce mixed rate earth carbonite, including mining, beneficiation and chemical separation of the rare earths from the thorium, will be about $3.50/kg, not including separation and purification of the individual rare earth oxides.
The weighted average basket price for rare earth oxides is currently about $16/kg.
“Rare earths are used in motors for electric vehicles (EVs). The rapid growth in the production and sales of EVs has caused rapid growth in the demand for rare earths like neodymium, praseodymium, dysprosium and terbium.
“Industry analysts predict that there will be shortages of these rare earths and that their prices will rise,” said Blench.
With an average grade of 14.4%, Steenkampskraal is the highest-grade rare earth deposit in the world, states SHL.
The project’s mineral resource estimate has confirmed a total of 86 930 t of rare earth oxides, including 15 600 t of neodymium, 4 450 t of praseodymium, 867 t of dysprosium and 182 t of terbium.
Steenkampskraal plans to produce 2 700 t of REOs a year over a 30-year period. This will include 480 t/y of neodymium, 138 t/y of praseodymium, 26 t/y of dysprosium and 5 t/y of terbium.
“Our project design makes optimum use of the existing underground infrastructure. Steenkampskraal is a former producing mine.
“Anglo American mined it for ten years in the 1950s and 1960s. A decline shaft, stopes, ore blocks, stockpiles of ore underground and much of the infrastructure are already in place. Much of the expenditure required to bring the mine into production has already been incurred,” affirmed Blench.
He added that several companies have expressed an interest in signing offtake agreements and these potential customers could ensure a positive revenue stream soon after SHL starts production.