The Crater Lake TG Zone project, northeast of Schefferville, Quebec, has the potential to be a long-term provider of critical scandium and magnet rare earths to world markets, a preliminary economic assessment (PEA) has confirmed.
The PEA, conducted by WSP Canada, calculated that the project has an aftertax net present value, using a 10% discount, of C$1.7-billion and an aftertax internal rate of return of 32.8%, reports Imperial Mining Group.
The study put a price tag of C$870.9-million, including contingencies, on Crater Lake, which will operate for 25 years, generating C$608-million a year in revenue from the sale of scandium-aluminium master alloy (ScAl) and rare earth element (REE) hydroxide concentrate.
“The WSP study results confirm that the TG-Zone deposit has robust economics,” Imperial president and CEO Peter Cashin said.
He stated that the financial-model estimates used in the PEA were conservative, as they applied discounted and historical average metal pricing. Accepted consensus is that REE prices have increased significantly since September 2021 and have been discounted by 70% for the purposes of the study, as REE will be delivered to a processor on a tolling basis for the magnet rare earths only.
“Project economics improve substantially if current spot REE and ScAl master alloy values are used. With rapidly accelerating onshoring of critical minerals and advanced material supply chains we believe that this could position Imperial advantageously to capture higher prices and thereby grow revenues,” said Cashin.
The upcoming summer exploration drilling of the Crater Lake project is intended to convert the inferred mineral resources from the TG North Lobe deposit reported in September 2021 to indicated and, potentially, measured mineral resources.
Work on the TG Southern Lobe, where drilling in 2019 returned 113.9 m grading 310 g/t Sc2O3, is also planned with the prospect of linking the North and South Lobes of the deposit.