Alkane Resources ferro-niobium JV to increase Dubbo Zirconia Project production to 1Mtpa

Alkane Resources (ASX: ALK) has the potential to produce 1 million tonnes per annum from the Dubbo Zirconia Project through a joint venture to produce and market ferro-niobium from the project.

The Memorandum of Understanding (MoU) with a European company is a major milestone for the development of Dubbo leading to production in 2014.

Alkane’s partner’s proprietary technology will be used to process niobium concentrate from Dubbo to produce more than 3,000 tonnes of ferro-niobium annually from the expanded 1 million tonnes per annum development scenario for Dubbo.

Based on current prices, 3,000 tonnes of ferro-niobium will generate revenue of US$95 million per annum, about 22% of total anticipated annual project revenue of US$432 million per annum.

Dubbo is also a significant source of zirconium and heavy rare earths, and negotiations are underway with a number of parties that are interested in signing MoUs for heavy and light rare earth concentrates.

Alkane’s European partner, which remains anonymous, operates globally developing and manufacturing ferro alloys for the steel industry, powders for the carbide industry and other special products for a variety of applications.

The Dubbo Project

The Dubbo Zirconia Project is based upon a world class resource of zirconium, hafnium, niobium, tantalum, yttrium and rare earth elements.

In September 2011, Dubbo delivered a bumper Definitive Feasibility Study, showing positive returns from a base case of 400,000 tonnes per annum production.

The expanded 1 million tonne per annum scenario provides significant upside to the base case model.

Alkane is undertaking detailed analysis to take the 1 million tonne per annum scenario to Feasibility Study standard, with completion expected in the March quarter of 2012.

The company said this additional work would not impact on the project timetable as it will proceed in parallel with the Environmental Assessment and Financing programs.

While resources identified to date will permit the project to produce for over 100 years, the feasibility study estimated earnings before interest, tax, depreciation and amortisation of A$6 billion and a net present value of A$1.2 billion.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/21211/alkane-resources-ferro-niobium-jv-to-increase-dubbo-zirconia-project-production-to-1mtpa-21211.html