Greenland Minerals and Energy (ASX: GGG) has conducted studies indicating that it can lower costs and risks while increasing financial returns by establishing the refinery for its Kvanefjeld project outside of Greenland.
The company had originally considered establishing the heavy and light rare earth elements and uranium refinery in southern Greenland, in close proximity to the mine and concentrator.
It is also focusing its implementation strategy on a smaller initial mine throughput of 3 million tonnes per annum with an expansion to 6Mtpa to reduce market risk and de-risk financing its development by lowering capital costs.
Greenland has initiated a detailed independent study into refinery locations and has additionally commenced discussions with a number of industry participants in relation to their potential involvement in the development of an offshore refinery.
This is expected to be completed this year.
It is also finalising a study for the establishment of a 3Mtpa mine and mineral concentrator in Greenland, outcomes of which will be released in March 2013.
Greenland's studies have shown that while the concentrator by necessity is required to be located in close proximity to the mine, its success in delivering a high ore‐to‐concentrate upgrade ratio via a simple beneficiation circuit offers it greater flexibility in regard to the location of the refinery.
While the concentrator circuit has relatively simple infrastructure requirements, the refining stage requires more complex infrastructure including acid production facilities.
As such, offshore locations with well‐established industrial infrastructure, readily available reagents and power, a skilled labour force and a regulatory framework to effectively manage radioactive materials are all key points of focus in establishing a refining location.
The company noted that the cost of shipping mineral concentrate from Greenland to an offshore refinery will be offset by removing the requirement of shipping reagents into Greenland and operating in a location where both reagent and power costs will be cheaper.
It added the mine and concentrator offered a much greater proportion of job opportunities for the Greenlandic populace than the refinery, which requires a higher proportion of specialised skills.
In addition to the expected reduction in costs and increased financial returns, Greenland also expects establishing a refinery overseas to reduce its project footprint in the country; reduce social and environmental impact; as well as reduce approvals risk.
While the new planned mine throughput of an initial 3Mtpa expanding to 6Mtpa is lower than the original 7.2Mtpa plan evaluated in the Pre-Feasibility Study, the company is confident that Kvanefjeld will continue to present a very robust economic proposition.
Results achieved in the recent pilot plant operation of the concentrator circuit delivered improved REO and uranium grades over those used previously in the design criteria.
This also confirmed the amenability of the ore to a readily scalable, conventional beneficiation/atmospheric leach process.
The Kvanefjeld concentrator pilot plant had achieved a concentrate grade of 15% rare earth oxides.
Greenland added a lower throughput will diminish market risk associated with high initial volumes of rare earth output, and will additionally serve to de‐risk financing Kvanefjeld's development through the significant reduction of capital costs.
Once Kvanefjeld's market position is consolidated, expansions will allow Kvanefjeld's maximum potential to be realised via a low‐risk implementation strategy.
Kvanefjeld is underpinned by one of world's largest REE‐uranium resources with significant upside, with the 2012 PFS demonstrating long‐life, cost‐effective production of uranium and rare earths.
The overall JORC Resource inventory is: 956 million tonnes containing 575 Mlbs U3O8, 10.33 million tonnes TREO, 2.25 million tonnes zinc. TREO includes: 0.37 million tonnes heavy REO, 0.84 million tonnes yttrium oxide.
Having previously established a sound technical basis for the completion of Kvanefjeld's Feasibility Study process design, Greenland Minerals and Energy's efforts to reduce costs and risks could enable the project to be approved and developed more rapidly.
While a lower throughput, the change will diminish market risk associated with high initial volumes of rare earth output, and will additionally serve to de‐risk financing Kvanefjeld's development through the significant reduction of capital costs.
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