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Main ForumAlkane kicks another goal

  • Today's announcement by ALK confirms my long term view that Alkane Resources under the guidance of Ian Chalmers is one of Australia's standout mining companies. (I 'd take a bet that Lynas Corp's share holders would swap CEOs in a millisecond if given the chance.)

    Dubbo Zirconia Project (DZP)

    - Australian Zirconia Limited (AZL), a wholly owned subsidiary of Alkane Resources Ltd, has signed a Memorandum of Understanding with Japan's Shin-Etsu Chemical Co.,Ltd, to produce a suite of separated heavy and light rare earths using the rare earth concentrates from the DZP.

    - Shin-Etsu is a diversified industrial company with reported net sales worldwide of nearly US$12.8 billion and a net income of US$1.2 billion for the fiscal year ending 31 March 2012.

    - A toll processing agreement will use Shin-Etsu Chemical?s technology to process 100% of DZP heavy and light rare earth concentrates in Japan (or other agreed location) to produce high purity separated rare earth oxides.

    - Shin-Etsu will have priority to purchase at commercial prices a quantity of the rare earths that they toll process under the agreement via an initial 5 year off-take agreement.

    - Shin-Etsu Chemical will also provide technical support and assistance to improve rare earths recoveries from the ore to the concentrate.

    - Selling the full suite of separated rare earths from the DZP output will significantly increase revenue over the base case assumption for sale of the two rare earth concentrates (LREE and HREE).

    - Based upon existing measured REE recoveries and the processing of 1Mtpa of ore, it is expected that Shin-Etsu will produce over 1,120 tpa of heavy rare earth oxides and over 3,050 tpa light rare earth oxides.

    - All DZP products are now under MOU, all of which are expected to be converted to binding off-take agreements.

    Shin-Etsu is a japanese company specialising in the production of separated rare earths and associated downstream products,such as magnets, which consume rare earths.

    Shin-Etsu operates Japan's only large scale separation and refining plant for rare earths, which uses a range of advanced separation and refining technologies. Shin-Etsu supplies high purity separated rare earths to a wide range of Japanese and international customers, while consuming significant quantities itself.

    Shin-Etsu was founded in 1926 and for the fiscal year ended 31 March 2012 reported net sales worldwide of nearly US$12.8 billion with a net income in excess of US$1.2 billion. Its research and development has led to advanced separation and refinement technologies enabling production of higher purity rare earth oxides, and the company can control the properties of the oxide particles to match most intended applications. Shin-Etsu is a leader in the production of many advanced industrial components through its business units which include Electronic and Functional Materials, PVC/Chlor-Alkali,Speciality Chemicals and Semiconductor Silicon:

    Shin-Etsu will have priority to purchase at commercial prices a quantity of the rare earths toll processed by it under the agreement via an initial 5 year off-take agreement. The remaining available quantity of separated rare earths will be sold to other companies with which AZL has been discussing off-take arrangements. Strong demand outside of China particularly for AZL's heavy rare earths, including yttrium,should ensure that all separated products are sold.

    Shin-Etsu will also provide technical support and assistance to improve rare earths recoveries from the ore to the concentrate, particularly for heavy rare earths. This will complement recent improvements in heavy rare earths recoveries obtained at laboratory scale, which will be confirmed on the demonstration pilot plant at ANSTO. This has the potential to significantly increase the quantity of heavy rare earth concentrates produced, and subsequent revenues, following separation by Shin-Etsu. Similar improvements in light rare earths recoveries are also anticipated.

    Prior to the recent improved rare earths recoveries, DZP output of approximately 1,120 tpa of heavy rare earth oxides and 3,050 tpa of light rare earth oxides were anticipated.

    The Dubbo Zirconia Project (DZP) is located in the Central West Region of New South Wales approximately 400 kilometres north west of Sydney.

    The DZP is based upon a large in-ground resource of the metals zirconium, hafnium, niobium, tantalum, yttrium, and rare earth elements. Over several years the Company has developed a flow sheet consisting of sulphuric acid leach followed by solvent extraction recovery and refining to generate a suite of products.

    The Demonstration Pilot Plant (DPP) has been operating at the laboratory facilities of ANSTO Minerals at Lucas Heights south of Sydney since May 2008 and to date has recovered substantial quantities of zirconium products and niobium concentrate. The DPP has continued operations to trial engineering and process innovations, and has demonstrated recovery of an yttrium rich heavy rare earth concentrate and a light rare earth concentrate.

    A definitive feasibility study was completed in September 2011 based upon 400,000 tpa ore throughput (ASX Announcement 19 September 2011). Changes in the dynamics of the markets for DZP?s output over the last 24 months, particularly the very important heavy rare earth and zirconium production, led to the evaluation of a 1 million tpa project which was shown to be financially robust based on an initial 20 year mine life (expected to be in excess of 50 years). A revised financial assessment of the DZP to confirm the 1 Mtpa model is being compiled.

    Alkane believes that the signing of this MOU is another significant achievement for the Company

    For those that haven't been following the Alkane story you should also look at the Toomingly Gold mine and Alkane's other projects. IMO the USA will really get their knickers in a knot over this deal as they will now miss out on one of the very few H-REEs sources coming online in the near future.

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