Arafura study points to rare earths production boost

Perth-based Arafura Resources' definitive feasibility study for its flagship Nolans rare earths project in the Northern Territory has revealed higher production and lower capital costs than previously anticipated.

In a statement, Arafura said Nolans will produce 4,357 tonnes of neodymium-praseodymium oxide per annum, 21 per cent more than its June 2015 estimate.

The company said the DFS revealed ultra-low production costs of $US25.94 ($36.50) per kilogram.

Nolans is estimated to require a pre-production capital expenditure of $1 billion, which is lower than previous forecasts.

In November 2015, the forecast was $1.19 billion, and in March 2014 it was estimated to cost $1.7 billion.

The original projected value was $1.9 billion, as announced in August 2012.

Nolans is forecast to generate average yearly earnings of $377 million before interest, taxes, depreciation, and amortization, over a 23-year mine life.

It has a net present value of $729 million at a 10 per cent discount rate, with an internal rate of return of 17.43 per cent.

Construction is due to start in 2020, with mining set to commence in mid-2022, at a peak construction workforce estimated at 650 and steady state operations workforce of 280.

Arafura managing director Gavin Lockyer described the outcome as outstanding, and said it highlighted Nolans’ status as the next potential scale producer of neodymium-praseodymium oxide outside China.

“The DFS confirms Nolans as an ultra-low-cost producer sitting in the industry’s lowest cost quartile,” he said.

“We are particularly pleased to note that forecast average annual production of NdPr oxide of 4,357 tonnes is 21 per cent higher than previously expected, positioning Nolans as the world’s most significant longterm NdPr development projects in a premier mining jurisdiction.”

The project will encompass a mine, process plant and related infrastructure to be constructed and located at the Nolans site.

China produces around 80 per cent of global neodymium-praseodymium supply and is estimated to account for 85 per cent of consumption.

Shares in Arafura were up 8.7 per cent to trade at 5 cents each at 3.10pm AEDT