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Namibia Rare Earth’s posts a PEA highlighting its potential in a volatile market.
Namibia Rare Earths (TSX:NRE) has released a preliminary economic assessment (PEA) of the Lofdal Rare Earths project, highlighting the project’s impressive rate of return and its potential to grow its Africa-based mine.
The company’s corporate presentation highlights the small cost of the mine compared to the potential for Heavy Rare Earth Oxides (HREO) with the PEA bolstering that claim.
Highlights from the PEA include an impressive 43 percent internal rate of return, and a payback time frame of 1.7 years listed, with an after-tax net present value of nearly $257 million.
Capital costs for the lifespan of the mine is listed as USD $156 million for a 2,500 tonnes per day mine (equivalent to 840,000 tonnes per year). Not a megaproject – like Quest Minerals’ (TSX:QRM) billion dollar Strange Lake development – by any stretch of the imagination, but the company says the estimated tonnes per day could provide up to 15 percent of the four rare earth heavy metals needed around the world.
The PEA gave an estimate of 2.88 Mt of indicated mineral resources yielding 9,230 tonnes of Rare Earth Oxides, of which 7,050 tonnes are estimated to be HREO.
The inferred resource stands at 3.28 Mt of mineral resources yielding 8,970 tonnes of REO, of which 6,700 tonnes are estimated to be HREO. The remainder of the REO is made up of Light Rare Earth oxides (LREO).
“The PEA confirms the strengths of the project in terms of its favourable rare earth distribution and amenability to conventional mining and processing, and demonstrates its financial strengths in terms of the low capital costs and significant cash flows,” said Donald Burton, president and CEO, in a press release.
Room to grow
An important aspect of the project is the possibility of extending its lifetime. In the PEA, the life of mine (LOM) is given as seven years but the company believes that with additional drilling, that time could be easily expanded.
“We will target additional drilling to significantly expand mineral resources and to establish mineable reserves thereby extending the life of mine,” said Burton.
The project will be developed as an open pit with a depth of 200 metres. The mine isn’t large enough to support the creation and funding of a separation plant meaning the final product will be delivered to a third-party facility.
What’s next?
The PEA recommends additional drilling combined with a six-month feasibility study to determine the potential to increase the life of the mine beyond current projections.
The news brought a 2.78 percent increase in Namibia share prices by the close of markets on Wednesday. The company has rallied over the course of the past month to have share prices rise 8.82 percent as investors watch to see how the rare earth markets reacts to the project’s potential.
Securities Disclosure: I, Nick Wells, hold no direct investment interest in any company mentioned in this article.