Arafura lowers Nolans costs

Arafura Resources has reduced the cost of developing its Nolans rare earths project in the Northern Territory by a further $299 million, with the value of the project now standing at about $1.19 billion.

In a statement today, the Perth-based company said a study on the Nolans project identified a capex savings of 21 per cent from its June 2015 estimate, partially offset by a $55 million owing to AUD-USD exchange rate movements.

It follows news in March last year that it had found about $500 million in capital expenditure savings.

The original estimated value of the project was $1.9 billion, as announced in August 2012.

“Further upside exists with the potential for additional capex cost savings as not all of the optimisation opportunities identified in the company’s extraction program have been factored into the revised estimates,” Arafura said in a statement.

“Additionally, due to longer lead items required for investigation, not all of the capex reduction opportunities identified in the capex review have been adopted at this stage.”

It estimated further capex savings of up to $30 million could be achieved through other initiatives.

Arafura shares closed 4 per cent higher to 5.2 cents each.