Hastings Technology Metals now on track for production of rare earths in 2018
Hastings Technology Metals (ASX: HAS) controls two rare earth projects in Western Australia. They are the Yangibana and Brockman deposits. The more advanced Yangibana deposit contains a predominance of neodymium, praseodymium, dysprosium and europium. The Hastings project contains the highest proportion (85%) of heavy rare earths of any known deposit.
Never get ahead of yourself in the rare earths business: that’s something commentators should always keep in mind, as it always usually takes longer than anyone expects to get to the next stage. Back in 2013, InvestorIntel reported that Hastings Technology Metals (ASX:HAS) – it was then known as Hastings Rare Metals – had attracted an unnamed strategic investor with connections to processing rare earths in China. Until that stage, Hastings had been facing a capital cost for its Yangibana project in Western Australia of about A$750 million. The 2013 tie-up with the strategic partner would, instead of financing its own processing, allow Hastings to mine the ore, send it overland to the Port of Wyndham, for processing overseas. Not only would this slash the capital cost, but reduce the number of approvals required in Australia as there would be no processing and disposal of uranium and thorium.
And then we wrote: “This strategy should make possible first production by early 2015”.
Well, it has not worked out quite the way but it is clear from the latest batch of news out of Hastings that the company is well on track, and is proceeding methodically toward that production two years from now.
So let’s review that news flow.
In early April Hastings reported that it had raised A$9.6 million. Not only did that fact seem impressive – it’s the sort of money in-fashion lithium junior explorers are able to raise these days, and not typical of capital raisings among Australian juniors – but the price of the new HAS shares represented a 28% premium to the last quoted price and a 42% premium to the 30-day volume weighted average price. The reason for the confidence on the part of the key investors: the positive pre-feasibility study that had been released on April 8. Hastings will soon seek shareholder approval for a second placement, more money to help the company to bring Yangibana into production by the second quarter of 2018.
In an interview with a local mining website, Hastings chief financial officer Guy Robertson was quoted saying the company had several options for toll treatment of the ore, and he expected a formal deal in the short term. As the website noted, “lower capital costs, lower risks and quickness into production are a trifecta investors have unsurprisingly been attracted to”.
What was also interesting was that, following the fund raising announcement, Hastings shares rose 22% on that news.
It is also worth looking at the highlights of that pre-feasibility that clearly unlocked the money for the latest capital raising.
Independent global engineering consultant Tetra Tech Proteus found that Yangibana had a pre-tax net present value of between A$700 million and A$750 million based on a 1 million tonnes a year operation, extracting mill feed from four deposits over a seven year mine life. On-site beneficiation and partial hydrometallurgical processing would produce a concentrate to be shipped overseas for separation and refining into individual rare earth oxides under a contract toll treatment agreement. The capital costs would be between A$390 million and A$420 million.
The pre-feasibility study contained the following commodity prices (US$/kg):
- Neodymium oxide 103.69
- Praseodymium oxide 92.55
- Dysprosium oxide 480.97
- Europium oxide 420.49
- Gadolinium oxide 49.57
- Samarium oxide 3.85
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