American Rare Earths’ Scoping Study confirms low-cost, scalable world-class REE project
18 Marzo 2024 - 5:32AM
American Rare Earths (ASX: ARR | OTCQX: ARRNF and AMRRY)
(“ARR” or the “Company”) is pleased to announce
the results of the “Halleck Creek Scoping Study Technical Report”
(“Study”) compiled by Stantec Consulting Services
Inc (Stantec - an independent engineering consulting firm). Located
in the major mining hub of Wyoming, USA, the Halleck Creek project
provides compelling economics and the ARR board has unanimously
recommended the project advance to the next phase of development.
Highlights:
- Under our base
case 3Mtpa operating scenario, Scoping Study outlines NPV8 of
US$673.9 and NPV10 of US$505.1m (pre-tax) at Halleck Creek,
equating to an IRR of 22.5% and payback period of 2.9 years with
total initial capex of US$456.1m (inc. US$76.0m contingency).
- LOM average Cost
(USD/kg NdPr Equivalent) = $38.38/kg, which is favorable when
compared to the most recently reported US$50/kg cash cost of NdPr
by China Northern Rare Earths1 – the world’s largest integrated
producer. A full breakdown of operating costs by product is
illustrated in the Project Metrics table below.
- Low operating
costs are attributable to favorable geology and mining economics,
coupled with the beneficiation and concentration circuit (Density
Separation and Wet High Intensity and Magnetic Separation (WHIMS),
which provides a 10X upgrade in grade) along with good
recovery/extraction via direct leaching, without the need for
cracking. The recoveries are illustrated in the Project Metrics
table below.
- The Study is
based on an initial phase of 3.0 Million tonnes per annum (Mtpa) of
mining to create a low capital cost for market entry and financing.
A 6 Mtpa economic case was also prepared to illustrate future
potential.
- The project had
previously evaluated mining cases of 15, 10, 7 and 5 Mtpa before
settling on this 3Mtpa mining case; making the project uniquely
scalable over time, given the vast resource base (540 Mt total that
were modeled in scoping exercise to identify grade for mine
sequencing: 180 years at 3Mtpa and 90 years at 6Mtpa).
- The Study was
designed to include separation of individual rare earth products in
Wyoming, avoiding sending a concentrate overseas and includes all
capital costs to separate products (sorted by revenue %
attributable). The products include the heavy rare earths Terbium
and Dysprosium as separated products, contributing 30% of revenue:
- 66%: Neodymium (Nd)/Praseodymium (Pr)
Oxide also referred to as “Didy”
- 16%: Dysprosium Oxide (Dy)
- 14%: Terbium Oxide (Tb)
- 2%: Samarium (Sm), Europium (Eu),
Gadolinium (Gd) “SEG” concentrate
- 2% : Lanthanum (La)
Carbonate
- The mine plan
averaged an in-situ grade of 3,805 ppm TREO, the entirety of the
cash flow presented (20+ years) is limited to approximately 400
acres on Wyoming state lands, which provides a very compact
footprint. The planned design allows future optionality and
enhances project economics by accelerating permitting and
leveraging established infrastructure in later stages.
- Late in 2023 the
US Treasury Department released a proposed rule for the Advanced
Manufacturing Production Tax Credit, part of the Inflation
Reduction Act (IRA), better known as 45X. This production tax
credit, equal to 10 percent of the costs incurred by the producing
taxpayer, seeks to incentivise the domestic production of, among
other things, critical minerals, including rare earths. The Study
has applied this 10 percent tax credit to costs incurred during the
project’s production process, with certain exclusions as detailed
in the full report.
- A long-term
price of US$91/kg of NdPr was used based on consensus estimates
from leading investment banks along with those for Tb and Dy.
Various sensitivity analyses are provided in this summary.
________________________1
https://news.metal.com/newscontent/102656189/China-Northern-Rare-Earth-(Group)-High-Tech-cut-March-rare-earth-listing-prices%C2%A0/
Project Metrics
The study is a preliminary assessment based on
Class 5 Association for the Advancement of Cost Engineering (AACE)
compliant cost development +/- 25-35% and includes a contingency
factor of 20%.
Project |
Unit |
Value |
|
Capital Expenditures |
Unit |
Value |
Phase 1 Mine Plan |
Yrs |
20+ |
|
Initial Mine Capital |
USD |
5.4 m |
Processing Run-of-Mine (ROM) |
Mtpa |
3.0 |
|
Initial Processing Capital |
USD |
374.7 m |
Total Production |
Mt |
64,263,399 |
|
Contingency (20%) |
USD |
76 m |
Construction Period |
Yr |
2.5 |
|
Total Initial Capital |
USD |
456.1 m |
|
|
|
|
|
|
|
Operating Costs |
Unit |
Value |
|
Pricing |
Unit |
Value |
NdPr Oxide |
USD$/kg |
38.38 |
|
NdPr Oxide |
USD$/kg |
91.00 |
Tb Oxide |
USD$/kg |
632.56 |
|
Tb Oxide |
USD$/kg |
1,500.00 |
Dy Oxide |
USD$/kg |
168.68 |
|
Dy Oxide |
USD$/kg |
400.00 |
SEG Concentrate |
USD$/kg |
4.22 |
|
SEG Concentrate |
USD$/kg |
10.00 |
La |
USD$/kg |
0.84 |
|
La |
USD$/kg |
2.00 |
Total |
USD$/kg |
25.66 |
|
Total |
|
60.85 |
|
|
|
|
|
|
|
Before Tax Financials |
Unit |
Value |
|
Recovery |
Unit |
Value |
Free Cash Flow |
USD |
2,081.1 m |
|
NdPr |
% |
63.9% |
NPV |
at 8% |
673.9 m |
|
Tb |
% |
70.2% |
NPV |
at 10% |
505.1 m |
|
Dy |
% |
66.5% |
IRR (%) |
% |
22.5 |
|
SEG |
% |
70.1% |
Payback Period |
Yr |
2.9 |
|
La |
% |
68.6% |
|
|
|
|
|
|
|
After Tax Financials |
Unit |
Value |
|
Annual production (average) |
Unit |
Value |
Free Cash Flow |
USD |
1,845.1 m |
|
NdPr Oxide |
mt |
1,529 |
Federal & State Taxes Paid |
USD |
(236 m) |
|
Tb Oxide |
mt |
17 |
NPV |
at 8% |
582.2 m |
|
Dy Oxide |
mt |
91 |
NPV |
at 10% |
430 m |
|
SEG Concentrate |
mt |
383 |
IRR (%) |
% |
21 |
|
La Carbonate |
mt |
1,486 |
Payback Period |
Yrs |
3.1 |
|
Total |
mt |
3,506 |
Sensitivities of Base Case 3
Mtpa
- As illustrated
above, the project is most sensitive to Processing Capital and NdPr
prices.
- At currently
depressed spot prices ($54.60/kg) for NdPr, the project still
provides a 12% IRR at 10% discount factor, further illustrating the
potential of the project as a low-cost producer. We note these
prices are not sustainable given current prices are at the cash
costs of China Northern Rare Earths.
- Stantec
completed a high-level comparison of a 6.0 Mtpa alternative
production rate and compared to the Base Case of 3.0 Mtpa to
investigate the upside of the property in the case that a higher
demand for rare earths is realised. A mine life of 20 years
was kept constant and supported by a design targeting the best
grade within the required tonnage within the Cowboy State
Mine. Operating and capital costs were factored for the
higher production rate. The 6.0 Mtpa scenario has a superior NPV at
all discount rates. Future planned prefeasibility study will assess
the annual production rate options. At a 10% discount factor, a 24%
IRR was achieved at $920MM NPV. The Company believes there is
additional upside in contiguous claims at higher grade that will be
evaluated in further phases of study as this sensitivity was
limited to just the Cowboy State Mine area.
Low-Cost Open-Pit Mining in a Favorable
Mining Jurisdiction
- A strip ratio of
0.03 : 1
- Open-pit mining
well suited to homogenous TREO grades.
- Substantial
pre-existing infrastructure (BNSF and UP Tier 1 railroads, I-25
highway).
- Mining hub with
availability of skilled labor given the decline of the local coal
industry.
- Low-cost power
($0.0349 per kWh).
- Cowboy State
Mine designed on Wyoming State Mineral Leases
- The Wyoming
Department of Environmental Quality (“WDEQ”) has rigorous and
comprehensive, yet well-defined processes for obtaining mining
permits on state lands.
- Thorium and
Uranium, and associated daughter products, occur in low levels
in-situ naturally at Halleck Creek, approximately 68 ppm in the
mineralized material.
Rare Earth Element (“REE”) Bearing
Allanite can be concentrated 10X using conventional
technology
- Up to 86% of
Allanite shown to be liberated from in-situ rock mass during
crushing and grinding.
- Up to 93% of
non-REE gangue material can be separated from the coarse REE
bearing allanite.
- Physical
separation methods shown to increase grade by approximately 10X
with an 84% recovery of TREO.
- In-Situ TREO
grades between 3,500ppm and 4,000ppm increased to 35,000ppm (3.5%)
to 40,000 (4.0%).
- Gravity and
Dense Media Separation removes between 77% and 83% of gangue
material from ore material.
- WHIMS can
separate another 7% to 10% of non-magnetic material from
paramagnetic material.
- Metamict
structure observed in SEM micrographs of the non-refractory
allanite.
- Metamictization
causes allanite to become amorphous and amenable to acid leaching
(requires less aggressive techniques).
Favorable Direct Leaching
Kinetics
- REE recoveries
up to 87% observed when using sulfuric acid at 90oC for 6 hours.
- 90oC is
relatively low temperature for acid-leaching processes.
- Low temperatures
and shorter residence times reduce the production of silica gel.
- Silica gel
contaminates process streams and increases precipitation and
filtration costs.
- High-temperature
Acid baking not needed to “crack” allanite, compared with others
that must heat temperatures to 1,000 oC.
- This affords the
project a significant ESG advantage moving forward that will be
quantified in future phases of work.
American Rare Earths CEO, Donald Swartz,
commented on the results:
“The work presented herein is a culmination of
several years of hard work that highlights the potential of Halleck
Creek to be the next world-class REE project. The study has
revealed a truly elegant solution, as its simplicity unlocks the
potential to decouple Western supply chains from Chinese
oligopolies. The favorable geology combined with conventional
technology, low-operating expenses, modest initial capital
expenditures, associated with an expedited path to production have
converged to offer a project that is compelling – even when
compared against the heavily subsidized Chinese state-owned
entities. As the Western downstream industries for rare
earths are being advanced from a nascent stage, we have right-sized
the initial phase of development to produce a reasonable amount of
separated rare earths, within a project area which is highly
scalable over time. This is a project that could yield transparent
pricing, provide reliable supply, and allow the U.S. to REEshore
this industry.”
The study was completed with the expertise of
highly experienced and reputable independent engineering consulting
firms: Stantec, Tetra Tech and Odessa Resources.
Competent Person(s)
Statement:
This work was reviewed and approved for release
by Mr. Kelton Smith (Society of Mining Engineers #4227309RM) who is
employed by Tetra Tech and has sufficient experience which is
relevant to the processing, separation, metallurgical testing and
type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2012
JORC Code. Mr. Smith is an experienced technical manager with a
degree in Chemical engineering, operations management, and
engineering management. He has held several senior engineering
management roles at rare earth companies (Molycorp and NioCorp) as
well as ample rare earth experience as an industry consultant. Mr.
Smith consents to the inclusion in the report of the matters based
upon the information in the form and context in which it
appears.
This work was reviewed and approved for release
by Mr. Gordon Sobering (Society of Mining Engineers #4061917RM) who
is employed by Stantec and has sufficient experience which is
relevant to the mining plan and type of deposit under consideration
and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2012 JORC Code. Gordon is a
Professional Engineer and has 35 years of experience in the
minerals industry including senior positions with Barrick, Newmont
Mining, Goldcorp Inc., Doe Run, Energy Fuels Resources and ASARCO.
Mr. Sobering consents to the inclusion in the report of the matters
based upon the information in the form and context in which it
appears.
The information in this document is based on
information compiled by personnel under the direction of Mr. Dwight
Kinnes who is Chief Technical Officer of American Rare Earths. This
geological work was reviewed and approved for release by Mr. Kinnes
(Society of Mining Engineers #4063295RM) who is employed by
American Rare Earths and has sufficient experience which is
relevant to the style of mineralization and type of deposit under
consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2012 JORC Code. Mr.
Kinnes consents to the inclusion in the report of the matters based
upon the information in the form and context in which it
appears.
This release was authorized for release by the
Chairman of American Rare Earths Limited.
|
Cautionary StatementsARR has published the study
in its entirety on the Halleck Creek project tab at REEshore.comThe
Study referred to in this announcement is a preliminary technical
and economic study of the potential viability of the Halleck Creek
Rare Earths project by developing a mine and constructing a
beneficiation facility onsite and refinery facility offsite. The
Study referred to in this announcement is based on lower-level
technical and preliminary economic assessments and is insufficient
to support estimation of Ore Reserves or to provide assurance of an
economic development case at this stage, or certainty that the
conclusions of the Study will be realized.Approximately 85% of the
Phase I initial production (20-year cash flow model) is in the
Measured + Indicated Mineral Resource category and 15% is in the
Inferred Mineral Resource Category. The inferred Mineral Resource
is not the determining factor in determining the viability of the
Halleck Creek Rare Earths project.There is currently a low level of
geological confidence associated with inferred Mineral Resources
and there is no certainty that further exploration work will result
in the determination of other Measured or Indicated Mineral
Resources or that the Production Target or preliminary economic
assessment will be realized.The Study is based on the material
assumptions highlighted throughout this announcement. While the
Company considers all the material assumptions to be based on
reasonable grounds, there is no certainty that they will prove to
be correct or that the range of outcomes indicated by the Study
will be achieved.These include assumptions about the availability
of funding. To achieve the potential project development outcomes
indicated in the Study, funding in the order of US$380 million +
$76 million of contingency is needed (ARR presently has U.S. market
capitalization of approximately US$100 million). Investors should
note that there is no certainty that the Company will be able to
raise funding when needed, however the Company has concluded it has
a reasonable basis for providing the forward-looking statements
included in this announcement and believes that it will be able to
fund the development of the project. This is based on an accepted
ratio of initial capital expenditure to market capitalization of
4.6 : 1 which includes 20% contingency. |
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American Rare Earths (ASX: ARR | OTCQX: ARRNF
and AMRRY) owns the Halleck Creek, WY and La Paz, AZ rare earth
deposits. The Company’s flagship project at Halleck Creek, WY, has
the potential to become the largest and most sustainable rare earth
projects in North America. American Rare Earths is developing
environmentally friendly and cost-effective extraction and
processing methods to meet the rapidly increasing demand for
resources essential to the clean energy transition and US national
security. The Company continues to evaluate other exploration
opportunities and is collaborating with US Government-supported
R&D to develop efficient processing and separation techniques
of rare earth elements.
Executive Summary and Full Technical report are
available here.
Head OfficeAmerican Rare Earths
Ltd1658 Cole Blvd, Suite G30Lakewood, CO,
80401info@americanree.comwww.americanree.com
For additional information:
Susan AssadiMedia
Relations USsassadi@americanree.com347 977 7125
Beverly JedynakInvestor
Relations USBeverly.jedynak@viriathus.com312 943 1123
Graphs accompanying this announcement are available
at:
https://www.globenewswire.com/NewsRoom/AttachmentNg/24593369-25c1-4c28-ab39-bb4f13c104f3
https://www.globenewswire.com/NewsRoom/AttachmentNg/a4981372-fc71-4a1b-a93c-50d4370fa0bf
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