Peak Resources' (ASX: PEK, OTCQX: PKRLY) shares are set to gain after the company executed a Memorandum of Understanding with a Chinese rare earth producer for the objective of developing Peak's wholly-owned Ngualla Rare Earth Project in Tanzania.
The Chinese company is an established rare earth producer based in a port city in northeast Jiangsu Province, with facilities and technical expertise in the beneficiation, processing and separation of rare earths into high purity rare earth products and an established marketing network.
While the MoU is non-binding, it provides the agreed framework to formalise arrangements for a long term strategic partnership to develop the project.
Ngualla hosts a globally significant resource on the basis of grade and tonnes, with thick zones of high grade >5% REO at surface. Importantly the resource is well defined, with 85% in the Measured JORC category.
The project currently hosts: 195Mt at 2.26% REO containing 4.4Mt REO including: Bastnaesite Zone weathered: 21.6Mt at 4.54% REO for 982,000t contained REO.
Ngualla also has the ability to be open pit mining with a low strip ratio, with the first 25 years 5.35% REO.
Highlighting the sheer scale, there is a plus 50 year mine life in B astnaesite Zone alone.
Terms of the MoU
Under the terms of the MoU both parties will work together to co-operate and form a partnership in the following areas:
- Chinese partner to review and provide technical expertise in the further optimisation of the demonstrated mineral process developed for Ngualla's rare earth mineralisation including beneficiation, acid leach recovery and separation.
- Chinese partner may introduce further parties for the purpose of investment, project construction, processing, engineering studies and marketing.
- Examine opportunities for the establishment of a jointly owned separation plant.
- A direct investment by the Chinese partner to assist with the development of the Ngualla Rare Earth Project.
- Negotiate an offtake agreement for Ngualla rare earth mineral concentrate, mixed carbonate or other intermediate products.
Preliminary Feasibility Study
With the metallurgical test work and most other major work components and associated expenditures now completed, the Preliminary Feasibility Study for the Ngualla Project is on track for completion prior to the end of the first Quarter 2014.
This will build on the revised Scoping Study released on 29th May 2013 that showed the project to have low capital and operating costs along with robust project economics.
This includes estimated NPV of US$1.768 billion and IRR of 60%, on the December 2012 10,000 tonne per annum base case scenario, capital costs of US$373 million and operating costs of US$10.18 per kilogram of rare earth oxides.
Detailed engineering, cost estimations and data from additional metallurgical test work programs and other studies are all included in the PFS to evaluate a series of production scenarios and determine the optimum development pathway for Ngualla.
Work carried out by ANSTO Minerals has successfully demonstrated the end to end metallurgical process from mineralisation to high purity separated rare earth oxide products.
These include a ultra-high purity (99.9%) neodymium - praseodymium rare earth oxide as well as a mid+heavy rare earth oxide.
ANSTO have also been engaged to evaluate a series of options regarding the production of cerium, giving the company the flexibility to either remove cerium early at lower cost, or process it through to a higher purity, higher value product, depending on market demand and prevailing cerium prices.
Specialist consultants Simulus Engineers have developed a sophisticated computer based simulation model for the entire mineral process s as part of the Pre-Feasibility Study.
This will enable Peak to quickly simulate a number of differing operating conditions and processing scenarios, and identify the impact that these variables have on the overall efficiency and productivity of the process.
Share price catalysts ahead include the release of the Preliminary Feasibility Study due to be released in the first quarter of 2014 to be followed by the maiden Reserve estimate prior to the end of the same quarter.
The Ngualla Project remains on track to achieve rare earth production in 2016.
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