Astron Corporation confirms ‘financially robust’ investment at Donald rare earth and mineral sands project
The DFS for developing Donald has given phase one of the operation a post-tax real net present value of $852 million.
A definitive feasibility study (DFS) for phase one of the Donald rare earth and mineral sands project in regional Victoria has given owner Astron Corporation (ASX: ATR) confidence that the project will present a “financially robust” investment.
The study is based on the Donald and Jackson heavy mineral deposits and has been significantly de-risked by the selection of conventional mining excavation techniques, extensive metallurgical test work and engineering evaluations as well as advanced regulatory approvals.
Financial metrics
Phase one is expected to deliver a post-tax real net present value of $852 million at a 25.8% internal rate of return (pre-tax NPV of $1.29 billion at a 33.9% IRR).
It is forecast to generate $4.3 billion in free cash flows, $13 billion in revenue and $6.1 billion in EBITDA (earnings before interest, taxation, depreciation and amortisation) over a 41.5 year mine life.
Average annual revenue has been estimated at $314 million over the phase one life of mine, made up of 58% rare earth elements concentrates and 42% heavy mineral concentrates.
The Donald project has garnered strong support from the local community and is expected to contribute $2.2 billion to gross regional product (GRP) over the first phase of its operations, providing employment opportunities and re-investment to the local area.
Value-accretion
The mine development and processing approach is reported to be scalable and allows value-accretion through further downstream processing.
Subsequent phases of the project are planned to improve project value, with phase two set to commence five years after the start of phase one operations.
A scoping study for phase two is based on a duplication of phase one on the same retention licence area and the addition of a mineral separation plant to take the heavy mineral concentrate to final zircon and titanium mineral products.
A pre-feasibility study and ore reserves update for the retention licence has been planned for the current quarter.
Long-life supply
Donald represents a globally-significant, long-life supply of critical mineral elements zirconium, hafnium and titanium, as well as rare earth elements including neodymium, praseodymium, dysprosium and terbium.
It contains over 2,634 million tonnes of mineral resource grading 4.4% heavy minerals and comprising the adjoining Donald and Jackson deposits.
New source of critical minerals
Astron managing director Tiger Brown said the DFS promotes a financially and technically-robust project which will become a major new source of critical minerals.
“Donald is expected to provide a long-life source of mineral sands and rare earths, with its dual revenue stream providing an attractive margin structure and defensive element in terms of commodity cycles,” he said.
“The project is expected to enter the market at a time when the supply of premium zircon and higher titanium dioxide ilmenite is challenged … the rare earth component — and in particular the weighting to the heavier rare earth elements — will find a ready place in this fast-growing and expanding market.”