Pre-feasibility lifts Rare Element Resources

A prefeasibility study on the Bear Lodge project in Wyoming suggests the rare earths project is technologically feasible and offers robust returns on invested capital, Rare Element Resources (RES-T, REE-X) says. The news sent the junior’s shares up 6¢ or 1.06% to close at $5.73 per share.

The study looked at a variety of aspects of the project including infrastructure, open-pit mining, mineral concentration and hydrometallurgical processing and analyzed production schedules based on a nominal model or base case and a maximum model. The nominal model considered 23,111 tons per year of concentrate production at 45% rare-earth oxide (REO) for a mine life of 19 years and the maximum model evaluated production of 73,080 tons per year of concentrate at 45% REO for a mine life of 10 years.

Under the nominal case scenario, Bear Lodge yields a pre-tax internal rate of return (IRR) of 44.9% and a net present value (NPV) at an 8% discount rate of $1.7 billion with payback of initial capital costs ($375.2 million) in two years.

Under the maximum case, the pre-tax IRR jumps to 99.3% and the NPV to $4 billion with the payback of initial capital in one year.

Total life-of-mine capital costs for the project have been estimated at $445.9 million including a 25% contingency of $89.2 million. The initial capital cost of $375.1 million includes $127.2 million for the  Physical Up-Grade (PUG) plant and mine (including replacement capital) and $133.8 million for the hydromet plant.

Initial capital expenditures are expected to span the first four years, with infrastructure heavily weighted in the first two years and plant construction heavily weighted in the second two years, the study outlines.  

The nominal base case and the maximum case both assumed an average price of $17.36 per kilogram of bulk mixed rare earth concentrates with an average grade of 45% total rare-earth oxide (TREO). The price is a three-year trailing average of prices from the Metal-Pages Bulletin.

The output concentrate produced from the Bull Hill mine will be a “basket mix” of individual rare earth oxides and consequently a 40% discount was assumed for the pricing in the company’s economic models.

The economic analysis also calculated that the break-even cash flow price for rare earth concentrate is $4.42 per kilogram, about 75% below the $17.36 price used in the models. The price required to achieve an IRR of 30% is about $11.70, which is 33% lower than the price assumed for both cases.

The mine will be operated as a conventional truck-shovel open-pit mine and the development of the project will be made up of two components: the open-pit mine operations and PUG plant on-site at the Bull Hill mine and the hydromet plant (hydrometallurgical) at Upton, Wyoming, next to the rail line. Upton is 64 km from the Bull Hill mine.

The PUG plant will maximize the rare earth ore and turn out a pre-concentrate using a gravity separation and screening and wash process. This pre-concentrate will be taken to the hydromet plant at Upton,  where a rare earth concentrate will be produced.

The PUG plant is designed to process up to 1,000 tons per day of high-grade oxide material and 1,000 tons per day of oxide carbonate and stockwork material, which will be blended to meet mine pit production plans and market demands.

The PUG process uses a series of crushing, attritioning, washing and screening methods to concentrate the rare earth fines and reduce the physical mass. Harder stockwork ores are used to break up the clay-like oxide ores. There are areas of the Bull Hill mine that contain variable amounts of weathered oxide ores and other areas that contain intermittent stockwork. Each of these ore types has a different upgrade percentage and mass reduction in the PUG circuit.

The product streams from the different ore types will combine to produce a pre-concentrate with the overall processing strategy to maximize the rare earth grade and recovery and minimize the mass or tonnage of the pre-concentrate that is transported to the hydromet plant.

The hydromet plant has been designed with two parallel circuits to process the pre-concentrate from the PUG plant. The nominal rare earth oxide production rate is expected to be about 10,400 tons per year. The hydromet process will use a hydrochloric acid solution, heated to 90 degrees Celsius to leach the rare earth elements from the concentrate. Iron is then precipitated from the solution, and calcium and manganese are extracted by an ion exchange process. The rare earth elements are finally precipitated as carbonates through the use of sodium carbonate.

The nominal or base case and the maximum case used only the Bull Hill deposit.

Rare Element Resources says exploration will continue at the outlying deposits where drilling has indicated that  heavy rare-earth elements appear to be more prevalent. If these deposits are found to contain economically feasible mineral reserves and resources, then there would be the opportunity to either prolong the life of the mine or increase annual production of rare earth element concentrate.

Life-of-mine operating costs under the nominal base case have been estimated at $254.73 per ton and $247.00 per ton for the maximum case.