Alkane Resources (ASX: ALK; OTCQX: ANLKY and ALKEF) will not remain under the radar much longer. 

The company is working on a range of financing options and expects to give the green light later this year to its legacy-making US$1 billion Dubbo Zirconia Project (DZP).

The DZP contains one of the world's largest in-ground resources of rare metals and rare earths and is expected to process more than 1 million tonnes of ore a year over a mine life of 70 years.

"The Dubbo Zirconia Project is the big end game for us," managing director Ian Chalmers said, as the culmination of more than 15 years' work nears fruition.

The DZP has advanced to build-ready status thanks in part to solid cashflow from Alkane's Tomingley gold project, also in central western New South Wales. 

Alkane has been mining Tomingley for just over two years and Chalmers said the mid-sized project was on track to produce its targeted 70,000 ounces of gold and AUD$20 million cashflow this calendar year.

The dual-listed company plans to push Tomingley underground in 2017 and continue exploration to extend the minelife to 10 years.

But its focus is on the DZP, which already has mining and environmental approvals and a new breakthrough agreement on toll treatment.

It will produce a strategic supply of rare earths and rare metals, including zirconium, yttrium, niobium, tantalum - and importantly, hafnium.

The company has notched up two significant milestones towards development - proving it can separate hafnium from its ore - and signing a letter of intent governing toll treatment of rare earths with a Vietnamese company.

"Hafnium is a really exotic metal," Chalmers explained.

"It's been known for some time but new applications have only started to kick in in the last 5-10 years.

"We were approached by international aerospace companies about 18 months ago because with the addition of 2% hafnium to a jet engine's turbine, the alloy can withstand temperatures of 2000 degrees centigrade rather than 1400.

"This means you get better output for same amount of fuel, create less emissions and the aircraft can fly faster and higher.

"For the same reasons of increased efficiency, hafnium is also being sought for industrial gas turbines and there is actually a bigger demand for them than jet engines."

Chalmers said the company then expanded its flow sheet to extract hafnium, at the pilot plant at the Australian Nuclear Science and Technology Organisation, which created three further benefits.

"We then end up with a very pure zirconium product, which enables us to tap into higher value zirconium markets than we'd previously considered," he said.

"Also, the additional revenue from hafnium will add something like US$50 million to the revenue stream - and it brings us in contact with a raft of big aerospace and industrial companies who have an interest in hafnium and possibly in securing a supply chain for other strategic metals outside China."

Chalmers said the toll processing Letter of Intent between Alkane's 100% subsidiary Australian Zirconia Ltd and Vietnam Rare Earth JSC (VTRE), announced earlier in April, was a significant breakthrough.

The agreement offers the opportunity to participate in downstream integrated rare earths processing and the operating costs are comparable or lower than those in China.

"This ensures our processing costs will be world competitive," Chalmers said.

"One issue in the rare earth space has always been whether you can compete with China in terms of output and cost.

"The answer now is ‘yes we can' so that's why this agreement is a big step forward."

VTRE is a specialist Vietnamese chemical and advanced materials company which operates a rare earths processing plant near Hanoi.

"In our base case model, we produce a rare earth concentrate that contains 14 individual rare earth metals," Chalmers said.

"We've been looking around for place to do toll treatment outside China for strategic supply reasons.

"We can now stand up and say we satisfy stringent supply criteria and we can provide a whole suite of metals - and that leads us down strategic investment paths."

The company is continuing to discuss financing options for the DZP with potential strategic partners, off-take partners and Export Credit Agencies, with the assistance of the project's financial advisors Sumitomo Mitsui Banking Corporation.

Chalmers said the advantage of a government-backed export credit agency was its ability to offer long-term loans at very competitive rates, provided the project was of strategic value to the agency's country.

"We've had a lot of positive interest from export credit agencies in Asia and Europe and we think we could get up to 60% of our project funding through these agencies," he said.

"By the middle of this year, we expect to have a clear understanding of how we're going to finance the DZP through the range of options we're investigating."

Alkane appointed Finnish group Outotec in 2015 to undertake an early contractor involvement towards improving design and construction methodology for the DZP's processing plant.

Chalmers said the market had been slow to respond to the DZP gaining momentum and was yet to fully appreciate Alkane's scale and diversity.

"We're one of the few so-called rare earth companies who's survived at a time when a lot of Canadian and Australian companies have dropped out or slowed down," Chalmers said.

"That's really because of the very strong difference that the Dubbo project brings, it's not just a rare earth project, the other metals including the hafnium, niobium and zirconium are very important to it."

He said the DZP's diverse output of more than 10 critical metals and oxides would enable a robust revenue stream as the project ramped up by 2020 and the specialty metal market stabilised.

"The DZP's diversity of products and markets also provides stability of revenue streams over a broad base as different markets cycle through ups and downs over time," he said.

Beyond the DZP, the company's diversity looks set to grow as it continues to explore for copper and gold in NSW on its smaller project holdings.

Alkane's most advanced copper-gold exploration projects are its 100%-owned Wellington and Bodangora prospects and the Elsienora farm-in, all located east of Tomingley. 

Meanwhile, its gold production from Tomingley has coincided with a prime time for Australian gold producers due to lower costs, higher prices and a favourable exchange rate.

Alkane is debt-free and had more than AUD$14 million in the bank at the end of the December quarter, with $4.4 million of bullion on hand.

"I think Alkane is in a strong position," Chalmers said.

"The Dubbo Zirconium Project is now construction ready and poised to begin, subject to financing.

"We have reached the point where we could start building tomorrow."