Arafura Resources Reduces Operating Costs at Nolans Rare Earths Project

Arafura Resources (ASX:ARU) reported that it has reduced its operating costs by 7 percent to US$11.22 per kilogram of rare earth oxide equivalent.

As quoted in the press release:

Arafura is pleased to report a significant reduction in operating costs at the Nolans Rare Earths (“RE”) Project following a review of the Company’s optimisation programs that were undertaken in China and Australia in 2014 and 2015.

Operating costs have further reduced by 7.4% to A$14.51/kg of REO equivalent (US$11.22/kg @ A$1 = US$0.773) at the commencement of nameplate production. Previously, operating costs were estimated at A$15.67/kg (US$14.06/kg @ A$1 = US$0.897) in the Nolans Development Report (“NDR”; ASX: ARU 02/09/14). The decrease reflects material reductions in sulphuric acid and process (waste) residues, which are expected to
impact favourably on the Project’s environmental and community risks. It also reinforces Arafura’s position as a potential low cost producer of critical magnet-feed rare earths
Neodymium and Praseodymium (“NdPr”). Annual operating expenditure per kilogram of NdPr Oxide produced is estimated to be US$41.55, as shown in the chart below.

Final outcomes of the process testwork programs in China and Australia are imminent. These are required prior to commencing integrated pilot plant testwork and the subsequent phase
of engineering activities for the DFS.

In addition, Arafura has undertaken a review of equipment and re-estimated capital costs for the Nolans Project. This has resulted in no significant change in capital expenditure on the NDR estimate of A$1,408 million (US$1,263 million @ A$1 = US$0.897). The revised estimate is now A$1,437 million (US$1,111 million @ A$1 = US$0.773), inclusive of 15% contingency. Capital estimates for both the Australian domiciled and offshore facilities were generated by independent engineering consultants Lycopodium Minerals Pty Ltd of Perth, Western Australia.

The capital and operating cost estimates are based on a production target of 20,000 tonnes per annum of REO equivalent from Measured and Indicated Mineral Resources at Nolans Bore. These Mineral Resources are summarised in the table below.

Click here to read the Arafura Resources (ASX:ARU) press release