Ionic Rare Earths on Thursday said that the base case scoping study considered an openpit mine with a run-of-mine feed to a modular heap leach plant, where rare earth oxide would be recovered in the form of a mixed rare earth carbonate.

The base case assumed that the first module would process at a rate of 2.5-million tonnes a year and would produce some 800 t/y of rare earth oxide equivalent product, with additional modules to be added in the second, fourth, sixth and ninth year of operations, to increase plant throughput to 12.5-million tonnes a year by year ten.

Life-of-mine earnings before interest, tax, depreciation and amortization has been estimated at A$1.71-billion, with the post tax free cash flow estimated at over A$1-billion, the post tax net present value at A$428-million and the internal rate of return of 38%.

The scoping study estimated a pre-production capital expenditure of around $89-million for the first module, including mining fleet, with the second module expansion expected to cost around $40-million, inclusive of mining, process plant and infrastructure.

The further expansions are expected to cost a combined $172-million and would be funded by project cashflow.

Ionic MD Tim Harrison on Thursday told shareholders that the results of the scoping study reinforced not only the significant strategic value of an ionic adsorption clay deposit like Makuutu, and the basket it could potentially produce, but the potential long-life free cash flow generating potential achieved with the modular, low capital intensity development plan and simple operation considered in the scoping study.

“The completion of this study with its positive project economics represents a critical milestone for the company. Combining the long life potential, with the low-cost modular capital development and high margin basket potential at Makuutu, confirms the project as on e of the best potential new sources of critical and heavy rare earths in the near term.

“We see this project as technically and financially robust and eminently financeable, and the company has received strong expressions of interest from strategic parties interested in accessing Makuutu’s unique basket composition that contains approximately 70% to 75% critical and heavy rare earths.”

A bankable feasibility study on the project has now started, the completion of which would result in Ionic increasing its share in the Makuutu project from the current 51% to 60%.