Arafura Resources Limited (ASX:ARU) (OTCMKTS:ARAFF) (FRA:REB) focused its efforts on product offtake and project funding at the Nolans Neodymium-Praseodymium (NdPr) Project during the six months ending December 31, 2020 and in 2021, continued to advance offtake discussions with potential customers.
With the assistance of European advisors, Arafura continues to advance its rare earth product offtake arrangements with parties in Europe, Japan, South Korea, the USA and China, and for phosphoric acid product with parties in India.
There is strong alignment between the Nolans project and the Australian Government’s critical mineral initiatives.
Arafura received strong endorsement of Nolans from the Territory Economic Reconstruction Commission (TERC) to advance debt funding opportunities with EFA and NAIF.
A review and gap analysis of the company’s sustainability policies, plans, and procedures was completed during the period by sustainability specialists from KBR.
The review was completed with reference to the Equator principles, International Finance Corporation’s performance standards and the United Nations sustainable development goals.
It determined Arafura has a significant number of policies, plans and procedures already in place that substantially satisfies the various international principles and standards they have been reviewed against.
Some gaps against these principles and standards were identified, resulting in the preparation of an action plan to guide planned work focussed on addressing these identified deficiencies.
This work is currently being incorporated into a summary report for use in the funding activities and will ensure that all the relevant principles are met.
In July 2020, Major Project Status for the Nolans Project has been renewed for a further three years by the Australian Government.
Major project status recognises projects that are economically and strategically significant to Australia and allows a single-entry point for a range of Australian Government coordination services.
Arafura received positive feedback from its submission to the Territory Economic Reconstruction Commission (TERC) which is tasked with providing recommendations to the Chief Minister and Northern Territory Government on opportunities to assist the Territory’s economic recovery from COVID-19.
Following discussions, it is the company’s understanding that Nolans is one of the highest rated projects that has been put forward to the TERC for consideration given its strategic significance and the economic value and long-term job creation that it would deliver to the Territory.
The Nolans Project Territory Benefits Plan, which doubles as an Australian Industry Participation plan and now incorporates the Local and Indigenous Procurement Plan, was submitted to the Northern Territory Government for final review.
Once feedback is received and any required amendments made, the document will be formally lodged for approval.
First phase of engineering works completed
During the period, Arafura completed the first phase of the early engineering works (EEW) scope of work.
This phase of work has validated the capital costs for both the beneficiation plant and the sulphuric acid plants.
Work is continuing with the validation of the capital costs for the hydrometallurgical plant with additional resources being engaged to provide further detail and clarity.
The integrated project management team (IPMT), which includes KBR and Wave International personnel progressed execution readiness activities across several fronts in preparation for the early contractor involvement (ECI) phase.
This included project execution and contracting plans, contract package listings, scopes of work for key contract packages, preparation of over-arching battery limit definition documents, basis of design documentation, risk management plan and planning and scheduling of project early works.
Following completion of the Nolans Project flowsheet piloting program in Q1 2020, final REO products were validated by supply chain partners across the globe during the period, including in Europe, China and Japan, and deemed to be well within the required key specifications for use in their processes.
Preparation of these products involved piloting of the project’s beneficiation, phosphate extraction, phosphoric acid production, rare earth extraction, rare earth processing and rare earth separation process stages to produce final NdPr Oxide, SEG-HRE (middle and heavy rare earth) Oxide and Cerium (Ce) Oxide products, achieving REO and TREO specifications indicated in the table below.
In all cases, the supply chain partners confirmed that Arafura’s products met the required specifications for use in the production environment and/or in their respective downstream applications.
The metallurgical test work for the Nolans Project phosphoric acid pre-leach flowsheet and a program for the purification of cerium hydroxide product with the aim of recovering lost NdPr in the cerium hydroxide product was also completed in the period.
Results of these technology programs resulted in enhancement of the Definitive Feasibility Study and a final process flowsheet for the Nolans Project agreed.
The final flowsheet incorporates changes since the DFS which optimises flowsheet performance, as well as reduces commissioning, ramp-up and operational risk.
Events after the reporting date
Arafura was granted ML 32416 (diversion channel) and ML’s 32411- 32415 (borefield) on February 8 for an initial term of 25 years by the Northern Territory Minister for Mining and Industry to provide exclusive access for the construction, use and maintenance of the borefield to support the operations of the mine and processing plant.
Additionally, the MLs also enable the construction of a water diversion channel around the mining area as required under the project’s environmental approval conditions.