TORONTO (miningweekly.com) – Toronto-based rare-earth company Quest Rare Minerals this week announced the results of a positive prefeasibility study for its Strange Lake deposit, in Quebec, saying the project has a net present value of $1.8-billion after tax, with an internal rate of return of 21.2%.

The mine would cost about $2.57-billion to construct, have a life of 30 years, and generate, on average, $1.05-billion in revenue a year. The capital costs would be repaid in 3.5 years.

The study contemplated the construction of a hydrometallurgical plant in southern Quebec to process ore shipped from Strange Lake, and the production of four separated products, namely a mixed high-grade heavy rare earths oxide concentrate and yttrium (HREE+Y), high-purity zirconium basic sulphate for further downstream processing, high-purity niobium oxide, and a mixed light rare-earth double-sulphate concentrate.

Quest in September said it had produced a HREE+Y concentrate and a separate light rare-earth (LREE) concentrate, from the deposit. The HREE+Y had a purity level of about 84%, of which 75% was composed of yttrium oxide.

Quest on Thursday said that Strange Lake would be one of the world’s largest and highest-grade HREE mining projects and that the planned processing facility would be the largest of its kind in North America.

“We are very pleased with the results of this prefeasibility study; our consultants have been conservative with the assumptions used and we are satisfied that the returns are very healthy for such a capital-intensive industrial plan,” Quest president and CEO Peter Cashin said.

He added that the Strange Lake project had the potential to provide an important base for establishing a significant new North American industrial sector, able to address the chronic HREE+Y supply deficit over a long period of time, and wrest a significant portion of the virtual supply monopoly from China.

The company argued that the project dovetails with both Canadian federal and Quebec provincial industrial strategies and it believed that strategic North American industries from defence to automotive (electric cars) to wind turbines would benefit from a stable source of rare-earth products.

Quest offers a significant high-technology industrial opportunity for Quebec and Canada with potential for employing many highly skilled technical and engineering employees.

The company has another rare earths project, Misery Lake, located 120 km south of the Strange Lake project.

The Canadian explorer’s TSX-listed  shares on Thursday closed up 1.22% at C$0.83 apiece.