TIDMPRE
RNS Number : 3505F
Pensana Rare Earths PLC
16 November 2020
16 November 2020
Update on BFS and the establishment of a sustainable
magnet metal supply chain
Pensana Rare Earths Plc (LSE: PRE, ASX: PM8) is pleased to
report on the progress the Company is making to bring Longonjo
online as the first major rare earth mine in over a decade and in
establishing a sustainable magnet metal supply chain to meet the
burgeoning demand from the EV and Offshore Wind industries.
Highlights
-- Two studies are currently underway, a feasibility study into
the production of a mixed rare earth sulphate in Angola, which is
being undertaken by a number of internationally recognised
consultants in Perth, Western Australia and the recently announced
Wood Group study into the establishment of a UK-based processing
facility to produce separated rare earth oxides.
-- The Longonjo mine and concentrator study is well advanced
with the capital costs in line with the $130 million reported in
the Preliminary Feasibility study in November 2019.
-- In March 2020 the scope of the studies was expanded to
include the processing of the concentrate to produce a mixed rare
earth carbonate (MREC), and in early October a high grade MREC was
successfully produced.
-- Subsequent to this, a resin-based process route was developed
which yields a high grade mixed rare earth sulphate, an ideal
feedstock for the proposed UK separation facility. This innovative
process route has the potential for lower capital and operating
costs and is being actively pursued.
-- Project manager Paradigm Project Management has recently gone
out with several equipment packages for quotation from suppliers
and contractors in preparation for the commencement of construction
of the initial infrastructure and bulk site services at the
Longonjo Project in the first quarter 2021.
-- The Wood Group study into the establishment of a rare earth
processing facility in the UK is well underway and is expected to
be reported in January 2021.
-- The study has highlighted the internationally competitive
power, labour and reagent costs at each of these post-Brexit
Freeport locations in the Local Enterprise Partnership zones of
Merseyside, Tees Valley and Humber. A decision on the location is
expected shortly.
Chairman Paul Atherley commented:
"The response to our announcement that we are looking to
establish a UK based rare earth processing facility as a key part
of a sustainable mine to magnet supply chain to supply the
burgeoning EV and offshore wind industries has been overwhelmingly
positive, and it's very clear already that the proposed investment
would receive strong support across a wide range of
stakeholders.
We are expecting to draw the various studies to a decision point
in January and are looking forward to reporting on the capital
requirements and the overall economics of the investment at that
time."
Establishing a sustainable mine to magnet supply chain
Recent announcements by the EU have made it clear that it is no
longer acceptable to import unsustainably sourced raw materials to
build the green economy. A particular focus is the establishment of
rare earth processing in Europe to meet the growing demand for
critical magnet metals.
In response to this new policy setting the Company is looking to
work with the UK government and others to establish a sustainable
magnet metal supply chain through the sustainable development of
the Longonjo mine in Angola to supply a UK-based processing
facility.
The study is based on the processing facility supplying existing
downstream suppliers to the automotive and offshore wind turbine
original equipment manufacturers both in the UK and the EU.
BFS well advanced. Capital costs supported.
The mine and concentrator study is well advanced and the capital
cost estimates are in line with the $130 million estimated for the
mining and flotation operations reported in the Preliminary
Feasibility Study (PFS) in November 2019.
A list of the consultants with their respective contributions is
provided below.
AREA OF EXPERTISE CONSULTANT
Lead Engineer, TSF, infrastructure, mining, Wood Group
process plant engineering, cost estimation,
surface water management
------------------------
Mineral Resource estimate and model SRK Consulting
------------------------
Pit Optimisation Snowden, Perth
------------------------
Comminution & flotation Pilot Plant ALS Metallurgy,
Perth
------------------------
MREC testwork Nagrom
------------------------
Site and camp infrastructure, bulk services, Paradigm Project
road & rail infrastructure logistics Management
------------------------
Financial Modelling Ockham
------------------------
Environmental and social impact assessment HCV Africa
(ESIA) and baseline studies
------------------------
Environmental and Social assessment, stakeholder Grupo Simples
engagement - Angola
------------------------
Angola Legal AVM Advogadas
------------------------
Australian Legal Thomson Geer
------------------------
Metallurgical consultant Mr Vic McLaglen
------------------------
Metallurgical testwork facility - flotation Auralia Metallurgy
------------------------
Metallurgical testwork - tailings storage Bureau Veritas Minerals
facility
------------------------
Mineralogy testwork ALS Mineralogy
------------------------
Geological Consultant Dr Wally Witt
------------------------
Geotechnical studies ARQ Consulting
------------------------
Hydrology, Borefield testing and modelling HCV Africa
------------------------
Transport rail and shipping Conrad Partners
------------------------
Rare earth markets and pricing Roskill / Adamas
------------------------
Sample Assays Nagrom Laboratories
------------------------
Successful production of a mixed rare earth carbonate
In March 2020 the technical studies were expanded to include the
processing of the concentrate for the production of a high grade
mixed rare earth carbonate (MREC), and in early October a high
grade MREC with NdPr comprising 33.5% of the total rare earths
content was successfully produced.
The finalisation of this part of the process route is well
advanced with a number of innovative and highly encouraging
metallurgical developments in the final stages of testing by Nagrom
under the direction of the Wood team.
Development of an innovative resin-based process route to
produce a mixed rare earth sulphate
One of these innovative process routes incorporates the
preferential adsorption of leached mixed rare earths onto resin
which when stripped yields a high grade mixed rare earth sulphate,
which is an ideal feedstock for the proposed UK facility.
A patent reservation is underway to protect the intellectual
property of this novel process route which re-purposes existing
technology and is expected to replace the high capital cost and
energy-intensive process route most commonly used to produce a
mixed rare earth carbonate and as a result is expected to lower the
overall capital and operating costs for this part of the
project.
Initial infrastructure
In July 2020 African based Paradigm Project Management
(Paradigm) was engaged as the Company's owner representative to
co-ordinate the various studies and to deliver the front-end
engineering design (FEED) for the main infrastructure elements of
the Longonjo Project.
Paradigm has recently gone out for quotation to suppliers and
contractors with several equipment packages in preparation for the
commencement of construction of the initial infrastructure and bulk
site services (water, power, reagents, communications, and
accommodation) for commencement in Q1, 2021.
A decision on the commencement of construction will be subject
to completion of the relevant part of the studies, the availability
of funding and Board approval.
Upgraded Mineral Resource estimate expected to increase mine
life.
In September 2020, a substantial upgrade to the Mineral Resource
estimate was reported, which contained 2.3 times the Measured and
Indicated resources used in the Preliminary Feasibility Study. This
increase is expected to lead to an extended mine life subject to a
favourable outcome of the various studies currently underway.
Decision on the site for the UK processing facility expected
shortly
The Wood Group study is in the final stages of evaluation of
potential sites within the three Northern Powerhouse post-Brexit
Freeports, Merseyside, Tees Valley and Humber and a decision on the
preferred site location is expected shortly.
The study has highlighted the international competitiveness of
each of the three locations, particularly in relation to power,
labour and reagents costs.
Detailed discussions with local councils and experienced
planning agents have confirmed that subject to a final investment
decision and funding being available, the necessary planning
permission for the proposed UK facility can be obtained with
sufficient time for it to be constructed contemporaneously with the
mine development.
Government initiatives
The Northern Powerhouse is a government proposal to boost
economic growth based on the benefits of agglomeration which aims
to reposition the British economy away from London and the South
East and comprises 11 local enterprise partnerships including
Liverpool, Tees Valley and Humber.
The Company notes the various initiatives surrounding the
Northern Powerhouse, in particular, the most recent meeting between
Conservative MPs of the Northern Research Group which is calling
for a post-pandemic recovery plan based on jobs and infrastructure
investment.
Chancellor Rishi Sunak, himself a Yorkshire MP, was reported to
have thrown his weight behind calls for a special package of
support for northern businesses and funding for large-scale
building projects.
In this light the Company welcomes the approval by the
Government for Less Common Metals Limited to carry out a
feasibility study into a fully integrated supply chain for rare
earth permanent magnet production in the UK and looks forward to
providing whatever support is required in assisting a favourable
outcome for this important study.
Less Common Metals Limited is a Merseyside based world leader in
the manufacture and supply of a range of metals and alloys based on
rare earth elements for a range of specialist uses including
permanent magnet production.
The Company also welcomes the recent policy statements by the EU
Commissioner Maros Sefcovic; "The EU is pushing the concept of open
strategic autonomy on raw materials by developing its own supplies
of rare earths and having its own rare earth mining and refining
capacity ready by 2030".
It is clearly no longer acceptable to import unsustainable raw
materials into Europe (EU and UK) to develop the Green economy. The
Company has joined a range of industry bodies including the
Critical Minerals Association, the Rare Earth Industry Association
and the European Raw Materials Alliance in order to support this
message.
Increasing magnet metal rare earth prices
The rapid uptake in electric vehicle production is well
documented with record global electric car sales reported in
September, up 91% year on year, however, it is the accelerating
growth in offshore wind capacity that is capturing attention.
The EU, which is already home to 42% of the world's offshore
wind capacity, has just announced a planned five-fold increase in
offshore wind generation this decade and a 25-fold increase by 2050
to meet its' climate goals.
China, in its' recently announced Beijing declaration, has set
out plans to increase wind capacity by four times to over 800 GW by
2030 and "at least" 3,000 GW by 2060.
To put the scale of these expansions into perspective the total
UK electricity generation capacity from all sources, not just wind,
is currently around 75 GW.
The US which is currently lagging the EU and China in terms of
the growth of offshore wind capacity is now expected to accelerate
its investment in the renewables sector in general and more
specifically in offshore wind capacity under the Biden Presidency.
The IEA has reported that the United States is now anticipated to
become one of the largest offshore markets in 2024.
All three major rare earth commodity forecasters Roskill, CRU
and Adamas are forecasting substantial increases in magnet metal
prices over the next few years, with Adamas forecasting
'unfathomable demand' post-2030 as the demand from electric
vehicles and offshore wind takes off.
Rare earth prices have already begun to respond. Over the past
twelve months, despite the COVID downturn, spot neodymium oxide
prices have increased by 35% to over US$57,000 per tonne on the
Shanghai metal market and are quoted at over US$72,000 per tonne in
Europe and the US.
Cash and LSE listing
The Company is well funded with US$9.2 million cash at hand. The
Company continues to receive strong support from UK investors
following the standard listing on the Main Board of the LSE in
July.
The LSE has recently reported that based on average daily
trading volume Pensana is now one of the most liquid ASX/LSE
dual-listed companies across all sectors on the LSE, ranking fourth
behind Rio Tinto, BHP and South 32.
S
The information in this report that relates to the 2020 Mineral
Resource estimates is based on work done by Rodney Brown of SRK
Consulting (Australasia) Pty Ltd. Rodney Brown is a member of The
Australasian Institute of Mining and Metallurgy and has sufficient
experience that is relevant to the style of mineralisation and type
of deposit under consideration, and to the activity he is
undertaking, to qualify as a Competent Person in terms of The
Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (JORC Code 2012 edition).
The Company confirms that it is not aware of any new information
or data that materially affects the information included in the
original market announcement on 14 September 2020 and, in the case
of estimates of Mineral Resources estimates that all material
assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not
materially changed. The Company confirms that the form and context
in which the Competent Person's findings are presented have not
been materially modified from the original market announcement.
FORWARD LOOKING STATEMENTS
Statements regarding plans with respect to the Company's project
are forward-looking statements. There can be no assurance that the
Company's plans for development of its projects will proceed as
currently expected. These forward-looking statements are based on
the Company's expectations and beliefs concerning future events.
Forward looking statements are necessarily subject to risks,
uncertainties and other factors, many of which are outside the
control of the Company, which could cause actual results to differ
materially from such statements. The Company makes no undertaking
to subsequently update or revise the forward-looking statements
made in this announcement, to reflect the circumstances or events
after the date of that announcement.
This Announcement has been approved in accordance with the
Company's published continuous disclosure policy and authorised for
release by the Company's Board.
For further information:
Pensana Rare Earths Plc
Website: www.pensana.co.uk
Paul Atherley Chairman / Tim George CEO contact@pensana.co.uk
Buchanan (UK Financial PR) +44 (0) 207 466 5000
Bobby Morse/ Augustine Chipungu /James pensana@buchanan.uk.com
Husband
About Pensana Rare Earths Plc
Pensana is a rapidly growing sustainable resources company with
shares trading on the London Stock Exchange's Main Market for
listed securities (PRE: LSE) and on the Australian Stock Exchange
(PM8: ASX).
Pensana has appointed the Wood Group to undertake a study into
the establishment of an integrated rare earth processing facility
in the UK ("the Wood Group Study") with a view to creating the
world's first sustainable magnet metal supply chain.
Having progressed the design of the Longonjo project to include
the production of a mixed rare earth carbonate, Pensana now has a
unique opportunity to explore the potential for it to make one
further step downstream and to create additional value by
establishing a rare earth oxide production facility in the UK.
By linking a mid-stream magnet metal supply with downstream
magnet manufacturing capacity there is the potential to create a
sustainable magnet metal supply chain at a time of increasing
concern over the provenance of these critical metals for the
electric vehicle and Offshore Wind Turbine industries.
Following the recent resource upgrade, the Longonjo project is
now one of the world's largest known rare earth resources.
Thierry Breton, the EU's internal market commissioner, recently
announced the establishment of a European Raw Materials Alliance
recognising that the EU needs to establish sustainable supply and
processing capacity of rare earths to support the UK government's
plans for the UK to become the Saudi Arabia of wind. Pensana is
focused on this broader context.
As the Angolan government continues to diversify its economy
away from oil and gas and diamonds and to develop its agriculture,
tourism and mining sectors, Longonjo is the flagship mining project
and is receiving strong support both within the community and from
government at all levels.
The Company has ongoing consultation with the local community
and elected authorities and is working closely with them to ensure
that the benefits of the project in terms of training, jobs and
broad community support meet the aspirations of as many
stakeholders as possible.
As the Company continues on its path to building one of the
world's lowest carbon footprint mines it also strives to be a
trusted partner for its employees, stakeholders and the communities
where it operates. The Pensana team is particularly passionate
about developing young Angolan professionals, especially women in
STEM, engaging responsibly with the environment and broad social
engagement with the local community.
Across the Company, at every level, the Pensana team is
committed to sustainable value creation and to the advancement of
the UN Sustainable Development Goals. The project is being planned
to the highest ESG standards and the Company is conducting a
detailed assessment of the appropriate international ESG standards,
initiatives and reporting frameworks to adopt to ensure the Company
remains best in class as the project moves into the development
phase.
With Presidential approval for the mining licence and strong
financial backing from FSDEA, the Angolan Sovereign Wealth Fund
which now holds a 23% stake in the Company, Pensana is in a strong
position to bring the project online as the world's first
sustainable supplier of critical magnet metal rare earths.
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