Peak, which describes Ngualla the one of the largest and highest-grade undeveloped rare earth oxide carbonatite projects in the world, decided in August to forge ahead with the project as a standalone option, deferring plans to develop a refinery at Teesside in the United Kingdom while it assessed the potential for building the plant in Tanzania.
By selling its high-grade rare earth concentrate to third parties Peak has reduced its upfront costs and risks, and with the option of building its plant in Tanzania, could help keep the government sweet.
The Tanzanian state is set to be a 16% free-carried partner in the development.
The BFS builds on an earlier bankable study that was completed in 2017.
The new Ngualla study has scaled up production by 14%, and delivers a post-tax net present value of US$1.48 billion with an equity internal rate of return of 37.3% based on expected pricing for neodymium and praseodymium.
Ngualla has an upfront capital cost of $321 million, with an initial 24 years of mine life based on reserves of 18.5 million tonnes grading 4.8% total rare earth oxides and average production if 16,000t of concentrate grading 45% TREO, with NdPr about 22% of the total.
Resource of 214Mt at 2.15% TREO suggest future upside.
The BFS shows annual earnings of A$711 million and an annual cashflow of $458 million.
The earlier BFS had capex of US$365 million, an NPV of $612 million, an IRR of 22%, and earnings of $150 million per annum.
Peak is now running front-end engineering and design work and optimisation studies, and wants to be in a position to take a final investment decision by May 31, 2023.
The company's new executive chairman, ex-Fortescue Metals Group deputy CEO Russell Scrimshaw, said with the BFS completed and the framework agreement with the Tanzanian government being finalised, Ngualla was positioned as the next major global rare earth producer in a market with rising demand, where prices are expected to rise.
Forecasts used by Peak suggest NdPr oxide pricing will increase to $200/kg by 2025 and $247/kg by 2035.
NdPr oxide accounts for over 93% of Ngualla concentrate basket value.
Peak and its debt adviser, WaterBorne Capital, are talking to a prospective syndicate of export credit agencies as well as development and commercial banks for funding.
Shenghe Resources has signed a non-binding agreement to take 75-100% of offtake over the first seven years.
The Chinese firm, which owns 19.1% of Peak, has also offered to provide technical support, and potentially buy in at the asset level.
Peak wants to produce its first concentrate in mid-2025.
Shares in the company were up 4% this morning to A47.5c, valuing it at $109 million.
It has traded at 29-92.5c over the past year.
