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Tuesday, 11 December 2012
Medallion Resources gears up to build rare-earth processing facility in Middle East next year
Medallion Resources (CVE:MDL)(OTCQX:MLLOF) is about to hit the ground running as the company prepares to announce the exact location of its proposed monazite-based rare-earth processing facility in the Middle East.
“We are working with a number of sovereign-related parties in the Gulf States to situate a rare- earth processing plant,” the company’s president, Don Lay, tells Proactive Investors.
He says that discussions have been had in a number of states already, including Saudi Arabia, United Arab Emirates, Qatar, Bahrain and Oman.
“We picked this region because it is quite close to 80% of the world’s monazite resources, and these jurisdictions have access to power, chemicals and labour. There is good infrastructure.”
Medallion’s rare-earth production strategy is to exploit available supplies of monazite, a rare-earth phosphate mineral that is a by-product of heavy-mineral-sands mining operations and that has a "proven, metallurgical extraction process".
Early last month, the company produced preliminary technical plans for the proposed processing facility, including flow sheets and initial capital and operating financial models. The plans, based on anticipated rare-earth oxide production of 10,000 tonnes per year, includes modules for monazite feedstock upgrading, total rare-earth extraction from monazite, and separation of individual light and heavy rare-earth oxides.
“These states in the Middle East are all looking for industry in a post-petroleum world. The oil and gas will not last forever and they need new industries in which to get involved. The monazite-based rare-earth processing facility is a terrific hedge in a post-petroleum world.”
As a result, there is an “intense” interest in these jurisdictions for this type of project. “They would also be investing their dollars into their own country, which resonates pretty well. This also creates local jobs.”
The company started its Gulf States initiative back in the second quarter of this year, and in June, settled on the approach that the plant would reside somewhere within the region. It hopes to announce a partnership within the next few months, and is currently deciding the best place for the processing facility.
Medallion is also working with a number of heavy mineral sands companies on agreements to source the supply of its monazite, and anticipates reaching a deal when it decides on where the site will be located.
“The pro forma 10,000-tonne-per-year output represents 8% of the global marketplace today,” the company’s president says.
“It’s important to note that having developed our processing flow sheets means that all the metallurgy is understood - which sets us apart. We have a well-known process for extracting the rare earths from the monazite that has been used for the past 100 years.”
Rare earths are used for virtually all computing and mobile electronic products, as well as wind turbines, electric and hybrid vehicles and strategic defense systems. Demand for the metals is projected to grow dramatically.
The bulk of rare earths derived from monazite include lanthanum, cerium, and neodymium, used widely in magnet production, with “hundreds” of other applications as well.
“In all, we will get eight or 10 different rare earths from our operations,” Lay asserts.
Monazite is widely available, he explains, but has been discarded by the larger mineral-sands companies for the better part of 30 years. “When the Chinese got into the market and drove down the rare-earth pricing, it was no longer worthwhile to use monazite.
Lay says that Medallion, however, is revisiting an “old way to process”, and has proven that the processing of monazite is now economic and can be managed safely. In January, a report prepared by internationally-recognized SENES Consultants concluded that a proposed large-scale monazite rare-earth extraction facility can be operated safely and effectively, while complying with all major national and international mining and environmental safety standards.
“We will either store the radioactive element thorium, which has potential as a future power source, or safely dispose of it. This decision will depend on the final jurisdiction, as many potential partners are interested in the power side of thorium, while others are not.”
Lay adds that while rare-earth metal prices are “off their peaks”, they are still well above pre-China quota numbers. “We don’t see significant new supplies of rare earths coming online. Molycorp and Lynas are currently the only two potential suppliers, outside China, and they have run into delays.”
“China wants the rest of the world in the rare-earths business so it can use its supplies internally. They are doing some stockpiling right now to protect the pricing. We don’t expect them to increase exports dramatically as they are looking to protect their downstream value-added rare-earth industries.
“China consumes 70% of rare earths globally, and the country is starting to get low on certain rare-earth resources. This bodes well for the long-term rare-earth business,” Medallion’s president concludes.
Once the site for the company’s monazite-based rare earth processing facility is selected, a complete study will be done. As that study validates the project, Medallion will focus on the engineering and design of the processing plant. Lay anticipates an 18-month construction period, with another six months to full ramp up.
Medallion has said that the final plant size will depend on the committed amount of feed monazite, rare-earth concentrate demand, market pricing, and other variables.
Investors are indeed keen on the anticipated plant announcement. The company’s stock has risen more than 13 per cent so far this year, currently changing hands at around 16.5 cents.