Alkane Resources Among the Top Tier of Heavy Rare Earth Producers Anticipated by 2014

Alkane Resources Ltd.’s (ASX: ALK) Dubbo Zirconia Project (DZP) has been 14 years in the making. Already, in the last 4 years — Alkane has demonstrated the ability at pilot scale to produce commercially viable rare earth products. This achievement is the ultimate precursor to commercialization and with an anticipated annual production of about 4,000 tonnes of rare earth concentrate of which 25% will be heavy rare earth element (HREE) concentrate, Alkane ranks among the top tier of HREE producers anticipated to come on stream in 2014. 

Alkane Resources has been working with the Australian Nuclear Science and Technology Organization (ANSTO) since 2006 and in 2007 a separation pilot plant was built to improve their existing flowsheet. The pilot plant has been operating since May 2008. Ian Chalmers, Managing Director of Alkane says, “I can’t stress enough the importance of operating the demonstration pilot plant at ANSTO, and now in our 4th year, we continue to make improvements to the flowsheet and our products. The DZP is a very advanced, very long life, polymetallic project in a very favourable location with the right mix of strategic metals.” Ian also reiterates that Alkane is making significant progress towards becoming a strategic supplier of heavy rare earth elements outside of China.

In recent days Alkane’s wholly owned DZP has been the focus of various news releases and updates. This morning, Alkane’s official news release titled, Drill Results Point to Possible Resource Expansion For Dubbo Zirconia Project, notes “Reverse circulation drilling of the Railway prospect within the Dubbo Zirconia Project (DZP) has identified extensive zirconium, niobium, yttrium and rare earth mineralisation…rare earth distribution at Railway is about 30% heavy rare earths and 70% light rare earths, slightly higher than Toongi which has a 25% / 75% distribution…additional potential from Railway could add to the already long life Toongi resource/reserve base.” At this stage the drilling is not sufficient to define a resource but an exploration target of approximately 40 million tonnes has been identified.

On Monday, June 18, 2012, a Company Insight – Progress After Capital Raising, provided additional details about the DZP, describing that the current focus of the project is two-fold, addressing the preparation of the environmental impact statement and advancing the feasibility study to revamp capital and operating costs. This will ultimately lead to the finalization of off-take agreements resulting in a solid revenue streams for Alkane. 

Here are some additional points that highlight why Alkane is a company to watch:

  • The DZP is based upon one of the world’s largest in-ground resources of the metals zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements; located 20 kilometres south of the large regional centre of Dubbo, about 400 kilometres northwest of Sydney in the Central West Region of New South Wales.
  • It is anticipated that all approvals, financing and off-take agreements for DZP will be in place by June 2013 with production anticipated by 2014. Alkane also anticipates that their gold project will be producing by Q3 2013. Both projects will create effective revenue streams for the company.
  • There are 4 off take agreements in place for products generated from the DZP. Three are for zirconium products and one is for niobium products. Alkane is also working toward signing a strategic partnership agreement for the rare earth output from the DZP by the end of July 2012.
  • A Definitive Feasibility Study for the DZP completed in 2011 references a 1 million tonne per annum throughput that will yield about 15,700 tonnes per annum of zirconium that will be further processed into other saleable products; 3,005 tonnes per annum of niobium; 3,050 tonnes per annum of light rare earth element (LREE) concentrate; and 1,120 tonnes per annum of heavy rare earth (HREE) concentrate.

On a personal note, I contacted Ian after a pile of emails on a colleague’s interview on what companies he thinks will be coming on stream in the next year and a half. I immediately noted that this individual missed Alkane…