EDITOR: | March 10th, 2015 | 23 Comments

Northern Minerals and the ‘Sexiness’ of Xenotime

| March 10, 2015 | 23 Comments
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xenotimeAs I have noted before, in the film, “The Graduate”, the unworldly character Benjamin (played by Dustin Hoffman) is told at a cocktail party that there is one word that he should know and that word is “plastics”. We are not sure in light of plastic’s progress over the last 40 years whether that would have been the best of tips. However, in the Rare Earth space we have been convinced for some time that the word is “Xenotime” and this is what aroused (and sustained) my interest in Northern Minerals (ASX:NTU), the only Xenotime player of substance in the rapidly depopulating REE space. In respect to Xenotime it has two projects, Brown’s Range and John Galt, both in the far northwest of Australia. It is the preponderance of Xenotime that is the key to the Brown’s Range deposit’s massive bias towards Heavy Rare Earths.

The mineral in question is a REE phosphate mineral, whose major component is yttrium orthophosphate (YPO4). The rare earths dysprosium, erbium, terbium, and ytterbium, and metal elements like thorium and uranium (all replacing yttrium) are the expressive secondary components of xenotime. Xenotime is used chiefly as a source of yttrium and heavy lanthanide metals (dysprosium, ytterbium, erbium, and gadolinium). Occasionally, gemstones are also cut from the finer xenotime crystals.

Prior to Northern Mineral’s discovery at Browns Range, the main occurrences of note of Xenotime were at Hidra (Hitterø), Flekkefjord, Vest-Agder, Norway (the mineral first being described in 1832 from an occurrence at the latter location). Other notable localities include Arendal and Tvedestrand in Norway, in Brazil at Novo Horizonte, São Paulo, Novo Horizonte, Bahia, and Minas Gerais and in Madagascar. In the U.S., California, Colorado, Georgia, North Carolina and New Hampshire have occurrences.

The beauty of Xenotime is the mix of REE in the mineral. The lanthanide content is typical of “yttrium earth” minerals, and runs about two-thirds yttrium, with the remainder being mostly the heavy and medium lanthanides, where the even-numbered lanthanides (such as Gd, Dy, Er, or Yb) each being present at about the 5% level, and the odd-numbered lanthanides (such as Tb, Ho, Tm, Lu) each being present at about the 1% level.

The Browns Range project

This 100%-owned property formerly was part of the Gardiner-Tanami Project (which was the focus when NTU was a uranium explorer), but since 2009 has become a focus for its HREE exploration program. The project consists of four granted exploration licenses, covering an area of 400km2, located adjacent to the WA/Northern Territory border in the Tanami Desert, approximately 150km south-east of Halls Creek. The company also has permit applications for most of the rest of the Brown’s Range Dome in its larger manifestation across the border in the Northern Territory. In December 2011, it signed a JV with Toro Energy for the non-uranium rights over several very large concessions (1,403 sq kms) on the Dome.

browns_range Source: Northern Minerals

The hydrothermal xenotime mineralisation targets at Browns Range are shown on the map above. They sit on the Western extremities of a geological formation known as the Browns Range Dome, a Paleoproterozoic dome formed by a granitic core.

Exploration Work and the Resource

Xenotime was first identified in the Browns Range area in the 1980s by PNC Exploration while exploring for uranium.  PNC tested one of the larger quartz-xenotime veins (10cm-30cm wide, 15m long) by costeaning and shallow drilling and obtained results up to 16% Yttrium, 0.2% Uranium, 0.5% light REE and 12% HREE.

Since changing tack to the pursuit of Rare Earths, Northern Minerals has conducted a sizeable exploration program at Browns Range in 2011, including a 166-hole RC drilling campaign. To date, four rare earth prospects with xenotime mineralisation have been identified within the project area – Wolverine, Gambit, Area 5 and Area 5 North prospects – all shown on the preceding map. The mineralisation at Browns Range is characterised by a dominance of Heavy Rare Earths (>80% HREE) as well as low levels of Uranium and Thorium.

The drilling in 2011 showed high-grade HREE mineralisation at all four prospects, with significant widths.

Examples of some intersections at the Wolverine prospect included:

  • 33m @ 1.53% TREO (1,470ppm Dy2O3) from 54m depth
  • 41m @ 1.01% TREO (881ppm Dy2O3) from 24m depth
  • 11m @ 1.89% TREO (1,806ppm Dy2O3) from 50m depth

The Browns Range resource is shown below:

NTU_resource

Metallurgy

The metallurgical test work was conducted in 2010, by the Perth-based metallurgical consultants Nagrom, on surface samples. The results from a floatation test have reported an 89.5% recovery of Yttrium (Y2O3). The test work completed to date indicates the ore is amenable to floatation beneficiation techniques, which would represent a considerably lower cost of extraction than most other projects currently being touted around the markets.

Previous metallurgical testing has indicated the mineralisation will be relatively easy to process, and is capable of producing a low cost, high grade concentrate.

Metallurgical beneficiation studies were completed by Nagrom with surface rock chip samples from Wolverine, Gambit and Area 5 North. These have reported a maximum Yttrium recovery of 89.5% and a maximum concentration of 42%

In November of 2011 a bulk sample of three tonnes (comprised of nine composite RC samples) from Brown’s Range was submitted to Nagrom for metallurgical testing, essentially to determine the economic cut-off grade. The nine samples comprise of three samples from each of the main Browns Range prospects – Wolverine, Gambit and Area 5 at cut-off grades of 0.25%, 0.5% and 1%.

Metallurgy work in recent months (to feed through data to the latest DFS) showed a significant improvement  in metal recoveries, following optimisations in the processing flowsheet, particularly the hydrometallurgical plant where pilot testwork improved recoveries from 88% to 93%.

The Definitive Feasibility Study

In early March the DFS hit the wires. The project is based upon a conventional mining operation involving both open-pit and underground mining. As a pleasant change from the industry norm there is a relatively simple processing flowsheet with all infrastructure on site. There is a projected production rate of 279,000 kgs of Dysprosium per annum contained within 3,098,000 kgs of TREOs.

The plan was welcomed as it resulted in an increase in NPV of $106mn to $552mn with an IRR of 34% and a payback period of 3.2 years. Mine life was increased to eleven years.

The one fly in the ointment here is that pre-production capex at $329mn is still chunky in a rather parched financing environment.

The Partner & Funding

Back in mid-February, NTU announced a financing deal with Jien Mining, is an Australian subsidiary of Jilin Jien Nickel Industry Co Ltd., a nickel mining group from China. We had previously encountered this company at the time of its tussle, several years back, with Goldbrook Ventures, a Canadian nickel explorer/developer.

Northern Minerals has signed a binding Memorandum of Understanding with Jien Mining Pty Ltd, for equity funding of up to AUD$49.5 million. NTU claims that the transaction will preserve Northern Minerals’ 100% ownership of the Brown’s Range project and facilitate the completion of detailed engineering design. It will also support the commencement of early works construction activities once final project financing is in place.

Jien Mining’s investment will be made through:

  • a AUD$5mn convertible note facility to provide immediate working capital
  • a placement of fully paid shares and options to Jien Mining.

The convertible note facility is based on the provision of 25 million shares at 20 cents per share. The first tranche of AUD$3mn has been received with the remainder to be paid through two AUD$1mn installments due in March.

Following a due diligence process, to be completed before early June 2015, formalisation of final agreements, FIRB approval and Northern Minerals’ shareholder approval, Jien Mining will be issued 110 million shares at 20 cents (less the 25 million shares at 20 cents subject to the convertible note) raising a further AUD$17mn. In addition, 110 million options with an exercise price of 25 cents and a term of one year to raise a further AUD$27.5mn, if and when the options are exercised.

Jien Mining will also be entitled to two board positions; one at the completion of the share placement, and the other upon exercise of all of the options.

Conclusion

Northern has managed to bag an enthusiastic and deep-pocketed backer which is more than we can say for most other players in the Rare Earth space. With Xenotime as its main mineralisation we can see why the Chinese “get it” and want a piece of the action here.

Capex is still an issue, with the number from the latest Feasibility Study coming in with too many zeros for our liking, but then again I am critical of virtually every capex number I see in the Rare Earth space. If this could be massaged even lower I would be a very happy camper.

Northern Minerals, in doing its deal with Jien, has leapfrogged some of the more torpid players in the space and put itself firmly in contention to parade around in the winner’s circle. There are few others at the moment of which we can say the same..


Christopher Ecclestone

Editor:

Christopher Ecclestone is the EU Editor for InvestorIntel and is a Principal and mining strategist at Hallgarten & Company in London. Prior to founding Hallgarten ... <Read more about Christopher Ecclestone>


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Comments

  • Tracy Weslosky

    It will be with great pleasure that I personally forward this piece to the self professed — Mr. Xenotime….Professor Dudley Kingsnorth.

    While this is the only time we have ever seen “sexy” used in describing rare earths. I can honestly confess that I have seen more than one geologist growl when discussing the Northern Minerals heavy rare earth deposit….

    March 10, 2015 - 9:52 AM

  • Chris

    A$329M capex required to produce a 52% mixed REE carbonate and a price forcast to sell the 52% mixed REE carbonate at double, and in some cases more than double, the current Chinese REO prices.

    It does not appear to be feasible to me.

    March 10, 2015 - 5:38 PM

  • David

    Hi “Chris”

    Just wondering if you are “Simon” and work at Patterson Securities in Perth?

    David

    March 10, 2015 - 5:53 PM

  • Investor

    Just a quick 101.
    It is all about heavy rare earths for juniors going forward into production any time soon. We all agree. How much heavies one junior has compare to other? That is % distribution of heavy rare earths in the total rare earth mix. Northern Minerals is amongst the highest. The next thing is mineralization as this determines the ease of extraction. Xenotime and quartz, simplest mineral system possible. The list keeps going, but possibly the third most important is the environmental and social license to operate. No matter how good and profitable deposit one has this will hold you back.
    NTU has all this, hence justification for all the pump pieces
    Mt wallbanger, if you require more explanation happy to assist.

    March 10, 2015 - 11:35 PM

  • Jackie Jackie

    exactly walbangerharvey – why

    perhaps Chris is making a subtle point that he does not yet agree with JL that : “Rare earth technology officially overtakes geology”

    March 10, 2015 - 11:40 PM

  • Fred

    To people in the desert, water can get very expensive. And processing the bulk ore from most mines uses vast quantities of water. Maybe my knowledge of the geography is all screwed up, but how is Northern Minerals planning to supply water for their mines? Or do they plan on shipping their mine output overseas, like Lynas?

    March 11, 2015 - 12:14 AM

  • Jackie Jackie

    good question Fred, which I would also like answered – this is what a google search revealed … from page 40 of the PFS ….

    Water Supply and Treatment
    Total project water demand is estimated at 1.32 gigalitres (GL) per annum. This is to be supplied by groundwater sourced from the Gardiner Sandstone Aquifer located approximately 10km to the southwest of the mine and process plant area. Water exploration drilling, pump testing and groundwater modelling work completed by Klohn Crippen Berger (KCB) has concluded that this aquifer will provide sufficient long term supply, with extraction having negligible environmental impact. The water is good quality, will not require treatment for the process plant, and only minimal treatment for potable water uses.

    A preliminary borefield and water supply pipeline design was completed by KCB for the PFS. A direct cost estimate of $6.0M is included in the capital estimate for the development of the borefield, power supply, and associated pipelines to the mine, process plant and accommodation village areas.

    March 11, 2015 - 12:32 AM

  • harveywalbanger

    Investor: Thank you for the offer but I will pass on still more pumping from you. If NTU actually is the best thing since sliced bread, it wouldn’t need all the pump pieces. Personally, I would prefer to read more about the industry and a greater variety of junior miners than see disproportional coverage of any one company. Reminds me of all the excessive positive press on Molycorp a few years ago and we all know what happened with that company–it also was presented as the best thing since sliced bread..

    March 11, 2015 - 1:59 AM

  • banger

    The difference is that one slice of bread is light another is heavy.

    March 11, 2015 - 2:04 AM

  • hackenzac

    Impressive hree skew at 80%. ‘Dysprosium’ is the word and these guys have it.

    March 11, 2015 - 6:45 AM

  • Tim Ainsworth

    kiwi, maybe U should spend a little more time on the recent ROMEO (Replacement and Original Magnet Engineering Options) report from the EU, its potential LT pricing impact, and figuring how the hell NTU are going to realise $684kg for Dy in a 52% mixed carbonate, from a reduction in grade to 0.63% TREO?

    “The ROMEO project has two main objectives: i) to develop high coercivity Nd-Fe-B magnets with zero or drastically-reduced heavy-rare-earth (HRE) Dy or Tb content; ii) to find a new material for oriented dense magnets with properties intermediate between sintered ferrite and sintered Nd-Fe-B.”

    ” the amount of HRE needed to improve the coercivity by 30 % is reduced to 0.2 mol %. Values of Br = 1250 mT and HcJ = 1650 kA/m were achieved”

    “For Goal 1 (zero or drastically-reduced Dy/Tb) it is expected that with the planned strategy of joining the successful method of electrophoretic deposition and the grain-boundary diffusion process, combined with an average grain size of the sintered magnets of around 2 μm, the foreseen objectives will be achieved.”

    http://cordis.europa.eu/result/rcn/156247_en.html

    Fairly strong language I’d suggest: “foreseen objectives will be achieved”.

    ROMEO Feb 15 provides a summary supporting Siemens (a project partner) recent statements re 0.7% Dy content in its D6 & 7 wind generator mags, a list of project partners and I also note Dr G Hatch as one external advisor. Wonder if Tracy can tempt Gareth just to expand a little on these developments?

    Point is, what are the LT economic thresholds for Dy? EU & Japanese Govt’s, leading academics & industry groups seem hellbent on ensuring it is below many of the expectations expressed here.

    March 11, 2015 - 8:04 AM

  • Positroll

    If I understand it correctly, this soon to be 2/3 Chinese owned company will mine the ore in Australia, produce a mixed carbonate and ship that for treatment to China, where the seperated REEs will fall under Chinese rules for export (including “fees” etc) that favor the Chinese magnet plants over ROW ones.
    Why in the hell would the Australian government permit any such thing to happen? IIRC, they still have a national-interest-test down under, don’t they?

    March 11, 2015 - 8:17 AM

  • walbangerharvey

    Positroll: It is called selling out to the Chinese and it does nothing to weaken Chinese control of that global industry, just adds to it. All this talk about a secure source of critical HREE for the West is just that, talk. When it comes to international commerce, the West almost always gets its clock cleaned by the Chinese. They are clever, have a long term plan and will do whatever it takes to win. In stark contrast, the West is in a kind of ree stupor–long on talk and that is about it.

    March 11, 2015 - 9:16 AM

  • Jack Lifton

    Everyone needs to keep in mind that even at 0.7% of the total mass of a Nd-Fe-B magnet the demand at that level could be between 700 and 1000 tons this year (assuming that all Nd-Fe-B magnets utilized dyprosium, which they do not) Since in fact the average use of dy over all REPMs has been estimated at 1.5% currently this means that the total legally reported production of dy is completely utilized. Very few critical applications of magnets will simply switch based on experimental data; even if the data turns out to be correct the changeover will take years. These are years during which total REPM production will increase dramatically according to both Kingsnorth and Hatch. Therefore the issue is will “thrifting” be enough reduction in individual use so that the supply is able to keep up with increasing demand. I am betting that the answer is a big negative.

    March 11, 2015 - 10:17 AM

  • Jackie Jackie

    thank you Tim Ainsworth, – much like you I also want to know “how the hell NTU are going to realise $684kg for Dy in a 52% mixed carbonate”

    perhaps Mr Lifton or other renowned rare earth experts can provide some insight

    also seemed like an obvious question to ask when Mr Bauk was being interviewed – perhaps next time

    March 11, 2015 - 4:40 PM

  • Steve Mackowski

    People are missing the point of how mineralogy (not geology) influences the CAPEX and OPEX. The costs of REO processing are massively controlled by the amount of non-REO that comes through the processing plant. A 50% REO concentrate plant is a quarter of the size of a plant treating 12%. All of those non-REO dissolve to a degree during processing and require OPEX to remove. So the holy grail in any processing is to get a 100% mineral concentrate into the processing plant. The mineralogy shows you if this can be achieved and how. Coarse xenotime in quartz (Northern Minerals) achieves this. Very fine xenotime intricately intermixed with phosphate or iron hosted minerals would not.

    March 11, 2015 - 6:20 PM

  • Jim

    How does NTU compare to Tasman and Quest Rare Minerals? I thought QRM had a higher % of HREE in its deposit and is larger aswell. The three all have pluses and minuses..

    March 11, 2015 - 7:53 PM

  • Jackie Jackie

    Mr Mackowski, given your expertise in the field I have no doubt what you say is correct.

    What do you consider may be some of the possible reasons then that Northern Minerals have chosen a 52% carbonate (and the associated additional costs of a hydrometallurgy plant and additional hydrometallurgy processing), instead of simply beneficiating up to a 100% mineral concentrate via a beneficiation plant and taking the processing no further.

    March 12, 2015 - 8:25 AM

  • Jackie Jackie

    Mr Mackowski, in case you didn’t understand the question:-

    You stated: …. “holy grail in any processing is to get a 100% mineral concentrate into the processing plant. The mineralogy shows you if this can be achieved and how. Coarse xenotime in quartz (Northern Minerals) achieves this”

    So if the Northern Minerals mineralogy is so good, why then are Northern Minerals not producing a 100% mineral concentrate.

    March 16, 2015 - 7:00 AM

  • Chris

    Currently Northern Minerals are only able to achieve a 20% mineral concentrate after benefication.
    While a 100% mineral concentrate is the holy grail, it does not mean it is achievable.

    March 16, 2015 - 9:10 AM

  • Jackie Jackie

    Thank you Chris, you are correct it’s 20% mineral concentrate from the DFS.

    If 100% mineral concentrate is possible as Mr Mackowski appears to have asserted and xenotime in quartz is the holy grail which is what Northern Minerals have – then all I can say is what an ordinary effort (achieving only 20% mineral concentrate) – pathetic really.

    Is it any wonder that funders have not fallen over themselves to back this project in it’s present form.

    March 16, 2015 - 9:38 AM

  • Ricki

    Jien Nickel are also major shareholders of Mr Yue’s other company Orion Metals. Seems these guys didn’t look too far for funding.

    March 17, 2015 - 2:23 AM

  • Bill

    Ricki, they don’t have the money yet, Jien is completing it’s due diligence

    JJ you have asked some interesting questions which everyone appears to have run away from.

    This is from an article I recently read by Rockstone Research:-
    “Projects that are able to successfully upgrade to a high-grade mineral concentrate will a have a strong advantage in terms of an economic metallurgical OPEX and CAPEX. This is clearly illustrated by the major current and past operating REE mines that, apart from the South China Clays, all operate at >30% TREO mineral concentrates (Bayan Obo, Mountain Pass, Maoniuping, Weishan, Kamasurt). The main impetus driving the need for high-grade mineral concentrates with these producers is simply the resultant decrease in consumables and corresponding OPEX.”

    Perhaps someone from Northern Minerals would be good enough to respond on why they opted for only a 20% TREO mineral concentrate when it appears all current and past operating REE mines that, apart from the South China Clays, all operate at >30% TREO mineral concentrates.

    What do Northern Minerals know that all the others don’t.

    April 6, 2015 - 11:59 AM

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