Rare Element (REE) Reports Successful PFS at Bear Lodge; Issues Highlights from Study
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Rare Element Resources Ltd. (AMEX: REE) is pleased to announce the results of a positive Pre-Feasibility Study (PFS) for the Bear Lodge project, Wyoming. The PFS was commissioned to provide a technical document for the resource model, present the technical activities for the rare-earth exploration program, provide a detailed process description and present an economic analysis of the rare-earth resources. The results of the PFS show that the Bear Lodge project is technologically feasible with robust returns on invested capital.
The Bear Lodge PFS addressed all aspects for the development of the project including infrastructure, open-pit mining, mineral concentration, and hydrometallurgical processing. Roche Engineers, Inc. was the independent consulting group who carried out the PFS on behalf of the Company. Other consulting groups who provided information and expertise included Ore Reserves Engineering (O.R.E.), John T. Boyd Company, Mountain States R & D International, Hazen Research Laboratories, and IMCOA, an independent industrial minerals research firm based in Perth, Australia.
More from the release:
Financial Analysis
The economic analysis that was performed for the PFS on the Bear Lodge project was conducted with both a Nominal (Model 1) and a Maximum (Model 2) production schedules. The Nominal production schedule was considered as the base case. The major factor differentiating the Nominal case with the Maximum case is the mine life and production schedule. The Nominal case addresses production of 23,111 tpa (tons per annum) of concentrate production at 45% REO (rare-earth oxide) for a mine life of 19 years while the Maximum case provides for production of 73,080 tpa of concentrate at 45% REO for a mine life of 10 years.
Total life-of-mine capital costs for the project have been estimated at $445.9 million including a 25% contingency of $89.2 million. The initial capital cost is $375.1 million. This includes $127.2 million for the PUG (Physical Up-Grade) plant and mine (including replacement capital) and $133.8 million for the Hydromet plant. Initial capital expenditures are assumed to span the first four years, with infrastructure heavily weighted in the first two years and plant construction heavily weighted in the second two years. There has been a trend toward increasingly higher equipment prices and input costs that have resulted in higher capital expenditures throughout the mining industry over the past years.
The Nominal base case and the Maximum case both assumed an average price of $17.36 per kilogram (kg) of bulk mixed RE concentrates with an average grade of 45% TREO (total rare-earth oxide). This price is a three-year trailing average of prices from the Metal-Pages bulletin. Recognizing that the output concentrate produced from the Bull Hill mine is a "basket mix" of individual rare earth oxides, a discount of 40% was assumed for the pricing in the economic models.
The economic analysis also calculated that the break-even cash flow price for RE concentrate is $4.42/kg, which is 75% below the $17.36 price used in the models. The price required to achieve an IRR of 30% is approximately $11.70, which is 33% lower than the price assumed for both cases.
Mine Design and Mining Operations
The mine will be operated as a conventional truck-shovel open pit mine. The PFS determined that the scope of the development of the Bear Lodge project should consist of two components: the open-pit mine operations and PUG (physical upgrade) plant on-site at the Bull Hill mine and the Hydromet plant (hydrometallurgical) at Upton, Wyoming, adjacent to the railway line. Upton is located approximately 40 miles from Bull Hill mine. The PUG plant is designed to maximize the rare earth ore and produce a pre-concentrate using a gravity separation and screening and wash process. This pre-concentrate will be transported to the Hydromet plant at Upton, Wyoming where a rare earth concentrate will be produced.
The PUG plant is designed to process up to 1,000 tpd (tons per day) of high-grade oxide material and 1,000 tpd of oxide carbonate and stockwork material which will be blended to meet mine pit production plans and market demands. The PUG process employs a series of crushing, attritioning, washing and screening methods to concentrate the RE fines and reduce the physical mass. Harder stockwork ores are used as the attritioning media to break up the clay-like oxide ores. There are areas of the Bull Hill Mine that contain variable amounts of weathered oxide ores and other areas that contain intermittent stockwork. Each of these ore types has a different upgrade percentage and mass reduction in the PUG circuit. These product streams from the different ore types will combine to produce a pre-concentrate with the overall processing strategy to maximize the RE grade and recovery, and minimize the mass or tonnage of the pre-concentrate that is transported to the Hydromet plant.
The Hydromet plant has been designed with two parallel circuits to process the pre-concentrate from the PUG plant. The nominal REO (rare earth oxide) production rate is anticipated to be 10,400 tons per year. The Hydromet process will use a hydrochloric acid solution, heated to 90 degrees C (degrees Celsius) to leach the REE from the concentrate. Iron is then precipitated from the solution, and calcium and manganese are extracted by an ion exchange process. The REE are finally precipitated as carbonates through the use of sodium carbonate.
Both the Nominal base case and the Maximum case utilized only the Bull Hill deposit. Rare Element has been exploring additional deposits that, thus far, have not been determined to contain mineral reserves nor resources. As we continue to advance the Bear Lodge project, exploration will continue at the outlying deposits where drilling has indicated that HREE's (heavy rare-earth elements) appear to be more prevalent. If these deposits are found to contain economically feasible mineral reserves and resources, then there would be the opportunity to either prolong the life of the mine or increase annual production of REO concentrate.
The life of mine operating costs for the Nominal Base case have been estimated at $54.17/t ore for the mining and PUG costs, $174.30/t ore for the Hydromet plant, $26.26/t ore for G&A costs for a total operating cost of $254.73. The Maximum case life of mine operating costs are $46.26/t for the mining and PUG operating costs, $191.57/t for the Hydromet plant costs, $9.17/t for G&A for total costs of $247.00/t.
The Bear Lodge PFS addressed all aspects for the development of the project including infrastructure, open-pit mining, mineral concentration, and hydrometallurgical processing. Roche Engineers, Inc. was the independent consulting group who carried out the PFS on behalf of the Company. Other consulting groups who provided information and expertise included Ore Reserves Engineering (O.R.E.), John T. Boyd Company, Mountain States R & D International, Hazen Research Laboratories, and IMCOA, an independent industrial minerals research firm based in Perth, Australia.
More from the release:
Financial Analysis
The economic analysis that was performed for the PFS on the Bear Lodge project was conducted with both a Nominal (Model 1) and a Maximum (Model 2) production schedules. The Nominal production schedule was considered as the base case. The major factor differentiating the Nominal case with the Maximum case is the mine life and production schedule. The Nominal case addresses production of 23,111 tpa (tons per annum) of concentrate production at 45% REO (rare-earth oxide) for a mine life of 19 years while the Maximum case provides for production of 73,080 tpa of concentrate at 45% REO for a mine life of 10 years.
Total life-of-mine capital costs for the project have been estimated at $445.9 million including a 25% contingency of $89.2 million. The initial capital cost is $375.1 million. This includes $127.2 million for the PUG (Physical Up-Grade) plant and mine (including replacement capital) and $133.8 million for the Hydromet plant. Initial capital expenditures are assumed to span the first four years, with infrastructure heavily weighted in the first two years and plant construction heavily weighted in the second two years. There has been a trend toward increasingly higher equipment prices and input costs that have resulted in higher capital expenditures throughout the mining industry over the past years.
The Nominal base case and the Maximum case both assumed an average price of $17.36 per kilogram (kg) of bulk mixed RE concentrates with an average grade of 45% TREO (total rare-earth oxide). This price is a three-year trailing average of prices from the Metal-Pages bulletin. Recognizing that the output concentrate produced from the Bull Hill mine is a "basket mix" of individual rare earth oxides, a discount of 40% was assumed for the pricing in the economic models.
The economic analysis also calculated that the break-even cash flow price for RE concentrate is $4.42/kg, which is 75% below the $17.36 price used in the models. The price required to achieve an IRR of 30% is approximately $11.70, which is 33% lower than the price assumed for both cases.
Mine Design and Mining Operations
The mine will be operated as a conventional truck-shovel open pit mine. The PFS determined that the scope of the development of the Bear Lodge project should consist of two components: the open-pit mine operations and PUG (physical upgrade) plant on-site at the Bull Hill mine and the Hydromet plant (hydrometallurgical) at Upton, Wyoming, adjacent to the railway line. Upton is located approximately 40 miles from Bull Hill mine. The PUG plant is designed to maximize the rare earth ore and produce a pre-concentrate using a gravity separation and screening and wash process. This pre-concentrate will be transported to the Hydromet plant at Upton, Wyoming where a rare earth concentrate will be produced.
The PUG plant is designed to process up to 1,000 tpd (tons per day) of high-grade oxide material and 1,000 tpd of oxide carbonate and stockwork material which will be blended to meet mine pit production plans and market demands. The PUG process employs a series of crushing, attritioning, washing and screening methods to concentrate the RE fines and reduce the physical mass. Harder stockwork ores are used as the attritioning media to break up the clay-like oxide ores. There are areas of the Bull Hill Mine that contain variable amounts of weathered oxide ores and other areas that contain intermittent stockwork. Each of these ore types has a different upgrade percentage and mass reduction in the PUG circuit. These product streams from the different ore types will combine to produce a pre-concentrate with the overall processing strategy to maximize the RE grade and recovery, and minimize the mass or tonnage of the pre-concentrate that is transported to the Hydromet plant.
The Hydromet plant has been designed with two parallel circuits to process the pre-concentrate from the PUG plant. The nominal REO (rare earth oxide) production rate is anticipated to be 10,400 tons per year. The Hydromet process will use a hydrochloric acid solution, heated to 90 degrees C (degrees Celsius) to leach the REE from the concentrate. Iron is then precipitated from the solution, and calcium and manganese are extracted by an ion exchange process. The REE are finally precipitated as carbonates through the use of sodium carbonate.
Both the Nominal base case and the Maximum case utilized only the Bull Hill deposit. Rare Element has been exploring additional deposits that, thus far, have not been determined to contain mineral reserves nor resources. As we continue to advance the Bear Lodge project, exploration will continue at the outlying deposits where drilling has indicated that HREE's (heavy rare-earth elements) appear to be more prevalent. If these deposits are found to contain economically feasible mineral reserves and resources, then there would be the opportunity to either prolong the life of the mine or increase annual production of REO concentrate.
The life of mine operating costs for the Nominal Base case have been estimated at $54.17/t ore for the mining and PUG costs, $174.30/t ore for the Hydromet plant, $26.26/t ore for G&A costs for a total operating cost of $254.73. The Maximum case life of mine operating costs are $46.26/t for the mining and PUG operating costs, $191.57/t for the Hydromet plant costs, $9.17/t for G&A for total costs of $247.00/t.
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