Peak Resources (ASX: PEK) remains confident of reaching a formal agreement for a transaction that will provide funding for the ongoing development of its Ngualla Rare Earth Project in Tanzania.While the unnamed investor has yet to complete due diligence due to a delay in in the site visit, the company is satisfied with negotiations to date.
It confirmed that major terms and conditions have been agreed with only some minor terms that remain outstanding.
Peak and the investor are continuing to work together to finalise all outstanding matters.
Funding
Under the Memorandum of Understanding, the funding will be made in three stages, with each stage to confirm the economic parameters as defined in Peak’s Scoping Study from December 2012, including:
- Stage 1 The Pre-Feasibility Study, which is in progress;
- Stage 2 The Definitive Feasibility Study; and
- Stage 3 Final funding for the construction of the Project.
Ngualla
Peak has also revised its Scoping Study for the Ngualla Rare Earth Project that delivered an improved NPV and IRR of US$1.768 billion and 60%, on the December 2012 10,000 tonne per annum base case scenario.
The option to double production rates to 20,000tpa REO delivers NPV10 of US$3.833 billion and IRR of 77%.
The current May 2013 revision to the December 2012 Scoping Study shows further improvements to project economics including:
- Operating Cost of $10.18 per kg REO* equivalent product reduced 8% from $11.05;
- Lower Capital Cost of US$373 million reduced 7% from $400 million (excluding contingency);
- Higher mine grade of 5.35% REO for initial 25 years production increased from 4.35%;
- Lower strip ratios of 0.89 for the first 25 years of mining down from 3.34, reducing mining costs by 44% per kg REO produced;
- Reduced sulphuric acid consumption by 45% in the hydrometallurgical (leach recovery) process; and
- Extended mine life from 25 years to in excess of 50 years from the weathered Bastnaesite Zone.
Resource
The Ngualla resource was recently updated, with the Resource for the Bastnaesite Zone weathered mineralisation, using a 3% lower grade cut-off, stands at 21.6 million tonnes at 4.54% rare earth oxides (REO) for 982,000 tonnes of contained REO.
Of the total Bastnaesite Zone Mineral Resource, 99.6% is classified in the high confidence Measured or Indicated category, with the majority (86%) being Measured.
The Measured and Indicated portions of the Bastnaesite Zone will form the basis for a maiden Reserve estimate for the project to be completed as part of the Pre-Feasibility Study which is now in progress.
The extremely low levels of uranium and thorium in the Bastnaesite Zone weathered Mineral Resource of 14ppm and 42ppm respectively are a distinct advantage over other rare earth projects.
Source: Proactive Investors, reported from UK
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