A definitive feasibility study (DFS) for Makuutu Rare Earths Project in Uganda has demonstrated the technical and economic viability of a magnet and heavy rare earth element (REE) focused project, in which Ionic Rare Earths Ltd (ASX:IXR, OTC:IXRRF) holds a majority interest.
The project is being developed by Rwenzori Rare Metals Limited (RRM), a Ugandan private company which owns 100% of the Makuutu project. IonicRE is a 51% owner of RRM and moving to 60% with the completion of the DFS.
The DFS outlines stage 1 earnings before interest, tax, depreciation and amortisation (EBITDA) of $2.29 billion, with post-tax free cash flow of $1.46 billion, a pre-tax net present value (NPV8) of $580 million and an internal rate of return (IRR) of 32.7%.
Evidence points to continued market growth
“The outcome of this study, which focuses solely on the central Makuutu zone, provides the required inputs for Rwenzori Rare Metals Limited to now finalise the Mining Licence Application (MLA) for RL 1693 (Makuutu),” Ionic Rare Earths managing director Tim Harrison said.
“These stage 1 results support what we think is a unique, geopolitically strategic asset to supply magnet and heavy rare earths into western supply chains.
“Evidence currently shows that countries are motivated to secure sustainable, traceable supplies of these critical raw materials to support their domestic manufacturing ambitions and to support both the energy transition and increasingly, military and defence requirements to provide sovereign capability and global security.”
IXR’s stage 1 plans involve the production of mixed rare earth carbonate (MREC) (including scandium), via a modular heap desorption processing plant, expected to require capital expenditure of $179.85 million.
Stage 1 plant capacity will be 5 million tonnes per annum, which is anticipated to support the production of 1,300 tonnes of rare earth oxide (REO) equivalent per annum over the first 10 years.
Stage 1 operations are therefore expected to produce 40,900 tonnes of product with 71% magnet plus heavy REO content.
Increase production in line with demand
“Furthermore, this stage 1 study provides a path to production at Makuutu, which has the potential for significant growth into the future through the conversion of the other tenements at Makuutu towards additional MLAs over the coming decade,” Harrison continued.
“The intent is to significantly increase production from the stage 1 initial focus at Makuutu and expand into the forecast increase in demand that will far exceed supply for the most readily sought after rare earths, being dysprosium and terbium.
“These rare earths are critical for the production of the magnets required to drive electric vehicles, offshore wind turbines and support a number of specialised defence applications.
“Makuutu is now advancing towards a Final Investment Decision with the capability to provide more heavy rare earths per annum from our initial Stage 1 Project than existing western light rare earth hard rock mines in production today.
“The next phase of work at Makuutu, is to build the demonstration plant to further drive value by proving the potential to achieve high desorption heap stack heights to improve capital efficiency with a view to further increasing production capacity, whilst optimising desorption conditions to explore improved extractions and minimising the dissolution of impurities, to further optimise economics.”
The maiden probable ore reserve for Makuutu Stage 1 sits at 172.9 million tonnes at 848 parts per million (ppm) total rare earth oxide (TREO) for an initial mine life of 35 years.