Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Cradle Resources Advances Key Niobium DFS At Panda Hill

Cradle Resources' (ASX:CXX) Definitive Feasibility Study for its Panda Hill Niobium Project in Tanzania is underway with key study consultants selected and a 75 tonne pilot plant test to begin in May 2015.

An updated Resource is expected to be completed in May, underpinning the DFS that is penned for completion in the 4th quarter of 2015.

The DFS will be scoped so as to achieve a 1 million tonne per annum entry into the market, more modest than the 2Mtpa project envisaged in the Pre-Feasibility Study.

In March, the PFS returned very robust project metrics over a 30-year open pit mine life generating EBITDA of US$103 million per annum, with an IRR of 56% and an NPV of US$470 million.

The company has also identified an Exploration Target of 200 million to 400 million tonnes with a target grade of between 0.4% and 0.6% Nb2O5 over the region of the carbonatite that falls outside of the current Resource.

Four potential high-grade target zones have also been defined that will be the focus for future exploration.

"The Cradle team looks forward to working with the chosen study consultants as we progress the Panda Hill Niobium Project through the next level of feasibility study," managing director Grant Davey said.

"The DFS will commence with the upgraded Mineral Resource in May and the 75 tonne metallurgy pilot test work in Canada which is important for ensuring that the engineering design is optimised for the study.

"Further to this the work carried out during the last two years on understanding the Exploration Target supports our view that Panda Hill hosts a world-class niobium deposit."

Key Consultants

Planning activities for the DFS have been completed and the following consultants have been appointed to undertake the necessary scopes of work.

Consultants for Panda Hill Niobium Project

Activity Consultant Scope
Geology Coffey Update Mineral Resource Estimate
Mining & Geotechnical SRK Consulting Pit optimisation and mine design with geotechnical studies for mine and plant areas
Metallurgical Test work SGS Canada 75 tonne flotation pilot plant with a further pilot program for the concentrate cleaning step
Plant & Infrastructure MDM Engineering Design, layout and cost estimates
Tailings & Water SLR Consulting TSF design and costing with surface and groundwater studies
Environmental MTL Consulting ESIA Baseline studies, with EIA & EMP

DFS activities

Key activities already underway include the update to the Mineral Resource estimate by Coffey Mining, with results expected to be finalised within a month and the preparation for the flotation piloting being carried out by SGS Lakefield, Canada.

This pilot plant program will consist of an initial "mini-piloting" campaign in May to validate the flowsheet and conditions, followed by the combined milling and flotation piloting campaign (75 tonne) in June / July and the concentrate cleaning pilot work in August.

Exploration Target

The Exploration Target is based on a review of 20,000 metres of reverse circulation and diamond drilling, an airborne magnetic survey, historical and detailed geological mapping and select rock samples analysed by hand-held XRF.

This review confirmed the extent of the carbonatite intrusion in the north of the project area with contact regions defined by field mapping.

In the southern area of the project interpretation of the magnetics data, historical drilling and surface mapping have been used to determine the carbonatite boundary.

Panda Hill Niobium Project

The Panda Hill Niobium Project is located in the Mbeya region of Tanzania with excess to excellent nearby infrastructure.

It currently has a Resource of 96.3 million tonnes at 0.52% Nb2O5.

Infrastructure includes the TAZARA Rail line (2 kilometres away), a dry port located in Mbeya (26 kilometres away), the Dar es Salaam - Tunduma Highway (5 kilometres away), Songwe Airport (8 kilometres away), the La Farge Songwe Cement Factory (6 kilometres away) and a major fuel depot in Mbeya.

Access to water and power is also relatively simple with the Songwe River, a major water course, running next to the mining tenements and TANESCO planning a new 400kV power line that will run past the licence area.

The Mbeya region is also a developing mining area with the established Shanta goldmine less than 100 kilometres away and Peak Resources developing a rare earths mine nearby.

Panda Hill will produce standard grade ferroniobium, which makes up some 90% of world niobium consumption.

This will be marketed worldwide once offtake agreements are in place with the major steel mills in North America, Europe and some parts of Asia.

The final product will be transported to Dar es Salaam (about 650 kilometres away) by road or rail and then shipped either directly to our customers or to designated warehouses before being distributed.

Niobium Market

Niobium is a steel feedstock sold into a liquid offtake market, which has seen an impressive 10% Compound Annual Growth Rate over the last decade.

Most of this is sold under quarterly or yearly contracts between producers and end users with only a small amount sold into the spot market.

Brazilian producer CBMM and Anglo American's Catalao mine control over 87% of global supply.

As a result, niobium prices have remained stable around approximately US$40/kg price since 2009.

Industry consultant Roskill has predicted potential for price rises to US$45/kg in the coming five years.


Cradle Resources is making rapid progress with its Panda Hill Niobium Project now in the Definitive Feasibility Stage.

A key Resource update is expected in May that will underpin the DFS that will be completed in the 4th quarter of 2015.

The critical DFS will consider the option of staging the production such that in the early years a more capital efficient mining operation can be built that will target 5,000 tonnes ferroniobium per annum.

Highlighting potential valuation upside, the 2.4Mtpa Niobec operation producing about 7,200tpa ferroniobium was sold by IAMGOLD Corporation to Magris Resources for US$530 million in 2015.

Share Price Catalysts

- Updated Resource Estimate (May 2015);
- Piloting Testwork (May - July 2015);
- Release of Definitive Feasibility Study (Q4 2015); and
- Offtake.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.