The latest results will be incorporated into an upgraded mineral resource, which is due for delivery in the March 2012 quarter.
Highlighting the size of the deposit at Ngualla, it is the fifth largest rare earth resource, and the highest grade of the seven largest deposits outside of China.
Ngualla hosts a resource of 170 million tonnes at 2.24% REO. The total resource includes a higher grade, near surface zone of 40 million tonnes at 4.07% REO for 1.6 million tonnes of contained REO.
The final assays from the 2012 drilling program from 13 holes, which will extend the mineral resource to the west, include:
- 120 metres at 3.38% REO from surface to end of hole, including 56 metres at 5.64% REO from surface;
- 113 metres at 4.22% REO from surface;
- 162 metres at 3.24% REO from surface, including 52 metres at 6.04% REO from surface;
- 91 metres at 4.06% REO from surface to end of hole; and
- 120 metres at 4.57% REO from surface to end of hole, including 60 metres at 6.60% REO from surface.
The new results include some of the highest grade intersections from surface received to date and continue to confirm the robust nature and continuity of the high grade, near surface weathered mineralisation in the heart of the Bastnaesite Zone that is targeted for first production.
The results also extend the +1% REO Mineral Resource to the west over a strike length of around 300 metres.
Drilling program from 2012
The 13,600 metres of drilling completed in 2012 will allow for the estimation of a large Measured Mineral Resource and provide the definition required for a detailed mine plan and schedule for the project.
Some newly defined high grade zones were not identified by drilling used to complete the maiden Mineral Resource announced in February 2012 and are therefore expected to increase the amount of high grade mineralisation within these parts of the deposit.
Furthermore, drilling in the Southern Rare Earth Zone in 2012 has extended the mineralisation to the south and west in some areas, and is expected to support an increase in the size of the overall rare earth Mineral Resource for Ngualla.
The resource at Ngualla has been developed in quick time and its sheer size and favourable project financial metrics are a feat in themselves. Clearly managing director Richard Beazley has not been idle.
Ngualla was a virgin discovery in August 2010, which means in less than two and a half years the deposit has been developed into the fifth largest rare earth resource, and the highest grade of the seven largest deposits outside of China.
Ngualla is also the highest grade of the large undeveloped rare earth deposits.
A near term valuation change catalyst for Peak is the resource upgrade expected in the March 2013 quarter.
The new estimate is expected to increase the amount of high grade mineralisation amenable to the chosen simple acid leach processing route, which will have a positive impact on the economics of the project.
The scoping study confirmed Ngualla as a leading rare earth project with an estimated NPV of US$1.57billion and pre-tax IRR of 53% for an initial 25 year mine life and mining of an 8.2 million tonne portion of the Indicated and Measured Mineral Resource within the Bastnaesite Zone with an average grade of 4.35% REO.
The favourable characteristics of the central Bastnaesite Zone targeted for first production distinguish Ngualla from all other rare earth development projects and are reflected in the results of the scoping study and preliminary economic assessment
Peak has also appointed financial advisors to work with the company in identifying and securing strategic partners to assist in funding Ngualla through to production.
Discussions have commenced and there has been some strong interest in the project.
An additional value accretion trigger includes Pre-feasibility studies which are scheduled for completion by August 2013, and are expected to continue to significantly enhance these robust project economics through the further beneficiation and metallurgical process optimisation.
Another to look out for is the range of high purity separated rare earth oxide products from the SX pilot plant, which will be available for assessment by potential off-take customers from March to May 2013.
With these catalysts, Proactive Investors continues to highlight the undervaluation of Peak. The company has a market cap. of $43 million, and with over $8 million in cash (end of September 2012) - the enterprise value is just $35 million.
The current share price of $0.17 is unlikely to last post the resource upgrade announcement.
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