Arafura Resources has expanded the scope of Bankable Feasibility Study (BFS) for the Nolans rare earths project and extended the expected completion date of the BFS by nine to twelve months.

The expanded BFS will not only reduce operating and capital costs and de-risk the proposed Rare Earths Complex at Whyalla, but take advantage of 1,221 per cent higher rare earths prices, by simplifying the project flow sheet to focus on rare earth products.

Notably, the average valuation for the Nolans Rare Earths mix has lifted to US$207.53/kg (FOB) in June 2011, compared to the June 2010 value. These higher prices are expected to continue because of the demand and supply equation for rare earths.

Arafura has A$79 million cash at end of May 2011.  To complete the expanded BFS, additional funding in the order of A$50-A$60 million will be needed and other costs originally envisaged as part of project financing, but now brought forward due to the revised schedule. The Company will look at financing options for these additional requirements.

The Nolans Project will be an integrated Rare Earths Oxide project (mine to market), using a production process developed in Australia, and will be one of the first major producers outside of China for users worldwide.

Dr Steve Ward, Arafura managing director and CEO,  said, “the entire project flow sheet was extensively analysed as part of the technical review. A key outcome was identification of potential opportunities to simplify the flow sheet, which we believe will enable Arafura to maximise the inherent value of the Nolans Project. 

"Our focus will be very much on Rare Earths with a de-emphasis on the other products which may be produced in simpler alternate forms using standard engineering designs. Importantly, the simplified flow sheet will reduce interdependency risks between the rare earth plant and the other product plants.”

The BFS was expanded following a detailed technical review by the company and its team of consultants, which are leading global experts in large scale mineral processing projects such as Nolans. 

Major work in the expanded BFS includes:

- Design and optimization of a modified mine site beneficiation circuit which aims to generate a higher mineral concentrate grade with associated reduction in reagent, transport, capital and waste management costs, both at the Nolans Bore Mine and Whyalla Rare Earths Complex;

- Further test work and refinement of R&D programs by the Australian Nuclear Science and Technology Organisation (ANSTO) to produce separated Rare Earth products to customer specifications; and

- Undertaking detailed technical studies on major interaction points in a simplified process flow sheet to provide further confidence in process technology and reduce start-up risk.

Higher Grade Mineral Concentrate

Recent trialling of new physical separation processes has identified the potential to generate a significantly higher grade mineral concentrate from the proposed Nolans Bore Mine. This would deliver substantial savings over the life of the project due to reduced reagent, transport, capital and waste management costs.

Given the potential benefits across the Nolans Project, extensive geological and metallurgical testing is in progress.

Further development of REO separation technology 

Arafura has also made strong progress on its technology development program to produce REOs in the past year. Laboratory and pilot scale work is continuing, including further refinement, separation and quality assurance work streams, in consultation with technical experts at ANSTO and targeted customers to meet their commercial specifications. 

Successful pilot/demonstration test work on individual components of the processing circuit has been completed or is currently planned. Additional work to assess key interaction points takes this work one step further to provide increased confidence in process technology and reduce start-up risk.

The resource expansion phase of the Nolans Bore drilling program has commenced, with the recent completion of the shallow reverse circulation (RC) component. 

The  remaining months of the program will concentrate on extending Rare Earths  mineralization to depths beyond 150 metres below surface.

The company said drilling aimed at enhancing confidence in the Nolans Bore resource, primarily through infill drilling, is now complete. 

By the end of 2011 the company expects to have a much clearer understanding of the deposit’s capability to support expanded production far into the future, with sample analysis and geological interpretation of the drill data well underway.