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  • Peak Resources Boosts Resource Estimate At Ngualla Rare Earth Project  0 comments
    Apr 3, 2013 8:20 PM

    Peak Resources (ASX: PEK) is now on the road to a maiden Reserve at its Ngualla Rare Earth Project in southern Tanzania having substantially increased the Resource and with 99.6% of it now in the high confidence Measured and Indicated categories.

    The updated Resource incorporates the 13,600 metres of additional drilling completed in 2012.

    The new Resource for the Bastnaesite Zone weathered mineralisation, using a 3% lower grade cut-off, stands at 21.6 million tonnes at 4.54% rare earth oxides (REO) for 982,000 tonnes of contained REO.

    This is a significant increase over the previously defined 8.2 million tonnes at 4.35% REO. Ngualla has the highest grade of all rare earth development projects.

    The revised Resource illustrates the potential to support increased production levels and an extended mine life based on a simple sulphuric acid leach operation.

    An increased production rate, higher grades and the enhanced beneficiation ability indicated by recent test work will substantially improve the already very strong NPV and IRR of the December Scoping Study.

    Richard Beazley, managing director, commented: "The new estimate illustrates the quality of the Ngualla Resource, the economic upside and the options available to Peak to expand production once the initial low cost, low risk operation has been established."

    Of the total Bastnaesite Zone Resource, 99.6% is now classified in the Measured or Indicated category, with the majority (86%) being Measured.

    The Measured and Indicated portions of the Bastnaesite Zone will form the basis for a maiden Reserve estimate for the project to be completed as part of the Pre-Feasibility Study which is now in progress.

    The extremely low levels of uranium and thorium in the Bastnaesite Zone weathered Resource of 14 parts per million and 42 parts per million respectively are a distinct advantage over other rare earth projects.

    Resource upgrade

    Infill drilling was completed to increase the amount of weathered mineralisation in the Bastnaesite Zone classified as Measured or Indicated and provide the definition required for a detailed mine plan and schedule to support the Pre-Feasibility Study.

    The Bastnaesite Zone weathered mineralisation is the high grade, near surface central portion of the greater Ngualla Resource amenable to a proven, low cost simple sulphuric acid processing route and targeted for production in the initial 25 years of the operation and beyond.

    At a 1% lower grade cut-off, the total Resource for Ngualla has increased by 15% in terms of tonnes and contained REO compared to the 2012 maiden Resource.

    At a 1% lower grade cut off, the new Resource is 195 million tonnes at 2.26% REO for 4.4 million tonnes of contained REO.

    The 195 million tonne Resource includes a higher grade near surface portion of mineralisation.

    Above a 3% cut-off grade this is 42 million tonnes at 4.19% REO for a total of 1.8 million tonnes of REO.

    Ngualla remains one of the largest and highest grade rare earth deposits in the world.

    Metallurgical test work has shown that mineralisation outside of the Bastnaesite Zone may be processed using other conventional beneficiation and leach processing routes.

    The long mine life supported by the Bastnaesite Zone provides Peak with the opportunity and time to optimise these processes, which could be brought in at a later stage in the life of the operation.

    Leading rare earth project

    The earlier Scoping Study confirmed Ngualla as a leading rare earth project with an estimated NPV of US$1.57 billion and pre-tax IRR of 53%.

    Other key metrics included:

    - Low capital cost requirement of US$400 million (excluding contingency) with a payback period within the first three years of production.

    - Low operating cash costs of US$10.09 per kilogram free on board for the first five years of production with an average cost of $US11.05 per kilogram over 25 years.

    - Annual average revenues of US$361 million at 10,000 tonne equivalent rare earth oxide production.

    The Pre-Feasibility Study will include a revised economic assessment for the project and quantify these improved economic parameters and is scheduled for completion in the September quarter of 2013.

    Offtake and funding

    A range of high purity separated rare earth oxide products from the SX Pilot Plant will be available for assessment by potential offtake customers in the June quarter of 2013.

    Peak has also appointed financial advisors to work with the company in identifying and securing strategic partners to assist in funding the Ngualla Rare Earth Project through to production.

    Discussions with a number of interested parties are ongoing.

    Analysis

    The increase in the tonnage and confidence levels of the Ngualla Rare Earth Project's Resource is a major step in enhancing the economics of an already economically attractive project.

    The revised Resource illustrates the potential to support increased production levels and an extended mine life based on a simple sulphuric acid leach operation.

    An increased production rate, higher grades and the enhanced beneficiation ability indicated by recent test work will substantially improve the already very strong NPV of US$1.57 billion and pre-tax IRR of 53%.

    A Pre-Feasibility is now underway which will include the definition of a maiden Reserve, another important step on the road to production.

    Ngualla is already one of the largest and highest grade rare earth deposits in the world, and further advancements in its development will serve to increase the value of the project.

    The delivery of a maiden Reserve and completion of the Pre-Feasibility Study should be strong catalysts for investors.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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