Perth-based Peak Resources (ASX: PEK) has received confirmation from Tanzania’s Minister for Minerals and the country’s Mining Commission that a Special Mining Licence (SML) application for its wholly-owned Ngualla rare earth element (REE) project will be granted in the near future.
The company said a delegation of officials and experts from the country’s Mining Commission spent four days earlier this month evaluating Ngualla onsite, with the project located 147 kilometres from the city of Mbeya on the edge of the East African Rift Valley.
The site visit gave Peak the opportunity to showcase the licence area and exploration camp, and host meetings with the local community.
“The visit was a positive move towards the issuing of the SML [and] the delegation left satisfied that their queries had been answered in an open and transparent manner,” the company said.
Ngualla is one of the world’s largest and highest-grade undeveloped neodymium and praseodymium REE projects.
When operational, it will be the largest employer in the area and contribute a considerable amount to the nation’s mining-related gross domestic product and government revenues.
The project has an estimated ore reserve of 18.5 million tonnes at 4.8% total rare earth oxides (TREO) for 887,000t of contained rare earth oxides (REO), which is believed to be sufficient to support a 26-year mine life.
Peak is planning to export approximately 32,700t per annum of REE concentrate grading 45% REO from Tanzania to a $165 million refinery in the UK’s Tees Valley.
The plant, which received the go-ahead for construction in May 2018, will produce 7,995tpa of a lanthanum carbonate, 3,475tpa of a cerium carbonate, 2,810tpa of a neodymium and praseodymium oxide product, and 625tpa of a combined mid and heavy rare earth carbonate.
Peak said the plant would allow it to become one of the few producers worldwide which is not reliant on China as part of its production process.
“Trade tensions between US and China, rising metal pricing and tightening supply will encourage more earnest negotiation to lock in binding off-take from Peak as the alternative ‘outside of China’ supply,” it said.
Peak said the move to gaining Mining Commission approval for the SML follows a number of recent positive developments in the Tanzanian mining sector, including a breakthrough agreement reached between Barrick Gold Corporation and the Tanzanian Government to conclude a long-term dispute which has impacted the local industry.
The dispute started in 2017 between Tanzania and Barrick’s subsidiary Acacia Mining Plc after the government banned the export of unprocessed metals by miners, subsequently presenting Acacia with a $277 billion tax bill or the equivalent of two centuries worth of revenue.
Acacia owns three mines in Tanzania and was bought by Barrick earlier this year.
For almost two years, Barrick has been leading negotiations with the government over terms of the deal.
Peak said the breakthrough agreement includes government clarification of key areas within the 2017 legislation which is expected to facilitate easier access to international financing for Tanzanian mining projects.
Specifically, the government has agreed it will take no more than 50% of the economic benefits from the mine, including all free-carried interest dividends, taxes, royalties, government fees and other fiscal levies.
“Best mining region”
Peak chief executive officer Rocky Smith said the agreement bodes well for the development of Ngualla.
“We are encouraged by recent engagement between the Tanzanian Government and Peak, and also more broadly the positive events in the Tanzanian mining sector as evidenced by the conclusion of the Barrick negotiations,” he said.
“Tanzania has gone very slow on the SML process – we believe some of this was related to the on-going issues with Acacia which should now be behind us.”
Mr Smith said he was optimistic that after a couple of difficult years, Tanzania could once again become one of the best mining regions in Africa.
With 90% of Ngualla’s future revenue to be derived from neodymium-praseodymium oxide, the project will be one of a few worldwide capable of meeting a predicted surge in demand by the electric vehicle and sustainable energy industries.
Neodymium-praseodymium oxide is a vital raw material in the production of high-performance permanent magnets used in the motors of electric vehicles.
Mr Smith said all indicators suggest critical shortages for these metals will be between the years 2022-2025 – around the time the Ngualla plant is scheduled to commence operations.
He said the company is currently seeking binding off-take contracts with critical rare earth and permanent magnet consumers in Asia, Europe and the US.
“The contracts we secure will likely result in identification of strategic partners for the Ngualla project and the Tees Valley refinery,” he said.
At mid-afternoon, shares in Peak were trading 10% higher at $0.044.