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Greenland Minerals & Energy reports compelling Kvanefjeld feasibility metrics

Kvanefjeld, Greenland.

Kvanefjeld, Greenland.

Photo by Greenland Minerals and Energy

25th May 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – A feasibility study on Australian explorer Greenland Minerals & Energy’s (GMEL’s) Kvanefjeld multi-element project has revealed compelling metrics, delivering a similar net present value (NPV) to a previous study despite increased capital costs.

The ASX- and Frankfurt-listed explorer on Monday said the Kvanefjeld project, one of the world’s largest undeveloped resources of rare-earth metals and uranium, could produce its primary product, a critical rare earth concentrate, at a cost of $8.56/kg of rare-earth oxides (REO) after by-product credits, making it one of the world's lowest-cost rare earths producers.

Critical rare earths were those particularly important for green technologies and expected to be in short supply over time. These elements included neodymium, praseodymium, europium, dysprosium, terbium and yttrium.

The forecast basket price for the company's critical rare earth concentrate was $78.6/kg REO, producing an operating margin of about $70/kg.

The added cost of recovering the uranium from the high-grade mineral concentrate was less than $6/lb of uranium oxide, which would place Kvanefjeld into the bottom quartile of the cost curve for current uranium production.

Kvanefjeld would also produce lanthanum and cerium products, zinc concentrate and fluorspar. The project economics were reported to be relatively insensitive to the pricing of these by-products.

GMEL said the Kvanefjeld project held an Australian Joint Ore Reserves Committee-compliant resource of more than one-billion tonnes that could support an initial mine life of 37 years and provide scope to expand output and significantly extend the life of the mine.

"The feasibility study presents a very compelling case for the development of Kvanefjeld and emphasises the project's standing as a globally-unique mining opportunity,” GMEL MD Dr John Mair advised.

MORE CAPITAL REQUIRED
The feasibility treatment calculated an increased price tag of $1.36-billion to build the project, comprising $1.12-billion in project costs for the plant, utilities, indirect costs and contingency, and $240-million in associated infrastructure costs, including power, port services and a village. This was up from the previous capital estimate of $810-million, which was a reduced number from the initial estimate of $1.53-billion.

The Perth, Western Australia-based company explained that the rise in capital costs reflected Greenland's Mining Act requirements that as much downstream processing as feasibly possible be conducted in the country, therefore, the project's refinery was now located in Greenland. A 2013 mine and concentrator study had considered establishing a dedicated rare earths refinery outside of Greenland in an industrial environment served by appropriate infrastructure.

The feasibility study had also added lanthanum and cerium separation to the refining circuit.

Despite the increase in capital cost, the NPV generated by both studies was similar, mainly owing to improved processing efficiencies and product recoveries.

The project attracted an after-tax NPV, at an 8% discount, of $1.4-billion and an internal rate of return of 21.8%.

The feasibility study incorporated extensive technical, environmental and social studies conducted and commissioned by consulting engineering firm GMEL over the past seven years.

The base case scenario evaluated the development of a mine, mineral concentrator, refinery and supporting infrastructure in the south-west of Greenland, treating three-million tonnes a year of ore.

Kvanefjeld was located near existing infrastructure and townships in southern Greenland, with direct year-round shipping access and an international airport only 35 km away.

ATTRACTIVE METALLURGY
A critical strength of the project was its attractive metallurgy. Its unique rare earth and uranium bearing minerals could be concentrated into less than 10% of the original ore mass using froth flotation.

The minerals were also found to be nonrefractory and could be effectively treated using an atmospheric sulphuric acid leach.

There was no requirement for complex mineral ‘cracking.’

The process flowsheet had been rigorously developed by GMEL and had been the subject of extensive testwork, including three pilot plant campaigns.

Meanwhile, GMEL continued to advance its dialogue with its processing partner China Non-Ferrous Metal Industry’s Foreign Engineering and Construction (NFC) to cooperate on separating the critical rare earth concentrates from Kvanefjeld into high-purity individual REOs and the subsequent product marketing to end-users globally.

NFC, a rare earth separation technology specialist and engineering, procurement and construction contractor, was involved in preparing the feasibility study for Kvanefjeld and completed the capital cost estimate based on detailed engineering design conducted by Tetra Tech Proteus.

GMEL said the Kvanefjeld feasibility study represented a significant project milestone and, along with environmental- and social-impact assessments, was a critical component of an application for a mining licence. GMEL was aiming to complete the environmental- and social-impact assessments in the third quarter, and would, subsequently, lodge a mining licence application with the Greenland government.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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