Alkane Resources (ASX: ALK) is a multi commodity mining and exploration company focused on the Central West of New South Wales, Australia. Alkane's shares are also listed as American Depository Receipts (ADR's). The company has built a gold resource inventory of over 1 million ounces at McPhillamys near Orange in a venture with Newmont Australia.
The Company has an advanced feasibility study in progress for the development of the Dubbo Zirconia Project which is based upon a very large in-ground resource of the metals zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements.
Alkane Resources upgrades zirconium and heavy rare earth Reserves at Dubbo Zirconia Project
With an earlier feasibility study estimating an EBITDA of A$6 billion and an NPV of A$1.2 billion, Alkane's DZP will become a significant and strategic source of zirconium and heavy rare earths. A revised 1Mtpa project financial assessment due for completion in early 2012 will likely update projections.
Alkane Resources (ASX: ALK) has delivered an ore reserve upgrade to the Dubbo Zirconia Project in New South Wales that will support a 36 year mine life at from a proposed 1 million tonnes per annum production parameter.
The project is already positioned to be a long term supplier of zirconium and heavy rare earth products when it begins production in 2014, which is one of the world’s largest known in-ground resources of the metals zirconium, hafnium, niobium, tantalum, yttrium, and rare earth elements.
The Proved and Probable Ore Reserves at the Toongi deposit are now 35.9 million tonnes at 1.93% zirconium, 0.04% hafnium, 0.46% niobium, 0.03% tantalum, 0.14% yttrium, 0.74% rare earth oxides (0.9% total rare earth oxides).
Where the story gets really interesting for Alkane is that the reserves will support an initial 36 year open pit life at 1 million tonnes per annum production.
This will provide a major boost over an earlier Feasibility Study which is based on a 20 year cash flow to indicate a $1.2 billion NPV.
The economics therefore will be even higher, with the highly anticipated revised financial assessment on schedule for delivery to the market in early 2012.
New drilling targeting resource expansion
Deep diamond core testing of Toongi deposit and reverse circulation drilling of the nearby and previously untested Railway deposit have been scheduled to commence in early 2012, which provide the potential to significantly expand the resource potential of the project.
Negotiations for heavy rare earth concentrate underway
Negotiations are continuing with a number of parties expressing interest in signing agreements with Alkane for the heavy rare earth concentrate and the light rare earth concentrate.
All of the zirconium and niobium products have now been committed through agreements which account for 61% of the revenue for the 1 million tonne annual operation.
Demonstration Pilot Plant
The Demonstration Pilot Plant has been operating at the laboratory facilities of ANSTO Minerals at Lucas Heights south of Sydney since May 2008 and to date has recovered substantial quantities of zirconium products and niobium concentrate.
The plant has continued to operate for short periods to trial engineering and process innovations, and has also demonstrated recovery of an yttrium rich heavy rare earth concentrate and a light rare earth concentrate.
In September this year the project demonstrated robust financial returns. While resources identified to date will permit the project to produce for over 100 years, the Feasibility Study estimated an EBITDA of A$6 billion and an NPV of A$1.2 billion based on an initial 20 year mine life.
Recoveries
Based upon the 1 million tonne per annum project, the product outputs derived from demonstration plant mass balances, overall recovery from ore to finished products were estimated to be 82% for zirconium, 66% for niobium and an average of 45% for rare earth elements.
There remains significant potential to improve the rare earth circuit and overall recoveries of individual rare earths within the concentrates.
Recent test work has already demonstrated improved heavy rare earth recoveries, and this work will continue in parallel with the project development program in the first half of 2012.
