Hastings Technology Metals (ASX:HAS) has entered a binding engineering, procurement, and construction (EPC) terms sheet with GR Engineering Services (ASX:GNG) for the delivery of a beneficiation plant and associated infrastructure at the Yangibana Rare Earths Project in Western Australia.
The company reports the term sheet sets out the key aspects of the ECP works, with a final agreement incorporating the agreed terms and other standard industry conditions expected to be finalised by the end of July 2023. The parties will also enter into an early works agreement which allows GR Engineering to begin work immediately, pending entry of the final agreement.
Under the $210 million contract, GR Engineering will design and construct the Yangibana beneficiation plant, including engineering, manufacture, supply, installation, commissioning, and testing of the facility over a period of less than 18 months.
Hastings reports the plant will have a feed capacity of 1 million tonnes per annum, and a rare earth concentrate output capacity of 35,000 tonnes per annum. Mobilisation and the start of construction are targeted in Q3 2023.
Following a ‘comprehensive’ and systematic review of the project’s capital expenditure during the last 3 months, Hastings has concluded that a fixed price EPC contract is the preferred alternative to ‘substantially’ reduce overall project risks.
Key benefits outlined by Hastings for the EPC model include reduced costs and greater cost certainty compared to current estimates of the same scope delivered through an EPC management (EPCM) model, along with greater certainty around the timeframe with completion expected to be 3 months shorter.
The company also says this model consolidates 50 separate construction related packages into a single package which reduces the delivery and package interference risks, while also guaranteeing on time, cost, and product quality.
Commenting on the EPC contract, Hastings Technology Metals Executive Chairman Charles Lew says: “The appointment of GR Engineering, one of Australia’s leading process engineering companies, for the construction of the Yangibana plant marks an important milestone on Hastings’ path to first rare earth concentrate by late 2024.
Achieving a fixed price EPC contract significantly reduces the risk of ongoing cost increases, which was a key objective set by the Hastings board for interim CEO Alwyn Vorster when he joined in late 2022.
With $221 million in contractual commitments already made to date on the world-class Yangibana project, we remain confident it is well-positioned to move into main construction in Q3 2023, establishing Hastings as a significant player in the critical minerals sector and generating strong returns for our shareholders.”
Achieving a fixed price EPC contract significantly reduces the risk of ongoing cost increases, which was a key objective set by the Hastings board for interim CEO Alwyn Vorster when he joined in late 2022″
Hastings Technology Metals CEO, Alwyn Vorster says GR Engineering has a strong track record in the design, construction, and commissioning of mineral processing plants across a range of commodities.
“Considering the current construction industry cost pressures, the EPC contract with GR Engineering is a positive step to reduce overall costs and schedule risk for our shareholders and lenders.
Hastings also acknowledges the quality engineering and design work completed by DRA Global since 2019, which has enabled Hastings to progress critical path activities during the early stages of the project.
The EPC contract is an important outcome of the project review initiatives which are close to being finalised and will set out the overall project execution strategy, capital cost, and schedule, enabling the company to clarify its medium to long-term funding requirements.”
In 2019, Hastings engaged DRA Global as its EPCM contractor to undertake the front-end engineering and design (FEED) work to progress the early design stages, while the project scope was refined, and project funding strategies were progressively advanced. The company says DRA Global has delivered ‘substantial’ progress on the design and engineering work to date, with about 50% design maturity achieved under the existing EPCM type services contract.
Hastings Technology Metals is a Perth-based rare earths company aiming to become the world’s next producer of neodymium and praseodymium concentrate.
The company’s flagship Yangibana Rare Earths Project is in the Gascoyne and Pilbara regions of Western Australia and hosts a neodymium-praseodymium deposit with a total rare earth oxide (TREO) ratio of up to 52%. Along with Yangibana, Hastings also holds the Brockman Project near Halls Creek in the Kimberley region.
Hastings also holds a 19.9% shareholding in Canadian rare earth processing and permanent magnets producer, Neo Performance Metals (TSE:NEO).
Images: Hastings Technology Metals Ltd
