A scoping study shows a project’s potential economic viability. Pic: via Getty Images.
Emerging developers: Who’s chasing an upgrade from explorer to developer?
Mining
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- Junior companies are looking to move into development status
- Resource updates and scoping studies are the first step on the path
- These companies have updates coming late 2024 or early 2025
Junior resource companies are leveraged to news from their projects, whether that comes in the form of an update to a mineral resource or releasing a scoping study.
These kinds of updates could deliver real growth to a company’s share price. But more than that, it’s about proving up a project.
The first step is defining an inferred or indicated resource (indicated being of higher confidence) which shows your project could actually host some decent mineralisation.
Next comes the scoping study, which is basically looking at the project’s economic viability, capital costs, life-of-mine sustaining capital and cashflow as well as details on processing and production rates of the ore based on assumed commodity prices.
That’s a stepping stone that justifies the move towards a pre-feasibility Study (PFS) which assesses the project’s feasibility (it’s in the name) with a more detailed financial analysis and whether all or part of the resources can be classified as an ore reserve.
Then further down the lines there’s the definitive feasibility study and bankable feasibility study, but that’s a more detailed story for another day.
Today, we’re looking to juniors who are toeing the line into emerging development territory.
Essentially those companies who are announcing resources, scoping studies and even a PFS for their projects – meaning they’re on the cusp of something potentially profitable and mineable.
One such company Stockhead spoke to is Brazilian Critical Minerals (ASX:BCM) who are looking to release a scoping study for the Ema rare earths project in Brazil in Q1 2025.
In April of this year the company put out a resource estimate of 1.02Bt at 793ppm total rare earth oxides (TREO). Current drilling is expected to wrap up by the end of the month, with results to date including up to 1,149ppm TREO.
These results will be included in an interim updated resource estimate that will underpin the study, and the results already received will allow the company to commence production and plant feed scheduling for the scoping study, as well as enable the pre-planning and in-situ field trials as part of a feasibility study scheduled for 2025.
Highlighting low capex processing route
Managing director Andrew Reid says the fully ionic rare earth clay-hosted deposit’s distinguishing factor is that the physical and chemical characteristics of the ore body are very similar – if not exactly the same – as a lot of the large Chinese deposits.
“That’s quite a distinguishing factor because about 30-40% of the world’s rare earths come out of China, Myanmar, South East Asia where they use in-situ recovery extraction processes,” he said.
“We have one of the few deposits, probably the only deposit that I know of, that’s similar to the Chinese outside of China, where we can apply this technology.
“That’s the route that we’re going down at the moment.
“It’s certainly much lower cost in terms of capital requirements and the operating costs to run the plant – once it gets up and running.
“They are the two big pieces of work that are coming out of the scoping study which will be completed over the next few weeks.”
The pros of in-situ recovery include the minimal disturbance compared to traditional mining methods, there’s no tailings dam or big dusty mining gear – plus BCM has a ‘green’ reagent, which means the leaching at the drill site will also be much more environmentally friendly.
“We’ve also been able to leach the same benign green reagents right through the process part so we’ve got this really environmentally friendly mining method,” Reid said.
“It’s certainly one of the greenest mines of any commodity that’s ever started up.”
Where will BCM fit into the market?
One of the key elements of a scoping study is also highlighting where the project sits in the current market, particularly around commodity pricing and supply/demand forecasts.
Reid says it’s a tricky sector to get across, as there are virtually no rare earths available outside of China, Myanmar and Malaysia – and all of their product gets sucked back in to China.
“There are lots of projects and lots of companies trying to get up and running but no one is even close to being able to push the button at the moment,” he said.
“There are a variety of reasons, cost is a big one with rare earth prices at the moment being quite low.
“The capital hurdles for some of these projects are astronomical and next to impossible to finance in the current environment and/or they’ve got metallurgical challenges.
“But we tick all the boxes. We’ve got good metallurgy and we have the opportunity to create one of, if not the lowest, capital requirement rare projects in the world with very low operating costs and we are certainly aiming to have a project that can return a profit under the current pricing regime – which is quite low.”
“We’re the only company on the ASX that’s talking about doing anything like this in the rare earths space.
“There is not a single other project outside of China, Malaysia and Myanmar that can lay claim to that right now.
“Given that there’s very little supply outside of China, if we can get this project up and running in a short amount of time I think we will be very attractive in the market and we are certainly going places.”
More juniors shoring up resources and scoping studies
The company is planning to release the maiden mineral resource estimate for its Blakala lithium play in Mali before the end of this year.
The estimate comes off the back of some stellar drill hits, which included strikes in the Eastern pegmatite zones less than 150m from surface including 24m at 1.53% Li2O from 129m, 28.59m at 1.51% Li2O from 117m and 9m at 1.62% Li2O from 117m.
Hits from the south extension of the main peggie included an intersection of 1.77% Li2O over 8.34m while a highlight hit from the second series of diamond tails in the western peg was 25.64m at 1.68% Li2O.
Anything above 1% Li2O is generally considered economic with only a handful of deposits reporting grades upwards of 1.4%. But grade is not everything and metallurgy is critically important.
While prices have long been set on the 6% Li2O benchmark originally delivered from the Greenbushes mine, the company’s Blakala testwork has come in at a solid 6.8%.
Completed to scoping study standards, the concentrate grade didn’t sacrifice metal recoveries, with 80% of lithia reported to the concentrate via flotation.
The testing has confirmed the strong economic potential of the project, the company said.
Pursuit is targeting a material resource upgrade – expected later this week – which will build on the recent maiden resource defined at the Rio Grande Sur project in Argentina of 251.3kt LCE at 351mg/Li.
Pursuit Minerals expects to increase both the size and grade of the lithium resource after drilling returned deep, high-grade intersections of lithium brines, including intervals such as 2m at 527mg/L of lithium from 263m, 2m at 520mg/L from 63m and 2m at 511mg/L from 159m.
Importantly, some of these >500mg/L intervals are beneath the currently calculated mineral resource estimate, which will likely add to its size and grade.
This confirms the large-scale of the project, which the company expects to support a significant low-cost, high-grade, long-term lithium carbonate operation.
The company – which owns the 2.3Moz Minyari Dome deposit near the ageing Telfer gold mine – is one of Lion Selection Group (ASX:LSX) CEO Hedley Widdup’s recent picks.
Greatland Gold is acquiring Telfer and the Havieron development from Newmont for US$475 million, but will need more ore to feed the mill long term.
A month ago, Antipa released a scoping study for Minyari Dome, outlining a 130,000oz per annum operation over 10 years at all-in sustaining costs of A$1721 an ounce.
Based on a $3000/oz gold price, around $600 lower than current levels, the project delivered a post-tax net present value of $598 million and internal rate of return of 46%.
Last month the company announced plans for a scoping study at its Kuusamo Schist Belt (KSB) gold and cobalt project in Finland, which has a resource of 7.3mt at 2.7g/t gold for 650,000oz and 0.08% cobalt for 5,840t.
“It’s an important step forward that will provide valuable insights not only for the KSB project development pathway but also potential scale-up optionality for further evaluation to incorporate any additional exploration success that expands our global mineral resource base,” MD Grant Coyle said at the time.
“The new additional target areas generated demonstrate the untapped, longer-term exploration upside potential of the KSB project and drilling will recommence following the detailed structural review of the KSB mineral resource.
“We look forward to reporting on further exploration results and the scoping study findings in the new year.”
The gold junior released a scoping study for its Tunkillia and Tarcoola gold projects in South Australia back in July, which highlighted competitive production of ~130kozpa gold with an all-in sustaining cost of ~A$1,917/oz gold, a 40% equity internal rate of return, and a 1.9 year payback driven by a higher-grade ‘starter pit’ producing ~180koz gold during the first ~18 months.
BGD is now hot on the heels of an optimised study update, having identified opportunities to target comminution, power, schedule and pit design improvements.
At Stockhead, we tell it like it is. While Brazilian Critical Minerals, Antipa Minerals, First Lithium and Pursuit Minerals are Stockhead advertisers, they did not sponsor this article.
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