Namibia Rare Earths, a Toronto-listed company, said a preliminary economic assessment (PEA) confirmed the potential for a heavy rare earth mine at the Lofdal project in Namibia.

The PEA confirmed the technical and economic potential of the project located in northwestern Namibia with capital costs set at $156 million for 1 500 tonnes per day open pit mine.

Expansion potential

The PEA indicates that there is considerable potential to expand the current mineral resource.

In addition, the PEA recommended that additional drilling be carried out to provide for an extended mine life in conjunction with a six-month Prefeasibility Study programme, said Namibia Rare Earths.

Economic potential

“This Preliminary Economic Assessment provides shareholders and investors with the first indications of the economic potential of Lofdal,” commented Namibia Rare Earths President Donald Burton in a company statement.

“The PEA confirms the strengths of the project in terms of its favourable rare earth distribution and amenability to conventional mining and processing, and demonstrates its financial strengths in terms of the low capital costs and significant cash flows.”

Clear path forward

Burton said the PEA provides a clear path forward for development of the project. “Management believes that there remains considerable upside to the project as we move towards prefeasibility and feasibility studies.”

Together with on-going metallurgical optimizations, the company will target additional drilling to significantly expand mineral resources and to establish mineable reserves thereby extending the life of mine.

Further, the company would aggressively pursue the most expeditious path towards development of Lofdal through all available options, stated Burton.

Rare earths pricing

A price deck has been developed for 2017 by Technology Metals Research and Core Consultants, based on REO supply/demand projections and pricing models for that year, which would be a reasonable approximation of when Lofdal might be expected to enter production, reports the company.

“Two key assumptions made in the price projections are that China maintains its production targets of 100 000 – 105 000 tonnes in the near- to medium-term, and that there are no sudden or unexpected policy changes in China that would shock the export market as occurred in 2010/2011.”

The economic analysis assumes that the project will be 100% equity financed and the project is expected to pay back initial capital within the first two years.

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