PERTH (miningweekly.com) – An expanded definitive feasibility study (DFS) on multicommodity explorer Alkane Resources’ Dubbo zirconia project, in New South Wales, has confirmed the viability of the operation.
An initial DFS, completed in 2011, found that a capital investment of some A$470-million could support a 400 000 t/y operation, with a 20-year life-of-mine.
However, Alkane reported on Thursday that the expanded DFS found that the project could support a production rate of some one-million tons a year, at a capital cost of A$996.4-million.
Over an initial 20-year life, the expanded project would have a net present value of A$1.23-billion, and would deliver earnings before interest, tax, depreciation and amortisation of A$5.23-billion. The project would also have an internal rate of return of 19.3%.
Alkane said in a statement that, since the 2011 study, there had been a reduction in market prices for zircon chemicals and for all rare earths; however, the miner noted that the DFS was positive regarding the future trend for products, especially heavy rare earths, which had greater scarcity.
Further upside for the project was contained in the size of the resource, which gave Dubbo a project life of at least another 50 years beyond the initial 20-year mine life assessed in the DFS.
The company noted that, with ongoing process optimisation, other potential upsides were in higher recoveries for all metals, the potential for recovery and sale of tantalum products, as well as positive outcomes from joint ventures.
In October last year, Alkane appointed Credit Suisse, Sumitomo Mitsui Banking Corporation and Petra Capital to secure a financing package of up to A$1-billion. The company was considering a number of options to raise funds for Dubbo, including an equity raising, the potential sale of a minority interest in the project, a debt facility, as well as government assistance programmes.
Securing the finance package was expected to take some 12 months, and would coincide with the final project approvals, allowing for the Dubbo development to start in the first quarter of 2014.