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”).
Pele recently announced results of an updated NI 43-101 Preliminary Economic Assessment (the “PEA”) of Eco Ridge. The PEA was prepared by Roscoe Postle Associates (“RPA”) and demonstrates that Eco Ridge has potential to become a profitable producer of REO and U3O8. The PEA is the culmination of several years of exploration and pre-development work by Pele and its world-class technical team.
Since publication of its previous PEA in July 2011, Pele has pursued opportunities for processing circuit improvements at Eco Ridge. The updated PEA demonstrates that the projected financial benefits from sharply higher rare earth recoveries, as a result of conventional milling rather than leaching, far outweigh associated capital and operating cost increases and more conservative forecast pricing for REO and U3O8. All production and recovery figures below represent significant gains from the 2011 PEA.
Operational highlights of the updated PEA include:
- 9,000-tonne per day operation with life-of-mine production of 97.2-million lbs. of total REO (in the form of a mixed rare earth carbonate concentrate) and 27.5-million lbs. of U3O8 over an 11-year mine life;
- Production of a strategically significant combination of rare earths forecast to remain in supply deficit, with 85-percent of Project revenue from Heavy REO, neodymium oxide (Nd2O3) and U3O8.
- Life-of-mine production includes 14.2-million lbs. of Nd2O3, 882,000 lbs. of dysprosium oxide (DY2O3), 4.1-million lbs. of yttrium oxide (Y2O3) and significant quantities of terbium and europium oxides, providing a vital source of Critical REO outside China.
- Light REO recoveries average 89-percent, Heavy REO recoveries average 78-percent, and U3O8 recovery averages 90-percent;
- Accelerated capital payback with initial mining within a higher-grade channel; Year 1 production
is expected to exceed average life-of-mine grades by approximately 40-percent.
- Increased mineral resources include new Hanging Wall Zone (“HWZ”) mineralization and recently drilled lateral extensions of the Main Conglomerate Bed (“MCB”).
Financial highlights of the updated PEA include (all terms in US$):
- For an 11-year mine life, Cumulative total revenue of $5.90-billion; Cumulative operating cash flow of $2.83-billion; Cumulative pre-tax cash flow of $2.16-billion;
- NPV of $1.02-billion (at a 10-percent discount rate); IRR of 50-percent;
- Start up capital expenditures of $563-million (includes contingency of $108-million);
- $535-million of processing fees included for separation of concentrates into individual oxides;
- REO basket price of $78 per kg for individual oxides net of separation costs and U3O8 price of $70 per pound are far more conservative than price forecasts in 2011 PEA;
- 67-percent of Project revenue from REO; Nearly 80-percent of REO revenue from Heavy REO plus Nd2O3.
- Operating unit cost of $71.33 per tonne or $13.09 per kg ($5.94 per lb) Total REO, net of U3O8 credits.
- Before-tax payback period of 1.5 years from commencement of commercial production.
Pele has assembled a world-class team to advance mine development at Eco Ridge. The team is led by Pele’s Executive vice President Roger Payne, a Professional Engineer with over 45 years of international experience including 20 years in Elliot Lake. Permitting efforts will be led by SENES Consultants Limited and Golder Associates Ltd., both of which have provided consulting services to Pele during the past five years at Eco Ridge and have worked closely with Mr. Payne during his tenure at Rio Algom. SENES and Golder have comprehensive knowledge and experience regarding the regulatory processes pertinent to licensing, operating, and decommissioning mines in Elliot Lake. RPA and SNC-Lavalin Inc. are leading the mine design and mineral processing design engineering, respectively. Pele’s Rare Metals Advisory Board includes renowned industry experts Dr. Tony Mariano and Dr. William Bird.
Sharp price increases in REO, caused by surging global demand and uncertain future supply, has incited a rush to find and bring to production new rare earth sources outside of China. With well-understood geology, excellent regional infrastructure, and strong local support, Eco Ridge is an ideal location for a safe, secure, and reliable long-term supply of REO and U3O8.
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.