Ara­fura Re­sources

The Australian Mining Review - - CONTENTS - EL­IZ­A­BETH FABRI

ARA­FURA Re­sources has made some in­no­va­tive de­ci­sions on its $US680 mil­lion Nolans neodymium-praseodymium (NdPr) pro­ject over the last few years.

In­stead of tak­ing what would be con­sid­ered a faster route straight to pro­duc­tion, the ex­plorer has had a ded­i­cated team fo­cussed on a de­tailed pilot pro­gram ad­dress­ing key engi­neer­ing and op­er­a­tional con­sid­er­a­tions prior to com­mis­sion­ing.

Ara­fura’s Nolans pro­ject is one of the world’s largest un­de­vel­oped de­posits, with a JORC com­pli­ant re­source of 56 mil­lion tonnes at 2.6 per cent to­tal rare earth ox­ide (TREO) with 26.4 per cent NdPr en­rich­ment that could pro­vide 5-10 per cent of global de­mand of NdPr ox­ide (about 3600 tonnes of NdPr ox­ide pro­duc­tion per an­num) for use in per­ma­nent mag­nets.

Nolans was po­si­tioned in a tier 1 ju­ris­dic­tion, 10km from Stu­art High­way, and ad­ja­cent to the Amadeus nat­u­ral gas pipe­line.

And un­like many of its rare earth peers, which were in ear­lier stages of devel­op­ment, Ara­fura’s Nolans pro­ject was fast ad­vanc­ing with ma­jor pro­ject sta­tus granted, en­vi­ron­ment and Fed­eral ap­provals locked in, and re­sults from a De­fin­i­tive Fea­si­bil­ity Study (DFS) ex­pected be­fore the end of the 2018 cal­en­dar year.

Ara­fura Re­sources Nolans pro­ject man­ager Ste­wart Watkins said the com­ple­tion of the DFS will be a ma­jor mile­stone that will set the team up for pro­ject fi­nanc­ing.

“It isn’t, how­ever, the only work we have on-go­ing in the com­pany at the mo­ment in re­la­tion to the pro­ject,” Mr Watkins told The Aus­tralian Min­ing Re­view.

“Cur­rently we are work­ing with the NT EPA to as­sess the im­pacts of the var­i­ous changes to the pro­ject to that con­tem­plated in the EIS.”

The main change Mr Watkins was re­fer­ring to was the com­pany’s re­cent de­ci­sion to build the rare earth sep­a­ra­tion plant on site in the North­ern Ter­ri­tory as op­posed to an over­seas op­tion in South Korea, orig­i­nally floated by the board.

The sep­a­ra­tion plant, which hosts the fi­nal stages of rare earth pro­cess­ing, takes a mixed rare earth in­ter­me­di­ate (chlo­ride) prod­uct and re­fines it into high-value NdPr ox­ide and other rare earth prod­ucts.

The de­ci­sion to build lo­cally would mean more jobs for the North­ern Ter­ri­tory, as well as as­sur­ance for the man­age­ment team with all op­er­a­tions un­der­taken on home soil.

Ara­fura was also sig­nif­i­cantly ad­vanced in pre­par­ing the Min­ing Man­age­ment Plan (MMP), which draws to­gether the en­vi­ron­men­tal ap­proval con­di­tions, com­mit­ments made in the EIS as well as the de­signs de­vel­oped in the DFS.

“This MMP will then be as­sessed by the Depart­ment of Pri­mary In­dus­try and Re­sources in the NT and once ap­proved will pro­vide Ara­fura with our ap­proval to mine (ob­vi­ously once we have a granted min­ing lease) which is a pre-req­ui­site to com­menc­ing any site works,” Mr Watkins said.

“Fi­nally, in or­der to be granted a min­ing lease, we need to reach an agree­ment with the tra­di­tional own­ers recog­nis­ing the im­pact of our op­er­a­tion on their Na­tive Ti­tle rights.”

Mr Watkins said the com­pany hoped to reach an agree­ment in the first half of 2019, and have the min­ing leases granted soon af­ter.

“Once all these things are com­pleted, and we have the fi­nanc­ing ad­vanced suf­fi­ciently, then we will be in po­si­tion for the board to make a fi­nal in­vest­ment de­ci­sion and the pro­ject team can then com­mence Front End Engi­neer­ing and De­sign (FEED) with our se­lected ex­e­cu­tion part­ners,” he said.

Pi­lot­ing Pro­gram

In par­al­lel to fi­nal ap­provals, the pilot plant pro­gram, un­der­taken at ALS Met­al­lur­gi­cal Ser­vices (ALS) fa­cil­i­ties in Perth, was also in its fi­nal stages.

In Ara­fura’s An­nual Re­port the com­pany’s chair­man Ian Kowal­ick said the pro­gram – de­signed to re­duce ex­e­cu­tion risk – went “above and be­yond the work typ­i­cally un­der­taken by a ju­nior re­source com­pany de­vel­op­ing a min­ing pro­ject”.

Mr Watkins agreed.

“Many typ­i­cal min­ing projects ex­e­cuted by ju­nior com­pa­nies ac­tu­ally in­clude no pi­lot­ing at all, or sim­ple bench scale pi­lot­ing such as locked cy­cle test­ing or the like,” Mr Watkins said.

“In the case of a com­plex rare earths pro­ject such as Nolans we have def­i­nitely had to go above and be­yond the nor­mal level of met­al­lur­gi­cal test­ing car­ried out by ju­niors.”

Mr Watkins said the pi­lot­ing pro­gram – which com­prised seven phases cov­er­ing ben­e­fi­ci­a­tion, phos­phate ex­trac­tion, bulk pre-leach, acid bake, rare earth pro­cess­ing, and the soon to be com­pleted rare earth sep­a­ra­tion phase – had been im­por­tant in a cou­ple of key ways.

“Firstly it pro­vides con­fi­dence that process is not just vi­able but suit­ably ro­bust to be work­able in the real world,” he said.

“Many things that work in a batch on a bench scale with con­tin­u­ous op­er­a­tor at­ten­tion be­come un­work­able when run­ning con­tin­u­ously at a larger scale.

“Se­condly there are as­pects, such as ma­te­ri­als han­dling or ma­te­ri­als of con­struc­tion that just can’t be tested in a batch set­ting.

“And fi­nally, in or­der to test some as­pects, such as solid/liq­uid sep­a­ra­tion, a rea­son­able quan­tity of ma­te­rial is needed and that just isn’t pos­si­ble un­less the pro­cess­ing is done at a rea­son­able scale.”

Mr Watkins said the most im­por­tant as­pect of the pi­lot­ing process by far was the acid bake pilot phase com­pleted in early Au­gust, fol­low­ing a thor­ough pe­riod of com­mis­sion­ing of all unit op­er­a­tions.

“Be­cause of the char­ac­ter­is­tics of the Nolans ore, Ara­fura is able to carry this out at a much lower tem­per­a­ture than tra­di­tional pro­cess­ing,” Mr Watkins said.

“Ad­di­tion­ally we are car­ry­ing it out us­ing pad­dle dyer tech­nol­ogy as op­posed to large ro­tary kilns.

“On that ba­sis it was ex­tremely valu­able to carry this out con­tin­u­ously at scale and to al­low us to prove up the equip­ment and also pro­vide de­tailed scale up in­for­ma­tion for the ven­dors.

“We now have a lot of con­fi­dence in this as­pect of the process which is re­ally at the heart of the whole plant.”

On 28 Novem­ber, Ara­fura an­nounced the fifth phase of the pi­lot­ing – the rare earth pu­rifi­ca­tion and pre­cip­i­ta­tion – was com­pleted suc­cess­fully.

This phase, took the NdPr sul­phate ma­te­ri­als from Ara­fura’s acid bake pilot plant through pu­rifi­ca­tion and pre­cip­i­ta­tion pro­cesses to pro­duce rare earth hy­drox­ide.

Ara­fura’s process en­gi­neers closely mon­i­tored sev­eral im­por­tant op­er­a­tional per­for­mance pa­ram­e­ters over the du­ra­tion of the five-day pilot, in­clud­ing solid-liq­uid sep­a­ra­tion, reagent dos­ing, tem­per­a­ture pro­files and res­i­dence time across each unit op­er­a­tion of the process.

The rare earth hy­drox­ide pro­duced would feed into phase six – rare earth dis­so­lu­tion and eva­po­ra­tion – with phase seven ex­pected to be com­pleted in early 2019.

Over­com­ing Chal­lenges

Like all of its rare earth peers, Ara­fura also faced the chal­lenge of bring­ing costs down.

Mr Watkins said the rare earth el­e­ments (REE) in­dus­try was “very dif­fer­ent to tra­di­tional min­ing projects in Aus­tralia”.

“In the case of a com­plex rare earths pro­ject such as Nolans we have def­i­nitely had to go above and be­yond the nor­mal level of met­al­lur­gi­cal test­ing car­ried out by ju­niors.”

“You are deal­ing with a pro­ject that is not so much a min­ing pro­ject but a small mine with a large chem­i­cal pro­cess­ing plant at­tached,” he said.

“As such the cap­i­tal costs are very much higher than a tra­di­tional pro­ject, how­ever, on the flip side the op­er­at­ing mar­gins are also much higher.”

Mr Watkins – who has a chem­i­cal engi­neer­ing back­ground span­ning 25 plus years – said he had worked on a lot of dif­fer­ent projects through­out his ca­reer, and Nolans was “by far the most com­plex and chal­leng­ing” and the pro­cess­ing was “some of the most tech­ni­cal go­ing around”.

“How­ever, it has been very re­ward­ing to come into the team and try and in­stil some of the prag­matic de­sign guide­lines that work on ev­ery pro­ject – know­ing what needs to be gold plated and done just right and what can be done more cost ef­fec­tively,” he said.

“This type of pro­ject, es­pe­cially with our very long mine life (which is typ­i­cal of the qual­ity REE projects around), means that the in­vest­ment de­ci­sion is more about de­vel­op­ing some­thing that is more akin to a fi­nan­cial an­nu­ity, which will de­liver share­holder re­turns year af­ter year for 20 to 40 years.”

In stud­ies to date, Nolans will have op­er­at­ing costs of about $US6.23/kg TREO or $US24.38/kg NdPr ox­ide, which will be the low­est amongst peers.

Mr Watkins said the costs were in­flu­enced by the ore be­ing mined.

“The devel­op­ment in house of the phos­phoric acid pre-leach ( PAPL) process means that our pro­cess­ing re­ally works with the ore.

“The added ben­e­fit of that is that we pro­duce a mer­chant grade phos­phoric acid by prod­uct, which off­sets a sig­nif­i­cant part of our op­er­at­ing costs (the by-prod­uct credit es­sen­tially pays for the in­com­ing and out­go­ing trans­port and lo­gis­tics ef­fec­tively re­lo­cat­ing the mine to Dar­win).

“There are also some other as­pects of the flow­sheet that also act to keep the costs lower where we utilise al­ter­nate chem­istry rather than fur­ther con­sump­tion of reagents.”

Mr Watkins said the big­gest part of the op­er­at­ing cost pic­ture was the cost of reagents, and as Ara­fura fi­nalised the costs for the DFS, any move­ment in pro­jected reagent pric­ing would im­pact on these costs.

How­ever, he said the team re­mained “pretty con­fi­dent of hav­ing com­pa­ra­ble or lower costs” to its peers.

The de­ci­sion to build the rare earth sep­a­ra­tion plant lo­cally would also be more ex­pen­sive in ar­eas.

“While there were some neg­a­tives on the cost side (higher reagent costs on site) the ben­e­fits of less over­all labour and con­sol­i­da­tion of ex­per­tise largely out­weighed these fac­tors,” he said.

“The key driver for con­sid­er­ing Nolans for the sep­a­ra­tion plant was re­ally the abil­ity to take full con­trol of our en­vi­ron­men­tal im­pact.

“Prove­nance of raw ma­te­ri­als is be­com­ing a larger and larger fac­tor in the REE in­dus­try (and other in­dus­trial sup­ply chains) and as such by lo­cat­ing ev­ery­thing at Nolans it means we have 100 per cent con­trol over all the wastes from the pro­ject and can as­sure that they are man­aged in an ap­pro­pri­ate man­ner.”

Ris­ing De­mand

Once Nolans en­ters pro­duc­tion, Ara­fura will be well po­si­tioned to tap into grow­ing de­mand for NdPr out of China.

“The NdPr mar­ket is a mat­ter of when, not if,” Mr Watkins said.

“There is mas­sive de­mand side pres­sure with the elec­tri­fi­ca­tion of trans­port, which is also the cur­rent drive that is fu­elling the lithium mar­ket.

“At the same time, China’s en­vi­ron­men­tal com­mit­ment to clean­ing up ‘black mar­ket’ and pol­lut­ing pro­duc­ers also adds a de­gree of sup­ply side pres­sure.”

An­a­lysts have forecast that China will move from be­ing a net ex­porter of NdPr to be­ing a net im­porter by 2021/22 to meet its own do­mes­tic de­mand.

“On that ba­sis, the prospects for a com­pany with a non-China linked NdPr pro­ject ca­pa­ble of pro­duc­ing roughly 5-10 per cent of cur­rent global pro­duc­tion, ready to de­velop and come on-line in 2021/22 look pretty good,” he said.

In Oc­to­ber, Ara­fura locked in its first off­take agree­ment with JingCi Ma­te­rial Sci­ence Co for the sup­ply of NdPr ox­ide.

JingCi is a tier 1 Chi­nese man­u­fac­turer of neodymium iron boron (NdFeB) per­ma­nent mag­nets and pro­duces about 6500 tonnes per an­num.

The agree­ment en­tered would see Ara­fura sup­ply up to 900 tonnes of NdPr per an­num to JingCi – a quar­ter of Nolans fore­casted an­nual out­put.

Mr Watkins said the com­pany was “rel­a­tively happy with the way things are go­ing in the off­take space”.

“I think com­ple­tion of the DFS may be a cat­a­lyst for po­ten­tial off­take part­ners to get a bet­ter feel for the pro­ject and that will cer­tainly help with the dis­cus­sion,” he said.


Post ramp up, Mr Watkins said Nolans had the life of mine (the EIS con­tem­plated 55 years) to sup­port an ex­pan­sion in pro­duc­tion.

“It cer­tainly could be­come a much larger pro­ject in the REE space, but let’s get the first phase up and run­ning be­fore we get ahead of our­selves,” he said.

“The ex­e­cu­tion of the pro­ject is an­tic­i­pated at this stage to con­sist of a six month FEED process fol­lowed by a roughly two year con­struc­tion (just re­view­ing pro­ject im­ple­men­ta­tion sched­ules at the mo­ment).”

At peak Ara­fura an­tic­i­pated about 500 peo­ple on site at one time.

“Com­mence­ment of con­struc­tion ob­vi­ously de­pends on fi­nanc­ing but I would be hope­ful that we would be get­ting into things be­fore the end of 2019,” Mr Watkins said.

“The ex­e­cu­tion of the pro­ject is an­tic­i­pated at this stage to con­sist of a six month FEED process fol­lowed by a roughly two year con­struc­tion.”


The acid bake (Phase 4) pilot plant.

Bulk sampling of Nolans ore.

Nolans pro­ject man­ager Ste­wart Watkins.

Drill sam­ple split­ting.

Nolan’s drill core.

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