Victory Metals (ASX:VTM) has completed a Scoping Study for the North Stanmore Rare Earth Project in Western Australia, which looks poised to be a “long-term, low-cost” supplier of critical minerals.
With a 31-year mine life and 72% of the resource being in the indicated category and 28% in the inferred category, the project has an estimated net present value (NPV) across multiple pricing scenarios including $1.212 billion (post tax) with 52% internal rate of return (IRR) and $1.777 billion (pre-tax) based on Adamas Intelligence downwards forecast.
Victory plans to engage a corporate advisor to finalise and implement an optimal financial structure with the focus on securing government grant funding and forming a strategic partnership with offtake, joint venture or partial asset sale type arrangements.
The final funding structure for the project’s execution phase will be influenced by partner participation and prevailing market conditions.
As one of the largest heavy rare earth and scandium clay projects globally, Victory Metals says the North Stanmore Project “presents a unique opportunity to establish a long-term, low-cost supply of critical minerals essential for high-growth industries such as renewable energy, electric vehicles, and defence”.
The company’s suspension from trading on the Australian Securities Exchange (ASX) has now been lifted as a result of the announcement.
Capital expenditure is about $337 million including a 30% contingency, and operating expenditure is $25.5 per ROM tonne over the life of mine due to the unique geology of North Stanmore and an extensive weathering event leading to high metallurgical extractions. The capex payback period is expected to be two years.
Victory is in discussions with potential strategic funding partners, with a range of trading and investment companies and various western Export Credit Agencies. Responses are reportedly ‘positive’ which, which CEO Brendan Clark notes backs Victory’s assessment of the availability of funding the project.
Operating costs have been focused on the development of a processing cost for the different alternative flowsheets. These costs have been built up from first principles and are presented in the operating cost section of this report. The total cost is estimated to be $25.50 per tonne of hydromet feed.
Clark says the Scoping Study confirms North Stanmore’s economic and environmental advantages over conventional rare earth projects.
“The completion of our Scoping Study is a defining milestone for Victory Metals, confirming North Stanmore as a world-class heavy rare earth and scandium project with outstanding economics,” the CEO says.
Victory has now entered into a non-binding memorandum of understanding (MoU) to negotiate an offtake agreement with Japanese trading house Sumitomo Corporation (TYO:8053).
Clark notes the MoU marks a key step in Victory’s strategy to advance North Stanmore towards production, as the company continues discussions with potential partners, funders, government and progresses towards further development.
Victory is targeting to be a Western supplier of rare earths elements, scandium, and hafnium with ‘strong support’ from offtakers for security of supply ex-China. The Scoping Study, led by independent engineering consultants Mincore, shows the project could have 8 million tonnes per annum throughput due to the shallow nature of the mineralisation.
A total of 13 different rare earth oxides, plus scandium and hafnium, will be recovered to the saleable concentrate from the project. Victory has strategically positioned itself to prioritise high-value, in-demand rare earth elements by excluding low-value commodities such as cerium and lanthanum.
Clark says this differentiation is critical in understanding the true economic potential of the project, adding that North Stanmore is located in the tier-one mining jurisdiction of Western Australia where both federal and state governments have committed billions of dollars of support for rare earth projects.
“As industries increasingly look for sustainable, high-performance and defence materials, the outlook continues to strengthen in these markets, presenting another compelling and diversified off-take opportunity for Victory Metals,” he continues.
“The combination of a globally significant resource, low capex and strong market fundamentals sets North Stanmore apart as a unique and highly strategic project. We are now focused on advancing towards production while continuing discussions with potential partners to further de-risk development and maximise shareholder value.”
Write to Adam Orlando at Mining.com.au
Images: Victory
