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Northern Minerals eyes globally significant role for Browns Range project amid heightened interest in rare earth elements

Chinese dominance of production, US interest in securing supply and surging dysprosium prices provide the company with a rare opportunity to become the principal supplier of ethically produced rare earth metals.

Northern Minerals Ltd - Northern Minerals eyes globally significant role for Browns Range project amid heightened interest in rare earths industry
Dysprosium is an essential ingredient in the production of NdDyFeB (dysprosium-neodymium-iron-boron) magnets which are used in clean energy and high-tech solutions.

Northern Minerals Ltd (ASX:NTU) is progressing the staged development of its Browns Range heavy rare earths project as global events create a unique moment in the rare earth metals industry.

The company is focused on becoming the first significant rare earths producer outside of China through its landholdings in Western Australia and the Northern Territory.

Its portfolio comprises Boulder Ridge in the NT as well as the flagship Browns Range and John Galt projects in WA.

High-value REE used in magnets and electric vehicles

The 100%-owned Browns Range project has several deposits and prospects containing high-value dysprosium and other heavy rare earths hosted in xenotime mineralisation.

Dysprosium is an essential ingredient in the production of NdDyFeB (neodymium-dysprosium-iron-boron) magnets used in clean energy and high technology solutions.

The rare earth metal is also critical to the production of electric vehicles, with each one using more than 100 grams of dysprosium.

Based on current industry trends, the company understands that demand for EVs may increase to more than 3,500 tonnes per year by 2030.

As more than 98% of dysprosium production is based in China, there is strong interest emanating from the US and globally for new, sustainable sources of supply.

Debt repayments strengthen balance sheet

The company further strengthened its balance sheet this year to date, repaying both its Lind facility as well as its $27 million Brevet research and development loan.

With 2.544 billion shares on issue and 119 million options, performance rights and convertible notes, the company is capitalised at $160 million.

Major shareholders include Citicorp Nominees with 12.3%, ACIIG holding 8.5%, Huatai Mining with 7.3%, Congyan Xue with 5.6% and the remaining top twenty holders holding 28.1%.

The financial focus for the remainder of 2019 is the R&D appeal process underway with AusIndustry as the company repays the Australian Taxation Office a total of $14.5 million in a 24-month payment plan.

Other repayments in coming months include the first quarterly payment of $2.1 million to Sinosteel on October 19 and the JHY convertible note of $4 million on December 19, which will be repaid in cash or shares at the election of JHY.

Drilling resumes after best-ever result

Exploration drilling has resumed at Browns Range, with Northern Minerals starting a new reverse circulation drilling program earlier this week after the previous 17-hole program completed in May delivered the project’s best-ever intercept.

This exceptional result confirmed the high-grade nature of the deposit, intersecting 52 metres at 3,831 ppm dysprosium oxide or 4.15% TREO from 20 metres, including 22 metres at 10,731 ppm or 11.48%.

The new program will comprise 3,000 metres of infill and exploration drilling again at Dazzler and the Iceman prospect, with a further 1,500 metres planned at other targets including Banshee South, Cyclops, Longshot and Rogue.

“Opportunities to increase the value of the project”

Speaking on the resumption of drilling, Northern Minerals managing director & CEO George Bauk said the company was pleased to have the team back on the ground testing new targets.

He said: “We have set the exploration team the challenge of making discoveries that will increase the life of the full-scale Browns Range development out to 20 years.

“The new exploration model and high-quality targets that have yet to be fully assessed present us with excellent opportunities to increase the value of the project.”

Planned exploration to broaden resource base

In the near-term Northern Minerals will continue its exploration efforts, aiming to expand its resource base as it finalises pre-development steps as well as funding arrangements.

The exploration program for 2019 and 2020 will focus on high-grade, near-surface deposits which are unconformity-related.

A $3.5 million program for the remainder of 2019 will include up to the 10,000 metres of RC and aircore drilling, diamond drilling, ground geophysics and resource estimation.

A $6 million program for 2020-2021 will comprise up to 20,000 metres of RC, 4,000 metres of diamond drilling, airborne and ground geophysics, target definition extending into unexplored areas as well as further resource definition and estimation.

Value-adding processing initiatives

The company will also focus on value-adding initiatives such as incorporating its ore sorter to increase feed grade and completing a separation scoping study which is investigating downstream processing of mixed rare earths into separated rare earth oxides.

If successful, the addition of separation technologies will allow Northern Minerals to value-add and increase the range of potential customers.

It also plans to reach nameplate capacity of its pilot plant, as well as testing the plant’s economic and technical viability.

The pilot plant has begun production of heavy rare earth carbonate which will provide production experience and surety of supply for its offtake partner, as well as assisting the company in its evaluation.

Debottleneck project

A debottleneck project was begun after bottlenecks that prevented nameplate capacity being achieved were identified during commissioning through to early 2019.

Work was initially delayed, but a $2.1 million budget was approved in April this year and it is anticipated to be complete at the end of October.

Several items for debottlenecking will be implemented including additional thickener for flotation concentrate, improved tailings pumps and pipelines and various optimisations of the flowsheet design.

Thyssenkrupp offtaking all pilot plant production

In August the company entered into an offtake agreement with thyssenkrupp Materials Trading gmbh for 100% of offtake from the Browns Range pilot plant.

Northern Minerals chief Bauk said the agreement with a global player such as thyssenkrupp was a significant endorsement of Browns Range and of the company.

He added: “The continued shift of new car sales to electric vehicles is gaining traction, with all major carmakers introducing EV variants of existing models over the coming years.

“With this shift, both car and component makers are accelerating plans to invest further down the production chain in order to secure surety of supply.

“Importantly for Northern Minerals, the new offtake agreement doesn’t include any price caps, giving the company full exposure to increasing dysprosium and terbium prices, which are up 60% and 35% respectively over the year to date.”

Focus on implementing separating technologies

Thyssenkrupp will purchase all heavy rare earth carbonate from the pilot plant project, with the flexibility for Northern Minerals to supply heavy rare earths as separated products in the future.

An intention for the parties to work together on implementing separating technologies at Browns Range was agreed, as well as an option for thyssenkrupp to participate in the potential full-scale project.

The offtake agreement will begin immediately with all current stockpiled product and future production included. 

Successful collaboration

Thyssenkrupp chief executive officer Wolfgang Schnittker said Northern Minerals was one of the few suppliers of rare earths outside China so looked forward to a successful collaboration between the companies.

He said: “As the exclusive marketer of these high-quality products we have the opportunity to strengthen our customer relationships long-term and expand our positioning in this field.”

Quick facts: Northern Minerals Ltd

Price: 0.056 AUD

ASX:NTU
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Market Cap: $142.54 m
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