Arafura has its eye on Nolans NdPr reserve upgrade
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Special Report: Successful metallurgical testing could increase reserves at Arafura’s Nolans neodymium-praseodymium project.
Improved economics and a longer mine life could be on the cards for Arafura Resources’ (ASX:ARU) Nolans neodymium-praseodymium (NdPr) project in the Northern Territory if its most recent metallurgical test work is any indication.
NdPr is used for the manufacture of rare earth permanent magnets, particularly neodymium iron boron (NdFeB) magnets that are finding increased use in electric cars, wind turbines and other high-tech devices.
The recent flotation variability program tested samples of NdPr-rich Material Type 5A2 that was not previously included in the project’s reserves due to the lack of flotation testing.
This has now been addressed with the latest test work on the material performing in line with expectations.
What this means is that Arafura could potentially convert a substantial proportion of the 8.7 million tonnes of 5A2 material, which was originally meant to be stockpiled under the project’s definitive feasibility study (DFS), into reserves.
This could improve the economics of the project even further.
Nolans currently boasts an economic reserve of 19.2 million tonnes at 3 per cent total rare earths (TREO), enough to keep the mine ticking for an initial 23 years. In-demand NdPr makes up a significant 26.4 per cent of the total rare earths content.
Inclusion of the 5A2 material, which has an average grade of 1.9 per cent TREO — with NdPr making up 26.2 per cent of this material — could extend processing life by up to 9.5 years.
In February, Arafura released the DFS for Nolans, a 90-minute drive north of Alice Springs, that pegged it as a very low-cost producer at just $US25.94 ($36.85) per kg of its cornerstone NdPr oxide product.
The project is expected to produce 4,357 tonnes of NdPr oxide per annum and has robust economics with a net present value (NPV) of $729m and internal rate of return (IRR) of 17.43 per cent.
IRR and NPV are used to estimate the profitability of a potential operation. The higher the number, the more profitable it is.
The Nolans project is highly leveraged to the NdPr price, with every $US5 per kg increase in NdPr oxide price adding another $130m to the NPV.
While China produced about 80 per cent of global NdPr supply in 2018, it is forecast to become a net importer by 2022 thanks to its growing domestic demand.
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This story was developed in collaboration with Arafura Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.