Alkane Resources (ASX: ALK, OTCQX: ANLKY) has delivered the enticing potential of a resource expansion at the Dubbo Zirconia Project - which already has a world class resource of zirconium, hafnium, niobium, tantalum, yttrium and rare earths.
Extensive zirconium, niobium, yttrium and rare earth mineralisation has been identified at the Railway prospect from reverse circulation drilling. The prospect is positioned just 4 kilometres northwest of the main Toongi orebody, which is close to infrastructure planned for the DZP development.
The grades within Railway are about 50% of the Toongi deposit and average: 0.912% ZrO2, 0.022% HfO2, 0.237% Nb2O5, 0.014% Ta2O5, 0.073% Y2O3, 0.343% REO (TREO 0.42%) (TREO = Y2O3 + REO).
Individual average rare earth oxide distribution in Railway is: 820 ppm La2O3, 1520 ppm CeO2, 140 ppm Pr6O11, 440 ppm Nd2O3, 120 ppm Sm2O3, 90 ppm Gd2O3, 20 ppm Tb4O7, 100 ppm Dy2O3, 20 ppm Ho2O3, 60 ppm Er2O3, 1.5 ppm Eu2O3, 10 ppm Tm2O3, 60 ppm Yb2O3 and 10 ppm Lu2O3).
Additional drilling will need to continue before a resource can be defined, but highlighting the upside an exploration target of 40 million tonnes has been identified.
The rare earth distribution at Railway is about 30% heavy rare earths and 70% light
rare earths, slightly higher than Toongi which has a 25% / 75% distribution.
The Proved and Probable Ore Reserves at the Toongi deposit are 35.9 million tonnes at 1.93% zirconium, 0.04% hafnium, 0.46% niobium, 0.03% tantalum, 0.14% yttrium, 0.74% rare earth oxides (0.9% total rare earth oxides).
Where the story gets really interesting for Alkane is that the reserves will support an initial 36 year open pit life at 1 million tonnes per annum production - and the additional potential from Railway could add to the already long life Toongi
Current resources are 73.2 million tonnes at 1.94% Zr02, 0.04% HfO2, 0.46% Nb2O5, 0.03% Ta2O5, 0.14% Y2O3, 0.74% REO (0.9% TREO). Current resources equate to a 74 year mine life.
Ian Chalmers talks to Proactive Investors
Ian Chalmers, managing director, told Proactive Investors today that the company is talking to strategic Chinese partners with existing HREE separation facilities. "When separated Alkane can derive a much higher yield compared to a concentrate product."
A deal with a Chinese partner should be completed in around a month.
Chalmers added that Alkane has already secured offtake partners for all of the zirconium and niobium - and with first production forecast for the end of 2014 - Alkane will be supplying nearly 10% of the world's zirconium.
Strategic significance of the DZP heavy rare earth production
The Chinese government released a White Paper on 20 June 2012 assessing the current state of development of its rare earths industry and confirming its intention to implement sustainable development for the industry.
The paper affirms the increasing scarcity of rare earths, particularly the heavy rare earths, which is relevant as Alkane proceeds towards development of its Dubbo zirconium, niobium and rare earth project, and the strategic value of that production which is anticipated by end 2014.
Earlier in the month Petra Capital highlighted the potential under valuation of Alkane, and considering having over $100 million in cash with no debt - Petra recommended a buy on the stock with a 300% upside to NPV of A$3.80/share.
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