EDITOR: | July 14th, 2017 | 5 Comments

Peak positioned to capitalize on explosive EV marketplace over next decade

| July 14, 2017 | 5 Comments
image_pdfimage_print

The electric vehicle (EV) market is beginning to move far quicker than many first anticipated, and the shift is strongly reflected in the associated metals’ prices. Lithium and cobalt have been climbing for some time now, but we are finally seeing movement on neodymium / praseodymium (NdPr) oxide; between November 2016 and June 2017, a 32% increase in spot prices has been recorded, prompting Peak Resources Ltd. (ASX: PEK) (“Peak”) to push ahead with the permitting stage of their Ngualla rare-earth element (REE) deposit in Tanzania.

This month, Tesla will release their Model 3 vehicle, or at least the first 30 units. Elon Musk has stated that production will be stepped-up throughout the year until the company is producing 20,000 vehicles per month by December. The Model 3 has been reportedly pre-ordered by over 450,000 people so far, pretty much guaranteeing its initial success and cementing the need for reliable supplies of the component parts. NdPr, being an ideal material for the manufacture of permanent magnets, represents a key ingredient in our cleantech future and is likely to experience a considerable price surge over the next five years as the cultural shift towards new modes of transport reach tipping point.

We’ve known this was coming for some time, but markets tank and wannabe producers began dropping like flies. Heck, even established big-guys were dragged under by the obstinate downward trend that refused to abate in the face of hype-fuelled overproduction, but we now have a situation in which plenty of material will be required, with very few players left producing them. This is what puts companies such as Peak in a great position looking forward; not only did they survive the bottomed-out metals markets of recent history, but they are in possession of one of the lowest-cost REE deposits in the world thanks to repeated efforts to reduce operating costs.

The team are now in possession of a bankable feasibility study (BFS) and an environmental certificate that will allow them to make progress on the permitting of Ngualla, which is now expected to produce 2,420 tpa of NdPr oxide at greater than 99% purity. Impressively, Peak originally stated that it would cost $118 million per annum to run the plant in 2014, but this has been reduced to only $83 million as stated in the BFS, making the project one of the most attractively costed resources currently in existence.

Operating at $34.20/kg NdPr oxide means that, on an equity financed project, more than $20 million per annum margin could be achieved on the NdPr oxide product alone, even at today’s low spot prices. Further to this, the company identified a significant opportunity to develop a fluorspar product from the same resource, and although NdPr will likely bring in around 90% of the project’s income, including the ability to produce fluoride products alongside REEs will ensure the project is never short of custom.

Peak have proposed off-site processing in Teesside, England, to take advantage of existing advanced processing technologies, solid infrastructure and a skilled workforce. The company aims to coincide the development of Ngualla with the still-recovering value of REEs, but with EV changeover targets being brought forward as far as three years, we could be looking at an explosive marketplace over the next decade, particularly as President Trump continues to take umbridge with materials mined in the far-east. China itself has been ramping up imports of REEs over the last few years, a sure sign that there are a rising number of potential customers waiting at the end of Peak’s impeccably-timed launch of Ngualla.


Lara Smith

Editor:

The Founder and Managing Director of Core Consultants in June 2009, Lara and her team are committed to supplying high quality commodity market research, analysis ... <Read more about Lara Smith>


Copyright © 2017 InvestorIntel Corp. All rights reserved. More & Disclaimer »


Comments

  • Chris

    REQUEST FOR EXTENSION OF VOLUNTARY SUSPENSION
    Peak Resources Limited (ASX: PEK), (the “Company”) refers to its request for voluntary suspension in the trading of the Company’s securities of 6 July 2017.
    As you are aware, the voluntary suspension is necessary as the Company expects to make an announcement to the ASX providing further information on legislation passed by the Tanzanian National Assembly with respect to the legislative framework governing the natural resources sector in Tanzania.
    The Company has sought and is currently awaiting further advice from its legal advisors in Tanzania on this matter and the potential impact of these changes on the Company and the planned development of the Ngualla Rare Earth Project. The Company requests that its shares remain in voluntary suspension until the earlier of when a further announcement is released to the ASX or the commencement of normal trading on Monday 31 July 2017.

    https://wcsecure.weblink.com.au/pdf/PEK/01873900.pdf

    July 16, 2017 - 7:50 PM

  • asrms

    This is excellent news for Lynas re the future need for NdPr. Having battled for years to overcome environmental concerns, production issues and debt control this company is finally coming out of its malaise. With its best quarter report yet Lynas is positioning itself as THE producer for its specific products outside of China. With other companies looking at probably at least 3 years to beginning production Lynas is IMHO in the driver’s seat for its specific product focus. If REEs pricing just goes up slowly over the next few years Lynas will do very well for its stockholders (even without a buyout).

    July 17, 2017 - 3:25 PM

  • NdPrTbDy

    It would be more interesting if these articles did more than summarise company releases and other publicly available information. Some analysis or insight would be appreciated otherwise it is just another PR puff piece. By way of example the writer presents the following “Peak have proposed off-site processing in Teesside, England, to take advantage of existing advanced processing technologies, solid infrastructure and a skilled workforce” as the answer to taking what it is suggested will be produced at Ngualla and turning it into products for the next step in the value chain. This step is absolutely the key to unlocking the value in any REE deposit. Without access the technology to do this there is no possibility of refining the intermediates into separated rare earths. The article notes “taking advantage of existing technologies” – where is the separation technology coming from? Presumably neither Appian nor IFC have it. From China? Exporting technology from China to prospective producers has proved to be very difficult in this space? New technology – there are a few hopefuls but good luck proving any of them at a commercial scale in time for “Peak’s impeccably-timed launch of Ngualla”.
    And, in a point that the first poster noted, why was the elephant in the room not mentioned in the article i.e. sovereign risk in Tanzania

    July 17, 2017 - 9:34 PM

    • Tracy Weslosky

      Ouch. I noted that you commented on our Rare Earths Monthly with insightful feedback or I would have just torn you off the site as this is an incorrect conclusion. Happy you are interested in PEAK, we have an interview scheduled with Darren in a few weeks. Now please do NOT diss our analysts or writers as they work too hard, are too experienced and IF you can do better —- call me. Note that we are one of the only news sites in the world that cover this market, and one of the only ones that PAY our editors and analysts to do an AMAZING job. Watching you Mr. Magnetic Materials that cannot reveal your own name…. — Tracy Weslosky, Founder, Owner and CEO with real name disclosed

      July 18, 2017 - 10:16 AM

    • Gavin Beer

      NDPRTBDY,

      With regards to the separation technology, it is public knowledge that Peak’s COO was the previous General Manager at Molycorp’s Mountain Pass Project in California. Peak has also previously ran a separation pilot plant at ANSTO’s SX facility in Sydney generating high purity rare earth products . They have the technology.

      July 20, 2017 - 5:17 AM

Leave a Reply

Your email address will not be published. Required fields are marked *