Released on Tuesday (November 28), the DFS lists operating costs at AU$142 million per year compared to the previous AU$202 million. CAPEX for the Western Australia-based project has also fallen 20 percent from the prefeasibility study to approximately AU$335 million.
According to Hastings, the DFS calculations are based on maiden JORC ore reserves of 5.15 million tonnes at 1.12 percent total rare earth oxide for the first six years of operations; years seven and eight are based on additional measured and indicated resources. The firm notes that all environmental studies and approvals are progressing for the proposed open-pit mining project.
The company expects Yangibana to generate AU$379 million in annual sales revenue with a NPV of AU$466 million at a discount rate of 8 percent. The project has an IRR of 78 percent and a 2.3-year payback period. Hastings plans to continue working to improve economics.
“We are very pleased that the DFS demonstrates the Yangibana project to be economically and technically viable and Hastings is focused on becoming the second source of Nd-Pr supply from Australia. We have already signed three MOUs with Chinese customers and we have ongoing discussions to sell our MREC to customers worldwide,” said Hastings Executive Chairman Charles Lew.
He added that the company will now focus on early stage infrastructure work and on obtaining the required permits and approvals for the project. Early infrastructure work is expected to start in March and April of 2018. The goal is to begin production at Yangibana in late 2019.
Rare earths market
Hastings says the project will produce a mixed rare earths carbonate (MREC) rich in neodymium (Nd) and praseodymium (Pr), which are used to manufacture permanent magnets for electric vehicles and wind turbines. The company expects to produce up to 15,000 tonnes per annum of MREC containing up to 3,400 tonnes of Nd-Pr. The company notes that its revenue streams are highly dependent on Nd-Pr prices, which account for between 85 and 90 percent of projected revenue.
The International Energy Agency expects the number of electric vehicles to increase to between 120 and 200 million by 2030 from 2 million at the end of 2016, as per Hastings. The company also comments that some countries have introduced policy targets to replace fossil fuel-powered vehicles with electric cars over the next decade, which hints at solid future demand for Nd-Pr.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.