Could you briefly introduce Peak Rare Earths?

Peak is an ASX-listed rare earths development company aligned with the global decarbonization thematic. Our flagship Ngualla rare earth project in Tanzania is one of the largest, highest-grade, undeveloped rare earth projects in the world. Key points of differentiation include its high-grade, low levels of radionuclides, a 24-year life-of-mine supported by JORC-compliant ore reserves, with substantial exploration and development upside. Approximately 92% of the value of Ngualla’s high-grade rare earth concentrate will be attributable to contained NdPr (neodymium praseodymium) oxide, which is used in high-strength permanent magnets deployed in electric vehicles and wind turbines.

Can you comment on the key highlights of your recently updated BFS?

The recently completed 2022 Bankable Feasibility Study (BFS) update follows a BFS completed in early 2017 and reaffirmed the world-class nature of the Ngualla project. Key takeaways included annual contained production of NdPr of approximately 3,700 t and compelling economics, including a US$1.5 billion NPV and a 37% IRR. We are targeting a final investment decision in May 2023, which will be followed by a two-year build and construction phase, with first concentrate targeted for mid-2025. The upfront capital cost is approximately US$320 million, of which 60-70% should be covered as debt, leaving the remaining balance to be financed through a combination of potential co-investment at a project level and an equity raising.

What has led to the corporate decision to update the BFS?

The decision to update the BFS was driven by a combination of upward movement in rare earth prices, project optimisation opportunities and movements in costs.

The outlook for rare earths has dramatically changed since the completion of our original BFS in 2017. The world is committing to decarbonisation with a rising number of countries committing to net zero carbon emissions and the phase out of new internal combustion engine vehicles. Global auto brands such as Mercedes, BMW, Fiat, Volvo, and Jaguar are set to be fully electric by 2030, while in North America, General Motors has committed to the phase-out of diesel and petrol cars by 2035. Rare earth prices have increased significantly since 2013 and are expected to further strengthen as the world continues to decarbonise.

From an optimisation perspective, the BFS update reflects a 14% capacity expansion as well as other enhancements such as a shorter and lower cost project access road, the use of a lower-cost flotation collector and the adoption of GITSM standards on our tailings storage facility.

While there has been some upwards movement in capital and operating costs, these have been more than offset by improved rare earth prices.

Peak Rare Earths has entered an MoU with Shenghe for the offtake of NdPr. How is this different from your original plan and what are the benefits of your new approach?

Our original plan was to develop a mine and concentrator in Tanzania in conjunction with a refinery in the UK. However, following negotiations with the Tanzanian Government, we have agreed to initially develop Ngualla as a standalone concentrate project and work with the government to explore further downstream processing opportunities. In this context, Peak signed a strategic and offtake MoU with Shenghe Resources, our largest shareholder and the largest importer of rare earth concentrate into China. This sequenced development approach enables us to reduce upfront capital and technical risk and generate operational cash flows before progressing further downstream. It also enables us to take advantage of a growing surplus in rare earth refining capacity, strong demand for high-grade rare earth concentrate and attractive payabilities.

Can you tell us more about the operational environment in Tanzania?

Historically, Tanzania has been mostly known for gold, diamonds and tanzanite. However, it also holds major deposits of critical minerals such as rare earths, graphite, copper and nickel. This creates an enormous opportunity for the country to diversify its mining sector and establish a strong nexus with the next phase of global industrialization. Under the current President, Her Excellency, Samia Suluhu Hassan, Tanzania has a target to increase mining’s contribution to GDP from the 3.5% to 10% by 2025. The President has been very vocal about the importance of foreign investment and has established a clear mandate to facilitate FDI and reduce red tape. In the last 12 months, multiple framework agreements have been approved in graphite, mineral sands and diamonds, as well as in the LNG sector.