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Cadence Minerals Yangibana Rare Earth project costs reduced by A$68m

Cadence Minerals plc (LON:KDNC) has noted that, further to the Hydromet Plant relocation announcement, Hastings Technology Metals (ASX:HAS), Cadence’s joint venture partner at the Yangibana Rare Earth Project in the Gascoyne region of Western Australia, has updated its Capital expenditure requirements previously estimated at approximately AUD$517m (ASX Investor Presentation 2 December 2019), which included a 114km gas pipeline and 14Mw gas fired power station.

Highlights:

·      Total CAPEX revised to A$449m from A$517m

·      $68m or 13% reduction in CAPEX based on Hydrometallurgical Plant relocation;

o  $79m saving by removal gas pipeline and 3rd party power offtake for Yangibana

o  $8m saving in Accommodation facility, Airstrip, Road access and Process building construction

o  $1m saving in Tailings Storage Facility construction

o  $3m saving in mining pre-strip volume reduction

o $14m addition in Process Plant equipment and additional storage/handling facilities for relocated Hydrometallurgical Plant

o  $8m addition for indirect (EPCM) related costs

·      New CAPEX leverages heavily to accessible services in the Pilbara with available gas, power, water and telecommunications.

·      CAPEX reduction is major step towards achieving Hastings objective of becoming a significant new mid-tier Australian NdPr rare earth producer, positioned to take advantage of the strong market outlook.

·    Capital cost reduction strategies are being advanced with possibilities of additional savings in final costing which will be presented during 4Q 2020.

Capital estimates have been revised based on the recently announced decoupling and relocation of the Hydrometallurgical plant to the Pilbara Region.

The revised capital estimate is now approximately $449m (exclusive of contingencies), being $68m or 13% lower than that previously announced.

The overall project capital cost estimate was developed by DRA Global and Hastings technical personnel based on an Engineering, Procurement, Construction and Management (EPCM) approach for the process plant and infrastructure. The estimate includes all the necessary costs associated with engineering, drafting, procurement, construction, construction management, commissioning of the processing facility and associated infrastructure, mining infrastructure, first fills of plant reagents, consumables and spare parts

Estimate Structure

The estimate is based upon preliminary engineering, material take-offs and budget price quotations for major equipment and bulk commodities. Unit rates for installation were based on market enquiries specific to the material requirements planning (MRP).

The estimate pricing was obtained predominantly during quarter one 2019 (1Q19) and is in Australian dollars (A$), with new and updated pricing being included from quarter one 2020 (1Q20) and quarter two 2020 (2Q20) for those items which have been altered due to the Hydrometallurgical plant relocation. The overall capital estimate has an estimated accuracy of ±15 to 20%. This will be refined over the next few months prior to a final cost estimate release during 4Q 2020.

The capital estimate was prepared using a project Work Breakdown Structure (WBS), which delineates the various areas of the project. Individual estimates were prepared for each area covering all engineering disciplines. The capital estimate has been structured into the following major categories:

• Direct costs;

• Indirect costs;

• Owner’s Costs; and

• Contingency.

The full HAS release including detailed capital comparisons can be found at: https://www.asx.com.au/asxpdf/20200729/pdf/44kyjnpw4ljpd0.pdf

Charles Lew, Hastings Executive Chairman, said“This new CAPEX clearly demonstrates the robust nature of the Yangibana Project and the options that it presents. Significant optimisations in project construction capital, mining and processing are starting to show the true value of the Yangibana Project to Hastings and its shareholders. We will now push ahead with re-defining operational costs to reflect the capital changes taking place and to delivering the final results to the market shortly and getting on with the job of building the project as quickly as we can. Lenders are encouraged by the Capex reduction during this challenging period for debt and equity capital market currently affecting small companies and greenfield projects.”

Cadence Minerals CEO Kiran Morzaria commented“Securing a 13% reduction in CAPEX costs at this relatively advanced stage is a testament to the value, opportunities and potential on offer at Yangibana, and provides additional validation for our investment into this project. We look forward to further developments.”   

Cadence Minerals Yangibana Holding:

Cadence owns 30% of 3 Mining Leases, 6 Exploration Licences which form part of the Yangibana Rare Earth Deposit. Hastings Technology Metals owns the remaining 70% (“Hastings”). Further details of our ownership the mineral resources and reserves on our jointly held leases can be found at: https://www.cadenceminerals.com/projects/yangibana-rare-earth-project-2/

The current mine plan anticipates production to start from our joint venture areas (Yangibana and Yangibana North) in year 6 and continue to the end of mine life (year 13). Further details can be found in the Hastings 2019 Annual Report

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