Pele’s flagship property is its 100-percent owned Eco Ridge Mine Rare Earths and Uranium Project. Eco Ridge is located in Elliot Lake, Ontario, a proven mining camp with historic production exceeding 300-million pounds of uranium oxide (U3O8) and the only mining camp in Canada to have achieved commercial production of rare earth oxides (REO). Elliot Lake has outstanding regional infrastructure including highways, railway, electricity, natural gas, airport, deep-water ports, and a qualified workforce.
Pele recently announced the results of an updated economic review of Eco Ridge, prepared by Roscoe Postle Associates Inc. (RPA). The economic review is a sensitivity analysis on Pele’s 2012 Preliminary Economic Assessment (PEA), also prepared by RPA, which evaluates the impact of the recent increase in the NI 43-101 Mineral Resource estimate for Eco Ridge along with reduced rare earth price assumptions, while maintaining all unit operating costs and process recoveries unchanged from the PEA.
The economic review concludes that the recent increase in Mineral Resources extends mine life and improves project economics. While this improvement is offset by a reduction in rare earth price forecasts, the net result demonstrates that Eco Ridge economics remain positive.
When compared to the PEA the economic review demonstrates the following:
- Pre-tax NPV(10%) remains at $1.02-Billion;
- Pre-tax IRR reduced to 43-Percent from 50-percent;
- 46-percent increase in life-of-mine REO production to 141.6-million pounds;
- 52-percent of Project revenue from REO; nearly 80-percent of REO revenue from Critical REO (neodymium, dysprosium, yttrium, terbium, and europium oxides) plus scandium oxide;
- 55-percent increase in life-of-mine U3O8 production to 42.7-million lbs;
- U3O8 revenue forecast to exceed operating costs for first five years of production and thereafter to offset the majority of operating costs, reducing financial risks associated with REO production.
- Sustaining capital increases by $33-million due to longer projected mine life;
- Economic sensitivity that reflects 30-percent decrease in REO prices;
- An increase in mine life from 11 to 14 years and an expanded block of higher-grade material for mining early in the production schedule.
The PEA and subsequent economic review demonstrate that Eco Ridge has excellent economic potential to produce critical rare earths and uranium. Eco Ridge is ideally situated in Elliot Lake, which contains one of the largest and most readily accessible concentrations of critical rare earths in North America. Pele is focused on the sustainable development of a safe, secure, and reliable Canadian REO supply chain that will support downstream value chain opportunities within North America.
Operational highlights of the economic review include:
- 9,000-tonne per day operation with life-of-mine production of 141.6-million lbs of total REO (in the form of a mixed rare earth carbonate concentrate) and 42.7-million lbs of U3O8 over a 14-year mine life;
- Production of a strategically significant combination of critical rare earth oxides forecast by the U.S. Department of Energy to be subject to a high risk of supply disruption, with almost 90-percent of Project revenue from Heavy REO, neodymium oxide (Nd2O3) and U3O8.
- Life-of-mine production includes 20.7-million lbs of Nd2O3, 1.3-million lbs of dysprosium oxide, 6.0-million lbs of yttrium oxide, and significant quantities of terbium, europium, and scandium oxides, providing a vital source of Critical REO outside China.
Financial highlights of the updated economic review include (all terms in US$):
- Cumulative total gross revenue of $7.12-billion; Cumulative operating cash flow of $3.27-billion; Cumulative pre-tax cash flow of $2.58-billion;
- Life of mine average operating unit cost of $72.12 per tonne; Net revenue of $143 per tonne;
- Start up capital expenditures of $563-million (includes contingency of $108-million);
- REO basket price of $57 per kg net of separation costs is more conservative than the $78 per kg used in the PEA. U3O8 price of $70 per lb is the same as in the 2012 PEA;
For additional operational and financial metrics, please click here: Table 1A-Economic Review Operational Metrics and Table 1B-Economic Review Financial Metrics
For forecast production of individual rare earth oxides, please click here: Table 2A-Forecast Individual Rare Earth Production and Table 2B-Uranium Recovery & Revenue
Uranium minerals are the major mineral sources for Yttrium and heavy rare earths at Eco Ridge, allowing for excellent recovery. Pele is transparent about its plans for the safe disposal of radioactive waste products as backfill underground at the mine site and plans to undertake the licensing process with the Canadian Nuclear Safety Commission.
Pele’s world-class development team is led by Pele’s Executive Vice President, Roger Payne P. Eng., former Rio Algom General Manager with over 20 years experience in Elliot Lake. Key consultants include Roscoe Postle Associates Inc., SNC-Lavalin Inc., SENES Consultants Limited, Golder Associates Ltd., and SGS Canada Inc. Permitting will be led by SENES Consultants Limited & Golder Associates Ltd., both of which have extensive experience in the regulatory processes for licensing, operating, and decommissioning mines in Elliot Lake.
The Project has no known environmental liabilities and enjoys enthusiastic local support. The Province of Ontario has already granted two renewable 21-year Mining Leases at Eco Ridge, giving Pele the exclusive right to mine the deposit. The Mining Leases include surface rights except where the City of Elliot Lake owns certain surface patents. The City of Elliot Lake has also granted to Pele a renewable 21-year lease with an option to purchase the Surface Patents. Both the Mining Leases and the City Lease allow for siting of project infrastructure like mine portals and processing facilities.
Pele places great value on community relations and has maintained friendly and productive dialogue with local First Nations and the City of Elliot Lake since the inception of the Eco Ridge Mine project in 2006. Pele seeks to provide long-term benefits to local communities through sustainable development.
Note: The PEA is preliminary in nature. It includes inferred mineral resources, which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty that the preliminary economic assessment will be realized.