Three Rare Earth Projects That Might Be Flying Below Your Radar (Part 2 of 3)

Sep. 3, 2013

In this three-part series we cover three of the world’s lesser-known rare earth projects. While it is easy to get caught up in the horse-race of projects owned by publicly-traded juniors, it’s important to acknowledge the array of less-conventional, yet still promising, rare-earth projects that are riding below the radar of many. With juniors facing an ensuing drought for capital, and equity markets still fluttering on broader economic woes, private- and sovereign-backed projects may enjoy a strategic advantage as the shakeout of the rare earth industry escalates.

Part 2: Tanbreez Mining Greenland’s Tanbreez Ta-Nb-REE-Zr deposit in Greenland

The Tanbreez project is owned by a Greenlandic company called Tanbreez Mining Greenland (TMG), which is a private subsidiary of Australian-based Rimbal, which itself is a private subsidiary of Westrip Holdings Limited. Interestingly, Greenland Minerals and Energy acquired its Kvanefjeld, Zone 3, and Sørensen properties from Westrip Holdings between 2007 and 2012.

The Tanbreez deposit is made up of an inter-layered sequence of feldspar, arfvedsonite, and eudialyte seams which outcrop approximately 400 m above surface. The company claims that the deposit hosts an inferred mineral resource of more than 4.3 billion tonnes of eudialyte-bearing ore with an average grade of 1.8% ZrO2, 0.2% Nb2O5, and 0.65% TREO by weight. Of the total volume of TREO contained in the deposit, the company purports that 12% is neodymium oxide and 19% is yttrium oxide.

Aiming to produce 2,275 tonnes of TREO contained in eudialyte concentrate

Danish consultancy MTH recently completed a Definitive Feasibility Study (DFS) on the Tanbreez project, which has been submitted to the Greenland Bureau of Minerals and Petroleum for approval. The operation aims to initially mine 500,000 tonnes of ore per annum to yield eudialyte and feldspar concentrates. Assuming 70% recovery though to concentration, the project is poised to produce 6,300 tonnes of ZrO2, 700 tonnes of Nb2O5, and 2,275 tonnes of TREO per annum, contained in 100,000 tonnes of eudialyte concentrate and 200,000 tonnes of feldspar concentrate.

The processing plant proposed in MTH’s DFS allows for expansion of up to 1.5 million tonnes of ore treated per annum. With approval of its DFS, Tanbreez plans to start construction in 2014 and production in 2016. The company claims that the mining resource proposed in the DFS for the first 10 years of operation is compliant with the “indicated” level of the JORC standard. An apparent strength of the Tanbreez project is that uranium and thorium are present at background levels comparable to that of the adjacent country rock, thus should not be impacted by Greenland’s uranium-unfriendly mining policies.

May struggle to find buyer or toll-processor for low-grade concentrate

Details from the project’s DFS are not available, but given that the deposit is amenable to open-pit mining and considering the simple (chemical-free) processing strategy the company plans to employ, we foresee the project having relatively low pre-production and operating capital requirements versus some of its publically-traded peers. However, low-costs will be of no benefit to TMG if it is unable to commercialize its product. We believe the company will struggle to find a buyer or toll-processor for its low-grade eudialyte concentrate, which as proposed, will contain a mere 2 to 3 wt. % TREO. Moreover, the eudialyte concentrate will contain a blend of LREOs and HREOs, thus narrowing the field of potential off-takers to those capable of separating both varieties. If TMG can secure a buyer or toll-processor for its eudialyte concentrate, it should expect to incur a heavy discount on the value of REOs contained in its product due to its very low-grade. Additionally, the company will incur significant transportation costs for shipping its concentrate, of which upwards of 98 wt. % is waste material.

May find synergies through co-processing agreements with neighboring projects

In the Tanbreez project’s favor, we believe, is the fact that two of its most geographically-proximal peers (Kvanefjeld and Norra Kärr) are also aiming to produce REE-bearing concentrates, thus TMG may find opportunities to piggy-back on future processing agreements that either of these projects enter into. For example, the Norra Kärr project aims to produce a mixed rare-earth carbonate from its eudialyte-rich ores, thus the ultimate off-taker of Norra Kärr’s product may also be interested in the similar (albeit lower grade) feed coming from Tanbreez. Admittedly, this is a speculative scenario, but highlights the premise that TMG’s larger neighbors may ultimately be boons instead of burdens.

Tanbreez Mining Greenland is due to submit an application for an exploitation license to the Greenland Bureau of Minerals and Petroleum any day. If and when the license is approved, along with the Tanbreez DFS, we believe TMG will become an attractive target for Chinese or Japanese investors looking to acquire the private company for its large polymetallic deposit rich in neodymium, yttrium, and other critical REOs.

 

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