HOUSTON, October 19th (Argus) - Canadian rare earth developer Aclara Resources has updated its research report on the Penco Module ion-type clay rare earth project in Chile. Thanks to the increase in resource quantities, the project's total lifecycle rare earth oxide (REO) production is expected to increase by 31% compared to before. At the same time, the project's mine life has been extended from the previously estimated 12 years to 17 years.
The latest preliminary economic assessment shows that the project plans to process 308 million tons of resources, higher than the 199 million tons in the 2021 study. Correspondingly, the total lifecycle rare earth oxide production is expected to reach 11,693 tons, higher than the previously predicted 8,901 tons. Although the average annual production has decreased from 774 tons to 732 tons, the purity of rare earth carbonate products will increase from 91.9% to 98.9%.
The annual production of the project will mainly come from medium and heavy rare earths, including: dysprosium 44 tons/year; terbium 6 tons/year; yttrium 400 tons/year; in addition, 128 tons/year of praseodymium-neodymium will also be produced.
Due to the shift in product structure towards high-value medium and heavy rare earths, the project's total lifecycle rare earth price is expected to reach $309 per kilogram, higher than the $96 per kilogram estimated in 2021. This price is based on Argus' long-term price forecast for the European market (markets outside China).
The company's price assumptions in the model include: yttrium: $250 per kilogram; gadolinium: $350 per kilogram.
The project's production cost is expected to be $76.3 per kilogram of REO, while costs such as separation, transportation, and sales discounts are expected to account for 32% of total revenue.
In terms of economics, the project's after-tax net present value is expected to reach $344 million at an 8% discount rate, higher than the $178 million in 2021 study at a 5% discount rate. However, the project's capital expenditure for construction has also increased by $115 million to $244 million.
Aclara also pointed out that one risk the project faces is that the actual sales price in the future may be closer to the domestic market price in China rather than the European market price.
According to the company's plan, the project aims to complete the feasibility study in the first quarter of 2027 and complete construction in the second half of 2028, provided that financing is in place.
