Rare earths are one of the few commodities worldwide for which there is more need now than ever before. This is because they are key ingredients in high-tech products such as mobile phones, computers and rechargeable batteries, which are demanded by consumers around the world on an increasingly global scale. Australian minerals explorer Hastings Rare Metals Limited (ASX: HAS) is confident that this landscape of growing demand will assist with its success as other junior mining companies struggle in the industry’s tough current market conditions.
Hastings has undertaken rare earths exploration in Australia for several years now, but it took a new management team and a change of focus in early 2014 to get the company on the road to mine development. New Chairman Charles Lew led a decision to put the company’s Brockman Project, near Halls Creek in Western Australia, on the backburner and to focus instead on the Yangibana project. Andy Border, Hastings’ General Manager – Exploration, explains that it quickly became clear that the project was prospective.
“After reviewing the existing data we concluded that the Yangibana project was well worth evaluation,” he says. “We’d done a bit of earlier legwork on the project but the real thrust of exploration started in April last year.”
The Yangibana project
Hastings worked efficiently in the year that followed, making short work of verifying the historical data and confirming the resource potential. Drilling completed in the 1980s had shown the Yangibana North resource to be shallow dipping and of a reasonable grade, indicating that further exploration would be relatively inexpensive. Hastings took advantage of this by drilling and preparing a JORC-compliant resource for not only the initial Yangibana North prospect, but also for seven other prospects within the project area.
The company confirmed that Yangibana North had an Indicated Resource of 2.73 million tonnes (mt) of 1.75% Total Rare Earth Oxides (TREO) and an Inferred Resource of 0.73mt of 1.65% TREO. Another prospect, called Bald Hill South, was found to have an Indicated Resource of 1.23mt of 1.22% TREO. Andy comments that the latter was the most exciting discovery Hastings made last year.
“The Bald Hill South prospect is relatively shallow and I expect that we’ll increase its current resource to at least 2.5mt this year,” he says. “It has high neodymium content and this is what we’re really after, due to its high value and increasing use in the rare earths magnets industry.”
The remaining six prospects have Inferred Resources that bring the project’s total JORC-compliant resources to 3.96mt at 1.59% TREO Indicated and 2.83mt at 1.43% TREO Inferred. The total Yangibana resource now stands at 103,000 contained tonnes of TREO, of which approximately 23,500t are neodymium oxide, 6,600t praseodymium oxide, 360t dysprosium oxide and 625t europium oxide. Andy believes that the project’s relatively high concentration of the rare earths required by the magnets industry is a significant commercial advantage.
“We have very good grades of neodymium compared to other projects worldwide,” he remarks. “Neodymium, praseodymium and dysprosium are used in magnets, which we understand is the fastest growing area of rare earth use, and we expect this trend to continue.”
Hastings commissioned independent mining consultant Snowden to complete a Scoping Study for the Yangibana Project in December. It showed that the project had compelling economic potential, with an estimated pre-tax Net Present Value (NPV) of US$900 million to $1.2 billion based on open pit mining at 1 million tonnes per annum (mtpa) over 15 years. The Yangibana Project’s Internal Rate of Return (IRR) was estimated at 62.5% and its capex at approximately $390 million, with payback within 1.6 years of the start of production.
Hastings has applied for three mining leases – Yangibana Main, Bald Hill South and Frasers – covering the bulk of the project’s defined JORC resources. A Pre-Feasibility Study is now underway and scheduled for completion in October/November this year. While there is still much work to do, Andy reports that Hastings’ recent beneficiation tests delivered results “even better than expected”, indicating potential to significantly reduce the capital costs of a hydrometallurgical plant compared with the Scoping Study’s estimate. They indicate that processing concentrates from the Yangibana project would require a hydrometallurgical plant to treat only 70,000tpa, rather than the previously estimated 200,000tpa.
Over the next few months Hastings will decide whether to build a hydrometallurgical plant and if so, where. Either it could be built at the remote project site, which does not yet have power or water, or somewhere else that has these resources to hand. Snowden is assisting in this decision and many others, alongside lead consultant Tetra Tech Proteus. Core Process Engineering is assisting with hydrometallurgical and refining/separation tests, ATC Williams is assisting with decisions concerning the project tailings, waste rock and water supply, and Ecoscape is undertaking environmental studies.
Having completed a capital raise in late 2014 and an oversubscribed share purchase plan in January of this year, raising $8.5 million in total, Andy says that Hastings is “well positioned for moving immediately into the Bankable Feasibility Study for Yangibana once the PFS is complete”.
While Hastings has a solid plan and a full schedule for the year ahead, what comes next has yet to be determined. The one thing that’s certain is the goal to get the Yangibana Project into production. “We’ll need further funding to be able to do that, for which the most important thing will be securing an off-take agreement with an end user,” Andy explains.
“For that, we have a number of options. We will consider whether to sell our beneficiated concentrate of about 20% TREO; upgrade the concentrate to, say, a 35% TREO concentrate, toll processing our concentrate offshore; or invest in a hydrometallurgical plant, whether on site or at another location, which would be capital intensive but provide us with a mixed rare earths carbonate, which is up-saleable and worth considerably more. Going further, in our PFS we will test our ability to produce separate neodymium, praseodymium, dysprosium and europium oxides, which would be even more up-saleable. Our consultants at Core Process Engineering believe that they can make this separation process work, and if so it would put us in a good position.”
The end decision, of course, relies on capital as well as other factors, and it’s possible that things could be done sequentially: with Hastings starting out selling a concentrate, toll processing offshore, and later to processing in-house. “There are a lot of balls up the air,” says Andy. “Wherever they fall, it’s going to be an exciting journey.”