Head of global research at Byron Capital Markets Jon Hykawy has raised his target price on Ucore Rare Metals (UCU-V, UURAF-O) to $1.00 per share — a 12-month estimate that he “still considers conservative” — after the company completed a preliminary economic assessment of the Dotson Ridge Zone of its Bokan Mountain heavy rare earth property in southeastern Alaska.
The PEA estimates capital costs of US$221 million that includes a complete on-site rare earth oxide (REO) separation plant and a contingency provision of US$25 million, a price tag that president and chief executive Jim McKenzie calls among the lowest in the industry.
The downstream separation facilities “promise to render high purity oxides both economically and on-site,” McKenzie said in prepared remarks.
The project on Prince of Wales Island, about 60 km southwest of Ketchikan and 140 km northwest of Prince Rupert, British Colombia, has direct ocean access to the western seaboard and the Pacific Rim, which bring some of the lowest shipping rates in the industry, and is situated in the Tongass National Forest within an area set aside for natural resource development.
The PEA outlines a mine life of eleven years based on a 2011 inferred resource estimate of 5.3 million tonnes averaging 0.65% total rare earth oxides at a cut-off grade of 0.4% TREO. (The deposit has been drilled to a depth of 450 metres, and remains open both along strike and at depth.) And about 40% of the TREOs are heavy rare earth oxides.
The proposed mine will yield a pre-tax net present value of US$577 million at a 10% discount rate and an internal rate of return of 43%.
At a mining rate of 1,500 tonnes per day, and average total rare earth recoveries of 81.6%, payback should come in 2.3 years. The mine will produce an average 2,250 tonnes per year during its first five years of operation, including 95 tonnes of dysprosium oxide, 14 tonnes of terbium oxide, and 515 tonnes of yttrium oxide.
Ucore plans to use Dual Energy X-Ray Transmission (DEXRT) sorting and magnetic separation. The mineralized material will be crushed and split into four size ranges. The fines will bypass the sorters and each of the other size ranges will feed one of three sorters that use DEXRT. The circuit will reject about 50% of the feed as waste. The concentrated mineralized material will then be crushed further and ground in a rod mill. That material will then be processed by magnetic separators, which will reject a further 50% of their feed as waste.
In total, Ucore estimates that about 75% of non-REE bearing material will be discarded through the physical beneficiation process. The remaining 375 tonnes per day of concentrated mineralized material is then further ground and fed to the leaching circuit. The company says the physical beneficiation circuit saves initial capital expenditure and operating costs.
Hykawy of Byron Capital Markets describes DEXRT as a technique “that passes X-rays of two different energies through ground particles of ore. By having detectors look at the difference in absorption of the two sources, it is possible to identify the particles containing large amounts of rare earth. Magnetic and DEXRT sorting combine to reduce ore volume by at least 50%.”
The leaching circuit consists of a nitric acid leach process. The slurry is filtered and the solids are then taken to the backfill plant to be put underground as cemented paste backfill. Before the solution continues on to the separation circuit, it is treated by diffusion dialysis to recover the unconsumed nitric acid, which is then recycled to the leach circuit.
The individual rare earth oxides are then separated using a technology called Solid Phase Extraction (SPE). The technology was developed by Ucore and IntelliMet LLC in Montana. Hykawy describes SPE as a “highly modified form of ion exchange, which has previously been used in the REE industry to “polish” products and produce purified versions of some products.”
The Toronto-based clean technologies and materials analyst explains that SPE turns the conventional ion exchange bed into a porous solid. “While the cost per mass of media remains high,” he explains in a research note to clients, “the operating life is dramatically extended and the medium can be used under high pressures and flow rate, dramatically improving extraction rates.”
At presstime in Toronto, Ucore was trading at 56 cents a share within a 52-week range of 21.5 cents and 64 cents. The company has about 153 million shares outstanding.
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