Page 46 - pd285-Aug20-mag-web_Neat

noRtHeRn teRRItoRY sPotLIGHt

Arafura lines up final hurdle

ong-term Top End resident Arafura Re- mode ahead of this month’s election. be supported by Wave International, which
Lsources Ltd is just one regulatory hurdle Brescianini said an “umbrella agreement” completed last year’s DFS on Nolans.
away from having a clear path to develop- which sits on top of the Native Title agree- Arafura has also entered a non-binding
ment for its Nolans project. ment – which is still to be officially regis- strategic alliance with USA Rare Earth LLC
A three-way agreement between Arafu- tered and can take up to 12-18 months to over the potential use of that company’s
ra, the Native Title holders of the Nolans be formally processed – provided authori- proprietary technology on non-preferred
project and the Central Land Council was ties with the jurisdiction to grant the relevant material such as dysprosium and terbium
formally executed in late June, paving the mineral leases. which will be part of the Nolans product
way for the grant of the all-important min- Arafura is proposing to develop a 39-year suite.
eral leases by the Northern Territory Gov- rare earths operation which houses the No- “Most of the focus is on our NdPr oxide
ernment. lans mine and beneficiation, extraction and product, that’s going to be the lion’s share
These mineral leases will host the mine, separation plants all within a single footprint. of our revenue, but it’s important to note we
process plant, tailings facilities, accom- The recently updated project economics in- then produce a couple of other rare earth
modation village, borefield and infrastruc- clude a capex of $US726 million and opex products, including a heavy rare earth prod-
ture elements of the proposed rare earths of $US27.02/kg NdPr, based on defined ore uct as a mixed product in which we’re not
operation at Nolan, about 135km north of reserves. This is reduced to $US23.71/kg separating out the individual rare earths,”
Alice Springs. Each lease carries a term of NdPr when inferred resources are incorpo- Brescianini said.
25 years. rated into the Nolans mining inventory. “What USA Rare Earths bring to the ta-
Execution of the formal Native Ti- ble, potentially, is some low-cost tech-
tle agreement took place some four nology that allows us to separate out
months after the final consent meeting the individual heavy rare earths from
was held on February 26, just weeks that non-core product. We haven’t
before nationwide travel restrictions come to any commercial agreement
were enacted to prevent the spread of as to what the arrangement will be
COVID-19, particularly into potentially should their technology work for our
vulnerable indigenous communities. product, that’s still to be piloted, but
Despite the longer than expected we’re doing some cooperation to see
waiting period, Arafura general man- if their technology could work for us.”
ager of exploration and business de- Securing project finance is the next
velopment, Richard Brescianini, said major milestone for Arafura, which has
the company was always confident identified binding offtake deals as inte-
the local communities to Nolans would gral to that process.
eventually sign on the dotted line. Brescianini was confident the com-
“Trust is a big factor in any of these pany is “a reasonably fair way down”
types of negotiations and because that funding process, with Arafura
we’ve known these groups since as far targeting completion of all funding ar-
back as 2003, we have that relation- rangements for Nolans by the end of
ship so they trust us to deliver what we the calendar year.
say we’re going to deliver,” Brescianini “Securing the debt for the project
said. will happen first, but that debt has to
“From early April through to mid-to- be supported by commercial offtake,
late May and even into early June, the which will be done in jurisdictions that
Central Land Council – to their credit require our NdPr oxide product to go
– did a lot of work in the background into their industries,” he said. “The
to modify their protocols, with the con- industries we’re talking about are the
sent of their Minister, so that went re- Arafura has secured a Native Title agreement for its Nolans automotive industry and wind energy.
strictions were lifted, everything was rare earths project. Pictured is Archie Glenn (seated), There’s a whole lot of other sectors
ready to go and all they had to do was Tony Scrutton and James Glenn, who are the senior Native where we could look at offtake, but
physically get out on the road to go and Title holders representing the prescribed body corporates ultimately that’s where we want to
get those final signatures on the agree- which are parties to the agreement place the bulk of our product in binding
ment. offtake.
“What that all means is we now just “All of that engagement around
need that one last approval which gives us Current reserves support production of offtake and financing is happening as we
security of tenure over our development almost 4,000 tpa NdPr oxide, generating speak and has been happening over quite
leases for a minimum 25 years. By contrast, a post-tax NPV of $782 million and IRR of some time. These are the relationships that
Lynas [Corp Ltd] operate on three-year li- 17.29%. Payback will occur during the fifth you build over long periods.”
censes up in Malaysia.” year of operation. Brescianini said the company was also
No timeline has been set for the grant In early June, Arafura raised $7 million via investigating the potential for governments,
of the mineral leases, although Arafura is a placement which will underpin early engi- both in Australia and abroad, to provide
hopeful something will eventuate before neering works, including some pre-FEED funding support which would ensure No-
the end of July when the incumbent NT activities. KBR has been appointed lead lans gets off the ground.
Government is expected to enter caretaker project management consultant and will
– Michael Washbourne

Page 46 aUgUST 2020 aUSTRaLIa’S PaYDIRT