TORONTO (miningweekly.com) – Canadian rare earths alloys producer Great Western Minerals Group (GWMG) is seeking to conclude a toll processing agreement with a partner to restart its flagship Steenkampskraal rare earths mine, in South Africa’s Northern Cape province, sooner.

During a telephone interview with Mining Weekly Online from Saskatoon, Saskatchewan, where GWMG is headquartered, president and CEO Marc LeVier said the turbulent capital markets had forced the company to seek the lowest-cost route to restart the old thorium mine.

GWMG said it had plans to construct a rare earths separation plant on site, but that it would follow in a later phase, once monazite mining had started. It was now focused on reducing the capital required to restart the mine.

LeVier pointed out the 140 000 t/y to 150 000 t/y global rare earths market was extremely dynamic and volatile at times, and four to five years ago there was no spare rare earths processing capacity.

“There have been some communications sent out about new plants coming on stream in Asia and perhaps some spare capacity in Europe, and we will seek a toll processing agreement to start the Steenkampskraal operation as soon as possible,” he said.

The rare earths processor, which is transitioning to a fully integrated rare earths producer, makes specialty alloys used in the magnet, battery, defence and aerospace industries from two facilities in the US and UK.

GWMG’s UK-based subsidiary Less Common Metals (LCM), was an advanced rare earths alloys producer and had established strong ties with its customer base over the last 20 years, but LeVier explained that securing streams of raw rare earths remained a challenge, hence the company’s focus on becoming a vertically integrated rare earths producer.

The Steenkampskraal project would comprise three activities, as part of GWMG's overall five-part integrated business model, namely the underground mine and future reprocessing of tailings; the mixed rare earths chloride (RECl) plant; and the $62-million solvent extraction separation plant that would produce separated rare-earth oxides about a year after the RECl had started.

Thereafter, GWMG's integrated business model called for more metal-making capacity to be installed and its current alloy production capacity at LCM to be expanded.

LeVier said the Steenkampskraal project was “properly” sized and was currently one of the highest-grade development projects in the world.

“At an average grade of 18% total rare-earth oxides (TREOs), and with a good distribution of TREOs which are of value to LCM, we only need to process about 150 t of material a day to reach our production goals, which is equal to constructing a large pilot plant,” he said.

At the start of May, GWMG filed its prelimimary economic assessment (PEA) results for the project, which were announced in March.

The PEA highlighted a C$555-million after-tax net present value for the project, after applying a 10% discount rate, and the 28% South African corporate tax rate.

The PEA also estimated a 66% internal rate of return and a two-and-a-half year payback period, on an after-tax basis, from the start of underground mining for the project, which has an 11-year potential mine life.

The PEA was based on the latest resource estimate, which estimated 278 000 t of inferred mineral resources at an average grade of 15.2% TREO and 176 000 t of indicated resources at an average grade of 18.2% TREO, each using a 1% TREO cutoff grade.

"We have directed our resources where we believe we can get the greatest return and add substantive value to the project to include a focus on finalising the feasibility study, which will provide greater clarity about project costs, thereby reducing the risk for development," LeVier said.

"Given the impact global economies have had on the mining industry and limiting access to capital, we have stopped geo-development drilling and deferred other site development activities,” he noted.

"The PEA conducted on the Steenkampskraal project confirms our internal projections of a high-grade and excellent distribution of the critical rare-earth elements (REEs). The impressive, high-grade nature of Steenkampskraal translates into lower tonnages for processing, which, in turn, results in low capital cost requirements relative to other REE projects.

“The work undertaken on the project to date and the accelerated metallurgical testing programme is intended to enable GWMG to advance the project rapidly. This ‘early mover' status, combined with GWMG's existing alloy manufacturing capacity, positions GWMG very favourably,” LeVier said.