TIDMREE
RNS Number : 5071Q
Altona Rare Earths PLC
18 October 2023
18 October 2023
ALTONA RARE EARTHS PLC
("Altona" or "the Company")
Monte Muambe Scoping Study Results
Altona (LSE: REE), a resource exploration and development
company focused on Rare Earths in Africa, is pleased to announce
the positive outcome of its Scoping Study(1) for its Monte Muambe
rare earths project in northwestern Mozambique (the "Project"), and
the publication of an updated Competent Person Report.
Results of the Scoping Study provide an encouraging initial
validation of the Project's potential, with highlights
including:
-- Post-tax NPV 8(2) of US$ 283.3 million
-- Post-tax IRR(3) of 25%
-- Payback from first production: 2.5 years
-- Production of 15,000 tonnes per annum, on average, of Mixed
Rare Earth Carbonate ("MREC"), at an average price of US$ 13,558.4
per tonne of MREC(4)
-- 18 years Life of Mine ("LoM")
-- Open pit mining operation, 750,000 tonnes of ore extracted and processed per annum
-- Two stage recovery process, consisting of comminution and
flotation, followed by hydrometallurgy
-- LoM EBITDA(5) of US$ 1.67 billion
-- Initial Capex of US$ 276.3 million
The new Competent Person Report containing the Scoping Study,
prepared by international geological and mining consultant Snowden
Optiro, is available on the Company's website under the investor
section: https://www.altonare.com/investors/reports/ .
The executive summary of the Scoping Study is attached as an
appendix to this RNS.
Scoping Study Overview
The Monte Muambe Scoping Study takes into consideration open-pit
mining of Target 1 and Target 4, at a LoM strip ratio of 1.6, over
a period of 18 years. An anticipated 750,000 tonnes of ore per
annum will be extracted and processed through a beneficiation plant
to produce a Rare Earths concentrate. The beneficiation process
will include crushing, milling and flotation. The concentrate will
then be processed through a hydrometallurgical plant to produce an
average of 15,000 tonnes of MREC per annum. The hydrometallurgical
process will involve a weak acid gangue leach, followed by rare
earths leaching and purification. The MREC product would be
packaged and transported via existing road infrastructure to the
port of Beira, in Mozambique, for export.
Base Case Technical and Economic parameters are summarised in
the table below:
Parameter Unit Value
Ore processed Mt 13.5
----------------------------------- ------- ---------
MREC produced kt 270.7
----------------------------------- ------- ---------
Initial Capex M US$ 276.3
----------------------------------- ------- ---------
Sustaining Capex M US$ 63.0
----------------------------------- ------- ---------
Opex LoM M US$ 1,519.0
----------------------------------- ------- ---------
Opex per ton MREC US$/t 5,612.6
----------------------------------- ------- ---------
Net Revenue LoM M US$ 3,193.1
----------------------------------- ------- ---------
EBITDA LoM M US$ 1,673.8
----------------------------------- ------- ---------
Gross revenue per ton MREC US$/t 13,558.4
----------------------------------- ------- ---------
Payback from first MREC years 2.5
----------------------------------- ------- ---------
Post tax NPV 8(2) M US$ 283.3
----------------------------------- ------- ---------
Post tax NPV 8(6) Upside Scenario M US$ 409.9
----------------------------------- ------- ---------
Post tax IRR % 25%
----------------------------------- ------- ---------
Operating margin % 42%
----------------------------------- ------- ---------
Sensitivity Analysis
Using an NPV of US$283.3 million with an applied real discount
rate of 8%, the Project is most sensitive to revenue (price,
recovery, grade and exchange rates), less sensitive to opex and
least sensitive to capex.
Figure 1 - Project sensitivity analysis
Upside Potential
The Scoping Study demonstrates the potential for Monte Muambe to
become a viable mining operation.
Considerable upside potential has been identified in the Scoping
Study and will be developed further in the Prefeasibility Study
("PFS"). This includes:
-- Increase of the resource base, as well as of the LoM and/or ore extraction rate;
-- Mining parameters optimisation;
-- Processing and metallurgy, both for the beneficiation and hydrometallurgical plants;
-- Energy sources mix and logistics options;
-- Evaluation of the possibility of doing further onsite,
in-country or regional separation and refining; and
-- Setting up Responsible Sourcing systems.
Next Steps
The publication of the Scoping Study marks the end of Phase 2 of
the Project Farm-Out Agreement and entitles Altona to an additional
31% ownership in Monte Muambe Mining Limitada, the Project's
special purpose vehicle, taking its total current holding to 51%.
Contractual and administrative processes have already been
initiated to implement this change and a further announcement will
be made when this has been completed.
The Project is now entering Phase 3, which upon completion will
allow the Company to increase its holding to 70%, with the key
deliverable being the PFS. Preliminary PFS activities started in
July this year, in the form of in-fill drilling at Target 4 and
these will ramp up over the course of the coming months, with
additional exploration, planning and consultant services
procurement activities, as well as a strong focus on additional
metallurgical test work. The Company intends to also apply for a
mining concession during Phase 3.
Cedric Simonet, CEO of Altona, commented: "For Altona, the Monte
Muambe Scoping Study is a significant milestone. This key
deliverable serves as an affirmative initial validation of the
Project's economic viability, enabling the Company to establish its
presence amongst other prospective REE producers in Africa. It
provides, together with the Mineral Resource Estimate ("MRE"), a
solid foundation for the Project's subsequent progression.
"As the Project moves into its PFS stage, the Company will
continue to work towards de-risking Monte Muambe and, with its
local partners, to optimise its technical, commercial and financial
parameters. We believe the timing for this achievement is
impeccable, at a time where the global rare earths supply chain is
diversifying away from China's decades-long domination, and Western
processing facilities are starting to come online.
"The magnet metals present at Monte Muambe (and representing 90%
of the Project's future revenue) are critical components of the
global green energy transition. The supply deficit for Neodymium
and Praseodymium Oxide is forecast to grow to 90,000 tonnes per
year by 2040(7) and, to allow the decarbonisation of energy
sources, more magnet metals mines must come on stream in the
following years.
"Altona intends to play its part in supporting this crucial
agenda, by working in a responsible manner to reduce the dependence
on China for critical mineral supplies. "
Notes
(1) Under the terms of the Farm-Out agreement of 21 June 2021,
Altona will earn a 51% interest in the Monte Muambe Project by
delivering the present Scoping Study (Project Phase 2), and a 70%
interest by delivering a Prefeasibility Study (Project Phase 3).
The results of the Scoping Study are presented on a 100% basis.
(2) Post-tax Net Present Value using an 8% discount rate for the
base case scenario, using Adamas Intelligence low case scenario
forecast for the period 2024-2040.
(3) Post-tax Internal Rate of Return.
(4) Price based on the average of Adamas Intelligence base-case
forecast from 2024 to 2040 for Nd, Pr, Tb and Dy oxides with a
payability factor in MREC of 90% for these 4 elements.
(5) Earnings Before Interest, Tax, Depreciation and
Amortisation.
(6) Post-tax Net Present Value using an 8% discount rate for the
upside scenario, using Adamas Intelligence base case scenario
forecast for the period 2024-2040.
(7) Source: Adamas Intelligence, "Rare Earth Magnet Market
Outlook to 2040", Q2 2023.
Scoping Study Cautionary Statement
The Monte Muambe Scoping Study has been prepared to assess the
potential viability of an open pit mining and MREC production
operation, to assess development options, and to give sufficient
confidence to the Company to advance to the Prefeasibility Study
stage. The results of the Scoping Study should not be considered a
profit forecast or a production forecast.
The Scoping Study is preliminary in nature and include material
assumptions outlined in the CPR, including product price
assumptions. Capex estimates qualify as Class 4 estimates as per
the Association for the Advancement of Cost Engineering Recommended
Practice 47R-11. The accuracy of the opex and of the initial capex
estimate is assessed at +35% to -30%.
The base case includes an indicative life of mine extraction and
production schedule, which is based on a Mineral Resource Estimate,
58% of which classified as Indicated and 42% as Inferred. The
assessments contained in the Scoping Study are insufficient to
support the estimation of Ore Reserves or, at this stage, to
provide assurance of an economic development.
Further evaluation work including infill drilling, metallurgical
test work, engineering and environmental studies will be required
to support the estimation of Ore Reserves, and to provide assurance
of an economic development case.
The Scoping Study must be read and considered as a whole.
Selection of portions of the analysis or factors considered by it,
without considering all factors and analyses together, could create
a misleading view of the process underlying the opinions presented
in the Scoping Study and CPR.
-ends-
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Altona Rare Earths Plc
Cedric Simonet, CEO +44 (0) 7778 866 108
Christian Taylor-Wilkinson, Business Development +44 (0) 7795
168 157
Novum Securities Ltd (Corporate Finance) +44 (0) 20 7399
9400
David Coffman
Daniel Harris
George Duxberry
Allenby Capital Ltd (Joint Broker) +44 (0)20 3328 5656
Kelly Gardiner / Guy McDougall (Sales)
Nick Athanas (Corporate Finance)
Optiva Securities (Joint Broker) +44 (0) 20 3411 1882
Daniel Ingram
Yellow Jersey PR (Financial PR) +44 (0) 20 3004 9512
Sarah Hollins
Annabelle Wills
Soraya Jackson
About Altona Rare Earths Plc
Altona is a resource exploration and development company focused
on Rare Earths in Africa. The Company is listed on the Main Market
of the London Stock Exchange.
Rare Earths are a group of 17 chemical elements, many of which
are critical to the W orld's on-going transition from carbon-based
to renewable energies, and to the defence and communication
sectors.
The Company currently focuses on the development of Monte
Muambe, its flagship Magnet Rare Earths Project, located in
Northwest Mozambique. The Project was acquired in June 2021, and
the Company has so far drilled over 7,800m, and defined a maiden
JORC Mineral Resource Estimate of 13.6 million tons at 2.42%
TREO.
A Competent Person Report including the Scoping Study for Monte
Muambe has been published on 18 October 2023.
Altona continues to take advantage of its position in Africa to
assess other possible Rare Earths opportunities on the
Continent.
Competent Person Statement
The information in this RNS that relates to the CPR has been
prepared under the responsibility of Mr Julian Aldridge, MSc Mining
Geology (MCSM), MESci (Oxon), CGeol FGS, MIMMM. Mr Aldrige is an
employee of Snowden Optiro, and the overall Competent Person and
principal author of the CPR.
The information in this RNS that relates to the MRE has been
compiled under the responsibility of Dr Andrew Scogings, PhD
(Geology), MAIG, RPGeo (industrial minerals). Dr Scogings is the
Competent Person for the Geology and Mineral Resources sections of
the CPR.
Other authors have contributed to the redaction of the CPR.
Their details are given in Section 2.7 of the CPR.
Dr Scogings is employed by Snowden Optiro and is independent of
Altona. Dr Scogings is a Member of the Australian Institute of
Geoscientists (Number 3013) and the South African Geological
Society. Dr Scogings has sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity which he and the co-authors are reporting to
qualify as Competent Person as defined in the JORC Code (2012).
For more information visit: www.altonaRE.com
COMPETENT PERSON REPORT EXECUTIVE SUMMARY
1. Background
This Competent Person's Report (CPR) and Scoping Study document
has been prepared by Snowden Optiro, a business unit of Datamine
Australia Pty Ltd (Snowden Optiro) for Altona Rare Earths Plc
(Altona, the Company or the Client). This CPR has been prepared to
provide compliant disclosure on all material mining assets and
liabilities of Altona's Monte Muambe Rare Earth Element (REE)
project (Monte Muambe or the Project), located in western
Mozambique, in accordance with relevant Financial Conduct Authority
(FCA) guidelines (FCA Technical Note 619.1 of May 2022, Appendix
II), and the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves, 2012 edition (JORC
Code, 2012).
The Company is a UK London Stock Exchange (LSE) listed mining
company focused on the supply of rare earth metal oxides for the
catalyst, laser, glass, polishing and magnetic materials industries
for the anticipated growth in the wind turbine and electric vehicle
sectors.
The Project is an advanced exploration and pre-development
project. Altona's interest in the Prospecting Licence (Licença de
Prospecção e Pesquisa) LPP7573L (the Licence) is through a Farm Out
Agreement dated 23 June 2021 between Ussokoti Investimentos,
Altona, Monte Muambe Mining Lda (MMML) and its original
shareholders. The Farm Out Agreement gives Altona the right to earn
up to 70% of MMML in a phased manner, subject to the completion of
certain conditions and milestones.
In this CPR and Scoping Study all references to dollars ($)
refer to American United States dollars.
2. Project description, location and ownership
The Project is located in Niculunga Locality, Cambulassisse
Administrative Post, Moatize District, Tete Province, Mozambique (
Figure 1.1 ). Access from the provincial capital Tete is through
the tarred road leading to the Malawi border (Zobue), through
Moatize town, and to the village of Cateme. The distance from the
Zambezi bridge in Tete to the Cateme turn-off is about 40 km. From
the Cateme turn-off, an ungraded 43 km track leads from to the
Monte Muambe camp through the villages of Mualadzi and Djendje.
Figure 1.2 shows the location of Target 1 and Target 4 in relation
to the Monte Muambe geology and structure and the proposed open pit
outline (black).
Figure 1 . 1 Project location in Mozambique
Figure 1 . 2 Location of Target 1 and Target 4 in relation to
the Monte Muambe structure and geology
3. Geology and Mineral Resources
Monte Muambe is located in the central part of the Karoo
Moatize-Minjova coal basin, which corresponds to the eastern part
of the Zambezi Graben. The Monte Muambe carbonatite intrusion is
hosted by Upper Karoo Sandstones of the Cádzi Formation. The age of
the intrusion is presently unknown.
While the Monte Muambe structure resembles a ring-dyke, or a
volcanic edifice, the outer ridge consists of sub-horizontal
indurated Upper Karoo sandstones and is the product of differential
erosion ( Figure 1.2 ). The basin formed by the inner part of the
structure consists chiefly of fenites, various types of
carbonatites, breccias, as well as pyroclastics. The diameter of
the carbonatite intrusion at surface level is about 3.3 km.
Carbonatites tend to outcrop in the form of small hills rising
above the floor of the basin. Fenites are often deeply weathered at
near-surface levels and rarely outcrop, though float can be
encountered on slopes.
Fenites form a circular zone lining the contact between
carbonatites and host sandstones, but the detailed relationships
between fenites and carbonatites are a lot more complex, involving
faulting during and after the emplacement of the intrusion, as well
as the incorporation of xenoliths of various size (centimetre to
decimetre size). Drilling in various parts of the intrusion shows
that fenite outcrops often cover carbonatites. This, as well as the
presence of pyroclastics, suggests that the present erosion level
may corresponds to the roof of the carbonatite intrusion,
immediately under the base of the volcanic edifice.
The Mineral Resource outline is shown for Targets 1 and 4 (
Figure 1.2 ). Mineral Resource Estimates for Targets 1 and 4 are
provided in Table 1.1 and are reported in accordance with the JORC
Code (2012).
Table 1. 1 Monte Muambe Indicated and Inferred Mineral Resource
September 2023 reported using a 1.5% TREO cut-off
Target Classification TREO TONNES TREO% CeO(2) Pr(6) Nd(2) Tb(4) Dy(2) NdPr Contained
Cut-off (Mt) ppm O(11) O(3) O(7) O(3) Oxide TREO (t)
(%) ppm ppm ppm ppm (ppm)
1 Indicated 1.5 8.0 2.38 11,400 910 2,250 15 80 3,160 191,000
Inferred 1.5 0.8 2.28 10,900 861 2,140 15 78 3,000 18,000
-------- --------------- -------- ------- ------ ------- ------- ------- ------- ------- ------- ----------
TOTAL 1.5 8.8 2.38 11,400 905 2,240 15 80 3,150 209,000
-------- --------------- -------- ------- ------ ------- ------- ------- ------- ------- ------- ----------
4 Indicated 1.5
Inferred 1.5 4.8 2.50 11,300 872 2,190 26 143 3,060 119,000
-------- --------------- -------- ------- ------ ------- ------- ------- ------- ------- ------- ----------
TOTAL 1.5 4.8 2.50 11,300 872 2,190 26 143 3,060 119,000
-------- --------------- -------- ------- ------ ------- ------- ------- ------- ------- ------- ----------
OVERALL Indicated 1.5 8.0 2.38 11,400 910 2,250 15 80 3,160 191,000
Inferred 1.5 5.6 2.47 11,200 871 2,190 24 134 3,060 137,000
-------- --------------- -------- ------- ------ ------- ------- ------- ------- ------- ------- ----------
TOTAL 1.5 13.6 2.42 11,400 894 2,230 19 102 3,120 329,000
-------- --------------- -------- ------- ------ ------- ------- ------- ------- ------- ------- ----------
Notes:
-- Million tonnes are rounded to one decimal place. Grades are
rounded to two decimal places for % and whole numbers for ppm.
-- The MRE has been reported in consideration of reasonable
prospects for eventual economic extraction (RPEEE) using a pit
shell based on a 1.5% Total Rare Earth Oxide (TREO) cut-off,
revenue of 24.65 $/kg TREO in Mixed Rare Earth Carbonate (MREC) and
average total recovery to MREC of 48%.
-- Mineral Resources are reported as dry tonnes on an in-situ basis.
-- Rare Earth Elements are inclusive of the TREO and not additional to it.
-- "NdPr Oxide" is the sum of Nd(2) O(3) and Pr(6) O(11) .
4. Mining
The mining method is based on conventional open pit using truck
and shovel, and drill and blast, coupled to a ROM stockpile.
Although the rock is largely classified as weathered, ore and waste
rock will require drilling and blasting.
Both ore and waste will be excavated in 5 m flitches following
mark-out by grade control. Ore will be hauled to either the ROM pad
and tipped onto a designated ore finger or a designated low-grade
stockpile. All mine waste will be hauled directly from the pit and
placed onto a designated location of the tailings storage facility
(TSF) dam wall; there are no other external waste dumps.
The mining fleet will comprise 40 - 60 t capacity articulated
dump trucks (such as a Caterpillar 745) loaded by a 90-t excavator
(such as a Caterpillar 395). A 30-t front-end loader (Caterpillar
980M) capable of loading the 41-t dump trucks, will be used as
back-up for the primary loading unit and to make up shortfalls in
periods where additional material movement is required. Other
ancillary support will be supplied by a Cat D9R dozer, Cat 14M
grader, and Cat 745 watercart. Maintenance will be conducted on
site. Contract-mining is selected as the operating strategy at the
Project.
4.1. Pit optimisation
Optimization parameters used for the Scoping Study are
summarised in Table 1.2 below. For Target 4 area the pit shell
chosen was using the price increment of 102% which provided the
highest undiscounted NPV as summarised in Figure 1.6 . For Target 1
and 6, the chosen price increment was 98% which provided the
highest undiscounted NPV ( Figure 1.4 ).
The mine life is planned at 18 years. There is no pre-stripping
period. Based on the selected pit shells a high-level pit design
was produced.
Table 1 . 2 Parameters used in optimization
Item Unit Value
Total Rare Earth Oxide
(TREO) $/t 24,651
Royalty % 3.0
Mining costs $/t 3.28
Ore - free dig $/t 4.26
Ore - drill and blast $/t 2.51
Waste - free dig $/t 3.53
Waste - drill and blast $/t 3.28
Processing cost $/t ore 25.00
Downstream processing
cost $/t TREO 66.00
Recovery from run of
mine (ROM) % 60
Recovery from refining % 80
Throughput rate Tonnes per year 750,000
Discount rate % 10
Overall slope angle
(OSA) T4 deg 47
OSA T1 and 6 deg 43
------------------------- ----------------- --------
Figure 1 . 3 T4 optimisation result
Figure 1 . 4 T1 and 6 optimisation result
4.2. Indicative schedule
An indicative life of mine (LOM) schedule was prepared for the
mining of the two open pits as shown in Figure 1.5 . Throughput
rate is maintained at 750,000 t/a at a total mining rate of between
2.0 to 2.5 Mt/a. The average strip ratio is 1.67 (waste: ore). A
pre-stripping period is not required but may be used to generate
sufficient waste for the first TSF lift.
Figure 1 . 5 Monte Muambe annual LOM mining schedule
5. Metallurgy and processing
The proposed process flow sheet includes a beneficiation plant
and a hydrometallurgical plant ( Figure 1.6 ).
The beneficiation plant comprises of the comminution and
flotation circuits. The purpose of the comminution circuit is to
reduce the size of solid rock particles and thus increase the
surface area of solids to enable the liberation of valuable
materials that are locked within the gangue minerals. This is
achieved by means of crushing and milling. Flotation is a method of
separation, which uses the differing surface properties of the
various minerals in the carbonatite. It involves the selective
attachment of mineral particles to air bubbles generated in the
flotation cell which float to the surface of the slurry and then
flow over the lip of the cells into the launders. A two-stage
selective flotation reagent regime is used; the first stage being a
gangue flotation to selectively target the calcium bearing gangue
minerals (calcite, fluorite and ankerite) and the second stage
being a rare earth flotation targeting the host mineral
bastnaesite.
The recovery process flow sheet comprises a two-stage selective
hydrochloric acid leach process. The first stage being a calcite
gangue leach in a weak (pH 4) acid solution and the second stage
being a strong acid leach (20% HCl) at 80degC. The hydrochloric
acid is recycled via calcium sulphate precipitation with sulphuric
acid which is produced on site via a commercial sulphur burner
plant. The process flow sheet also includes purification and Mixed
Rare Earth Carbonate (MREC final product) precipitation. This
approach offers advantages, including a significant reduction in
acid costs as well as a further concentration of the rare earths
thus providing a reduction in downstream capital and operating
costs.
Figure 1 . 6 Proposed process flow sheet
6. Project infrastructure
All required infrastructure, the accommodation camp, process
buildings, stockpiles, water resources, and tailings storage
facility (TSF) are located within the current mineral tenement
boundaries. Site infrastructure is required both inside the crater
and outside to service these facilities.
A conceptual site block plan (SBP) locates the main
accommodation camp outside of the crater to minimize dust, noise
and radiation exposure, whereas the process plant, mining
contractors' workshops, TSF and associated infrastructure are
deployed inside the crater, arranged to minimize the physical
footprint and in close proximity to the two main pits.
The mine infrastructure and process areas are, as far as
practical, consolidated to reduce materials handling distances,
including that of run of mine (ROM) mineralisation. The SBP
arrangement has considered the topography as well as accommodating
future expansion of selected process units and exploitation of new
pits.
Diesel generators will be used during construction and
commissioning, and as backup for infrequent events of grid failure.
It is assumed that the appointed bulk diesel supplier will install
its own diesel storage tank(s) at site. Process, mine and office
diesel storage tanks will be connected to the primary diesel
storage tank(s).
The 18 MW electrical power maximum demand of the Monte Muambe
site will be provided at 11 kV, 50 Hz by a hybrid power generation
plant. The plant will comprise a diesel-powered electrical
generator station and solar photovoltaic (PV) power station
supported by a battery energy storage system. Cables will link the
power station substation to the process plant substation.
Solar PV generation is expected to contribute approximately 25%
to the overall generation. The solar PV power station will be
contained in a separate area, 800 m upwind from the process
plant.
Management consider that a bore well-field will be the most
optimal solution for the Project's water supply. The water demand
for the Monte Muambe site will be supplied by on-ground overland
pipelines from the bore field. Various sites for bore water have
been identified and well tested. The bore field selected will
provide water to the accommodation camp, process plant and camp.
Dewatering from the open pits is also expected to increasingly
contribute to the plant's water supply during the life of the mine.
A water demand forecast will be designed as part of the PFS.
Wastewater and overall water management will be achieved by
suitably planned drainage channels and site layout. Waste will be
collected in a landfill.
The Project is primarily accessed from the northern side. A
tarred, single carriageway (N7) extends from Tete, passed Moatize
coal mine in a north easterly direction, a total distance of 70 km.
There is a right turn onto a tarred single carriageway extending in
a southeasterly direction for 10 km to Cateme. From Cateme, a 35 km
gravel road is used to access the Project site; this road passes
through the villages of Mwaladzi and Dezemge ( Figure 1.7 ).
The road from Dezemge to the Project site will require
upgrading, including by-passes around villages. The road climbing
from the foot of the mountain to the existing camp and into the
basin will need to be redesigned to ensure a maximum slope of 10
percent. Inside the basin, where the planned mining infrastructure
and plant facilities will be located, the topography is gentle.
Existing dirt tracks will require widening and upgrading using
locally sourced road metal.
The Tete International Airport (Chingozi) or TET, is 110 km by
road to the Project, along the N7. Beira is the closest port to the
Project site, approximately 730 km by road. A detailed cost-benefit
of the various logistical options both for inbound and outbound
freight cargo will need to be done as part of the PFS.
An integrated information system will be provided by the
Company, including the latest operating systems enabling effective
telephonic and digital communications.
For product transport, it is proposed that stockpiled MREC will
be placed in 1 t polypropylene, double-lined woven bulk bags at
Project site, and then placed on pallets or loaded directly into
containers. Containers will be trucked to Beira port and
warehoused, prior to shipment. These transport arrangements are
expected to result in approximately 745 truck journeys per annum
(equivalent to 62 trips per month) of bagged concentrate product to
Beira. The containerised bags will be offloaded at Beira and then
re-containerised at Beira or report straight to ocean going
vessels.
Figure 1 . 7 Location of the Project, licence LPP7573L in Tete Province, Mozambique
Source: Altona, 2023
The approximate infrastructure size and costs for the Project
have been estimated. Primary infrastructure costs include:
-- Power ($7.5 million)
-- Access road ($7.0 million)
-- Accommodation ($4.0 million)
-- Sewage treatment ($2.0 million)
-- Raw water dam ($2.0 million)
-- Wellfield ($2.0 million)
-- Stormwater ($1.0 million)
-- Water treatment ($1.0 million)
-- Other surface infrastructure (including gatehouse,
changehouse, laundry, clinic, canteen, office buildings), of $2.8
million.
The approximate footprint of the ten primary surface
infrastructure/ buildings is 10,915 m(2) . As the Project advances,
greater accuracy and footprint size will be estimated.
Design details will be required as the project advances to PFS
stage; this will include as a priority:
-- Power demand
-- Water demand
-- Detailed plans for site location
-- Detailed access road plans.
7. Tailings and waste
7.1. Tailings storage facility
All process plant waste products will likely be disposed of onto
a single fully contained tailings storage facility. Pre-stripping
over the mining area will provide the initial waste rock required
for the containment embankment walls. As more waste is stripped
over the mining areas, these waste rock embankments will be raised
always above the tailings level to provide solid rock embankment
walls. The intention is to, where possible, use the existing
topography and outcropping areas to buttress the final TSF
walls.
The tailings will be placed on a 2 mm high density polyethylene
(HDPE) lined facility with suitably constructed underdrainage
systems. Despite the low acid generating potential and also the
presence of carbonate rock, there will be a component of plant
waste containing residual thorium and radio-active elements, which
will require safe disposal in the TSF.
A preliminary site was chosen for a storage capacity of 13.3 Mt,
with a full-containment facility in line with the Global Industry
Standards for Tailings Management (GISTM). The design also took
cognisance of the potential seismic nature of the area with the
full waste containment and has 1V:3H outer perimeter waste rock
side-slopes.
The capital expenditure estimate (capex) was factorised from a
database of costs into 2023 prices. The overall TSF has an
estimated capex of $54 million over the 18-year mine life. It may
be possible to divide the capex over various design phases with
further design work, to reduce the initial capital and to increase
the sustaining capital over the subsequent tailings dam lifts.
7.2. Waste rock disposal
The waste rock excavated from the Monte Mumbe open pit mining
activities will be loaded and hauled to a permanent disposal site
or waste rock dump (WRD). The waste rock will partly be used in the
construction of the TSF containment embankments. The balance of the
waste will be deposited in designated waste rock dumping between
the Target 1 and Target 4 pits. The TSF embankment will require
approximately 3.6 Mm(3) or 6.5 Mt of waste rock, with the WRDs
requiring a collective capacity of 8.7 Mm(3) or 15.7 Mt.
The WRD is expected to be non-acid forming with limited release
of contaminants over the long term. The waste rock contact water is
however expected to be high alkalinity (due to the carbonatites)
with minor concentrations of REEs. The WRD footprints are not
expected to be lined, but an engineered (compacted) basal area is
proposed to rescue seepage and protect ground- and surface water
resources.
The WRDs will be located adjacent to each respective pit, and
adjacent to the TSF. The development of the waste rock dumps will
be in 10 m vertical lifts, with 15 m wide benches and 1V:1.5H
intermediate side slopes. The overall outer side slope profile will
be 1V:3H for rehabilitation. The WRDs will cover a total footprint
(natural ground) of approximately 40 ha, with a final downstream
height of approximately 50 m.
The capex for the WRDs has been determined through the
factorisation of database costs into Y2023 terms and has been
estimated at $2.72 million, inclusive of 30% preliminary and
general costs. The capex is primarily comprised site clearance and
earthworks with selected concrete works and drainage material.
Future recommended work includes a geotechnical investigation
and geochemical characterisation of the waste rock.
8. Social and environmental matters
Exploration activities on LPP7573L are carried out under an
environmental management plan (EMP) prepared by local environmental
consultancy GeoAmbiente Lda. The Company's activities were
subjected to an independent Environmental Audit which was validated
by the National Agency for Environmental Quality Control (AQUA) of
Tete Province on 24 October 2022.
The Licence is not located in any environmentally protected
area.
As part of its Mining Concession application, the Company will
prepare an EMP covering the proposed mining operations, and
subsequently a Level A environmental impact assessment (EIA).
A Level A EIA covers mining activities carried out on a Mining
Concession. These activities require a full EIA, which must be
prepared by an environmental specialist licensed by the Ministry of
Land and Environment (MITA). The EIA process aims at producing a
project-specific environmental licence.
The EIA licensing process involves:
-- The preparation and submission to MITA of a set of Terms of
Reference (ToR), which must include the timing and procedures for
public consultation, a risk and emergency management plan, and an
EMP.
-- The review of the ToR by MITA and the Minister, Ministry of
Mineral Resources and Energy (MIREME).
-- If the EIA is approved, MITA issues an Environmental Licence
within 10 days from the date of approval. The Environmental Licence
is valid for the duration of the Mining Concession but must be
reviewed every 5 years.
The holder of a Level A Environmental Licence must also submit
an annual environmental management report, with the monitoring
process carried out either by the concessionaire or by an
independent consultant.
Level A activities also require the provision of an
environmental bond to cover rehabilitation activities during the
closure of the mine. The bond may take the form of an insurance
policy, a bank guarantee, or a deposit in cash in a bank account
provided by MIREME. The value of the bond is based on an estimate
of the costs of such restoration, which will be calculated during
or after the active life of the project. The value of the bond is
set by MIREME and reviewed every two years.
8.1. Radiation management
The Project ore contains low levels of thorium (Th) and uranium
(U). The LOM average concentrations for the bastnaesite ore are 200
ppm Th and 20 ppm U at Target 1 and 330 ppm Th and 7 ppm U at
Target 4, which is favourably low compared with other rare earth
deposits. The Project's flotation tailings will contain lower
levels of radioactivity because thorium and uranium are mostly
associated with the rare earth minerals (and hence removed from the
tailings).
The mineral concentrate produced from the Project, whilst having
an upgraded Th and U content, is expected to have a specific
activity well below the trigger point of 10 Bq/g and will therefore
not be deemed as Class 7 Dangerous Goods for transportation
purposes. Note that this concentrate does not leave the site; it is
fed directly to the hydrometallurgical plant.
Radionuclides (Th, U and the decay nuclides) will be removed
during the hydrometallurgy refining stage to produce a
radionuclides-free MREC.
Altona will develop a comprehensive radiation management plan
and undertake regular monitoring and regulatory compliance of
radioactivity levels of all activities including exploration,
mining, processing and tailings disposal.
8.2. Closure and remediation
The intent for closure planning at the Project is that disturbed
areas will be rehabilitated and closed in a manner to make them
physically safe to humans and animals, geotechnically stable, and
geochemically non-polluting/ non-contaminating. It is the Company's
intent that a sustainable solution is agreed upon for post-mining
land use, without unacceptable liability to stakeholders.
In addition, environmental rehabilitation will be ongoing
throughout the LOM. Decommissioning activities are likely to
include the following:
-- Dismantling of buildings and infrastructures.
-- Rehabilitating haul roads and hard stand areas.
-- Ensuring access to the void left from open pit mining is restricted.
-- Reprofiling slopes and top surfaces of waste rock dumps,
stockpiles and TSF to ensure stable landforms.
-- Revegetation of previously disturbed areas with indigenous vegetation.
9. Project costs and economic analysis
Snowden Optiro has undertaken a real financial model for the
Project. The base date for all financial inputs is 1 September
2023. All values reported in this section are real; and all
diagrams and tables have been generated from the financial model.
ROM material and mineralisation are used interchangeably in this
section.
A basis of estimate and exclusions are referenced in Section
11.2 and 11.3 respectively, for capex and opex.
A mine schedule has been undertaken by Datamine and reviewed by
Snowden Optiro. Proposed ROM steady state production of 0.75 Mt/a
is reported for a mine life of about 20 years. A tail-cut has
reduced the Project mine life to 18 years and is referenced
accordingly as the LOM in this report. Planned steady-state is
reached in Year 1 of mining production.
Long-term CIF (China) metal prices calculated as the average of
Adamas Intelligence forecast (Adamas Intelligence, 2023) for the
period 2024-2040 low case scenario have been applied as
follows:
-- Praseodymium oxide price of $148,000/ t
-- Neodymium oxide price of $156,000/ t
-- Terbium oxide price of $1,937,000/ t
-- Dysprosium oxide price of $440,000/ t.
Gross revenues total $3,670 million over LOM. Neodymium and
praseodymium comprise the bulk of planned gross revenues (86%)
along with dysprosium and terbium (14%); no value has been ascribed
to the other 13 REOs, primarily cerium and lanthanum. A payability
of 90% on the four primary elements in the sold MREC has been
applied.
Net revenues include a State royalty of 3% on gross revenues;
and payabilities of 90% on MREC product sold. Total MREC produced
is 270.7 kt over LOM or 15.0 kt p/a, with an equivalent contained
TREO volume of 148.9 kt over LOM or 8.3 t p/a. Net revenues total
$3,193 million over LOM.
The planned LOM opex and unit opex is shown in Table 1.3 .
Process opex accounts for 74% of total opex over LOM.
Table 1 . 3 Planned LOM opex for the Project
Opex item Value ($ Unit cost ($/t Unit cost ($/t
M) ROM) MREC)
Mining 152 11.3 563.0
Process 1,127 83.7 4,164.3
Overheads/ shared services 160 11.9 591.0
Off-mine 80 5.9 294.3
Total 1,519 112.8 5,612.6
---------------------------- --------- --------------- ---------------
Note: MREC - Final Mixed Rare Earth Carbonate product
The total initial and sustaining capital for the Project was
estimated to be $339.3 million, which includes project execution;,
engineering, procurement construction management (EPCM),
contingency and sustaining capital costs. Initial capital is
estimated to be $276.3 million and includes all capex over the
period October 2023 to December 2028. The initial capital is
summarised in Table 1.4 .
Table 1 . 4 Initial capital summary
Initial capital item Value ($
M)
Project mobilisation and camp construction 4.0
Bulk and other infrastructure 31.3
Direct plant costs 150.0
Indirect plant and EPCM costs 35.0
Tailings dam 18.0
Waste rock dump 2.0
Mining infrastructure, pre-production
and mobilisation 14.0
Exploration, evaluation, Owners Team and
sterilisation drilling 22.0
Total initial capital 276.3
-------------------------------------------- ---------
Note: EPCM - Engineering, procurement, construction management;
rounding has been applied to select initial capital items.
For the LOM, debtors days of 30 days has been applied, creditors
of 30 days (mining and process opex) and 15 days on inventories
(select mining and process opex).
A production tax or royalty is payable based on the value of the
mineral extracted, with an applicable royalty of 3% for other
minerals. Total State royalties over LOM is $110.1 million and have
been included under net revenues.
A corporate tax of 32% on cashflows (after the applied WPT) has
been applied in the financial model. Total corporate tax over LOM
is $372.5 million.
Provision has been made under Owners costs, for customs and
duties; although there is a strong likelihood that no customs will
be payable during the initial years of construction, ramp-up and
first two years of steady-state production.
No government free carry has been applied to the financial
model.
No capital gains, withholding or transaction tax has been
applied.
Snowden Optiro is not aware of any municipal fees or rates that
are to be applied.
9.1. Net present value (NPV) and internal rate of return
(IRR)
The NPV of the Project is $283.3 million, based on a real
discount rate of 8%. An NPV of $149.6 million is reported using a
real discount rate of 12%. A post-tax IRR of 25% and a payback from
the construction start date of 4.5 years, and a payback from first
TREO production of 2.5 years is reported. An operating cashflow
margin of 42% is noted. Project earnings before interest, tax,
depreciation and amortisation (EBITDA) would effectively be
operating cash flows (no capital expenditure, tax, interest,
depreciation nor amortisation expenses have been included).
Operating cashflows would include all realisation costs, on- and
off-mine expenses and royalties. The planned LOM EBITDA will be
$1,674 million; and planned annual EBITDA is $93 million.
9.2. Sensitivity analysis
Using an NPV of $283.3 million with an applied real discount
rate of 8%, the Project is most sensitive to revenue (price,
recovery, grade and exchange rates), less sensitive to opex and
least sensitive to capex ( Figure 11.6 ). The sensitivity analysis
shows that the Project is more sensitivity to capital than other
benchmarked projects.
9.3. Summary of key Project parameters
A summary of key Project parameters is shown in Table 1.6.
Table 1 . 5 Forecast key Project parameters
Parameter Unit Value
Ore processed Mt 13.5
TREO ROM grade (after
dilution) % 2.30%
MREC produced Kt 270.7
Initial capex $ M 276.3
Sustaining capex $ M 63.0
Opex LOM $ M 1,519.3
Opex per sold MREC $/t MREC 5,612.6
Gross revenue LOM $ M 3,670.2
Net revenue LOM $ M 3,193.1
EBITDA LOM $ M 1,673.8
Gross revenue per
tonne MREC $/t 13,558.4
Net revenue per tonne
MREC $/t 11,795.8
Payback from first
MREC Years 2.5
Post-tax NPV(8) $ M 283.3
Post-tax NPV(10) $ M 207.0
Post-tax IRR % 25%
Operating margin % 42%
----------------------- ---------- ---------
Note: TREO - Total Rare Earth Oxide; ROM - Run of mine; MREC -
Mixed Rare Earth Carbonate; EBITDA - Earnings before interest tax,
depreciation and amortisation; opex - operating expenditure.
9.4. Upside scenario
An upside scenario with higher long-term metal prices has been
undertaken. No changes in production, opex, capex or discount rates
were made to the financial model. The long-term metal prices
applied are as follows:
-- Praseodymium oxide price of $174,000/ t.
-- Neodymium oxide price of $183,000/ t.
-- Terbium oxide price of $2,083,000/ t.
-- Dysprosium oxide price of $474,000/ t.
Total gross revenues of $4,258 million are reported over LOM for
the upside scenario ; with planned net revenues of $3,704
million.
The NPV of the upside scenario is $409.9 million, based on a
real discount rate of 8%. An NPV of $231.3 million is reported
using a real discount rate of 12%. A post-tax IRR of 32% and a
payback from the construction start date of 4.0 years, and a
payback from first TREO production of 2.0 years is reported. An
operating cashflow margin of 50% is noted.
10. Project execution
A high-level planned schedule has been undertaken for the
overall Project. Key milestones are highlighted in the Level 1
schedule ( Table 1.6 ). The schedule was based on industry
benchmarking, scope of work and a general deliverables list.
Snowden Optiro assumes a seamless advancement between the various
phases, as the Project advances. The overall schedule is five years
to first TREO being produced, which includes 18 months for a PFS,
one year for a FS, two years construction and a six-month
production ramp-up. Project financing will be applied for, for
pre-production funding and Project construction.
An engineering, procurement, construction management (EPCM)
execution strategy has been recommended for the Project.
Table 1 . 6 Planned milestones for the Project
Milestone Milestone date/ duration
Prefeasibility study 18 months to March 2025
Submission of mining concession Q4 2023
application
Feasibility study 12 months to March 2026
Value engineering, FEED and Nine months to December 2026
financing
EPCM tendering November 2026
Early works commencement December 2026
EPCM award January 2027
Construction commences Two years to December 2028
First TREO to be produced December 2028
Production ramp-up Six months to June 2029
Steady state of 187.5 kt per Q3 2029
quarter (750 kt/a)
-------------------------------- -----------------------------
Note: FEED - Front end engineering design; EPCM - Engineering,
procurement, construction management; TREO - Total Rare Earth
Oxide
Source: Snowden Optiro, 2023
11. Recommendations
It is expected that Altona will undertake a prefeasibility study
(PFS) as the next stage of project development, based on the
positive outcome of this CPR and Scoping Study.
11.1. Exploration
Snowden Optiro's recommendations for continued exploration
include:
-- Use the improved mineralisation model to attempt identifying
new targets, including blind targets.
-- Continue improving mineralisation model through mapping as well as academic research.
-- Exploration drilling at T3, T9, T11, and any other potential high-grade target
-- MRE update
-- Data centralisation
The resource update should cover tonnage increase, as well as
improve the level of confidence within the pits to Measured and
Indicated.
11.2. Geometallurgy / processing
Geometallurgy and process flowsheet design will be a priority
activity during the PFS. The Scoping Study sighter testwork forming
part of this Scoping Study provides a preliminary assessment based
on a possible flowsheet. Ongoing work includes:
-- Mineralogical and geo-metallurgical assessment.
-- Beneficiation flowsheet development.
-- Hydrometallurgical flowsheet development.
It is anticipated that the ongoing testwork will extend over a
nine to 12-month period.
11.3. Mining
Snowden Optiro's recommendations include:
-- Geotechnical studies:
Drilling program
Geotechnical logging of core
Off-site testing of core
Structural interpretation
Slope stability assessment
-- Mine planning and ore reserve:
Pit optimisation and schedule
Scenario analyses
Cost assessments
Ore reserve development
Once adequate testwork has been completed to reliably inform
geotechnical models, recovery and process cost parameters, more
detailed work can be carried out.
11.4. Environmental studies
This will involve starting baseline studies as soon as possible
and planning to reach environmental compliance as part of the
Mining Concession application (EMP, ESIA). This will include
environmental, social and governance (ESG) planning to a World Bank
level. Minimisation of the carbon footprint of the proposed product
can be minimised through locally available sourcing.
11.5. Infrastructure studies
This will involve multiple trade-off studies; including
logistics optimisation (road vs different rail options), and power
sources mix optimisation (based on capex, opex and carbon
footprint).
11.6. Tailings / waste management
The PFS study will require a detailed site selection and
associated surface geotechnical investigations. A key requirement
will be to conduct geochemical static and kinetic leach testing on
the types of ore / tailings / waste to determine the future design
/ lining of the TSF. The planned PFS will identify several options
and determine the best site or sites for tailings disposal.
For waste rock disposal, the prefeasibility scope will include
hydrogeological testing, site selection, geotechnical and chemical
testwork. Both tailings and waste rock will require detailed design
criteria and opex / capex costings.
11.7. Marketing
As part of the PFS, Altona will join a Responsible Sourcing
organisation and integrate Responsible Sourcing processes. The
Company plans to develop marketing side of business as part of PFS,
which may include offtakes and integration with rest of world
supply chains (existing and projects).
11.8. Project economics
Relevant studies need to be undertaken to improve granularity
and accuracy of the opex and capex estimates, production,
payabilities and planned recoveries.
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