Steenkampskraal Holdings Ltd (SHL), owner of the Steenkampskraal rare earths mine in South Africa’s Western Cape Province, has won its case in the Pretoria High Court.
The three defendants were ERES Engineering Projects, ERES managing director, Jan Dreyer, and the former Steenkampskraal project director, Vincent Mora.
Judge R G Tolmay found that there was a corrupt relationship between Mr Dreyer and Mr Mora. She rescinded the two contracts between SHL and ERES, dismissed the ERES counter-claim against SHL and ordered the defendants to pay SHL’s costs. She also ordered ERES to pay back to SHL a deposit of R2.5 million that SHL had paid for one of the contracts.
Judge Tolmay wrote in her award that her judgement must be sent to the National Director of Public Prosecutions for their consideration regarding the possibility of instituting criminal proceedings against the defendants.
SHL chairman, Trevor Blench, said that SHL can now proceed with the Steenkampskraal project. “The litigation made it difficult for us to raise finance. Most investors require a Bankable Feasibility Study (BFS) before they invest in a project. We will now be able to raise finance for the BFS.”
This BFS will confirm the capital requirement (capex) for the construction of the mine, the processing facilities, operating cost (opex) to produce the rare earths and the time that it will take to build the mine.
SHL presently estimates a capex at R500 million, opex at USD $10.00 per kilo of rare earth oxides (REOs) produced, including separation and purification, and about one year for the construction of the mine and the processing facilities.
SHL estimates that its cost to produce mixed rare earth carbonate, including mining, beneficiation and the chemical separation of the rare earths from the thorium, but not including the separation and the purification of the individual REOs, will be about USD $3.50 per kilo.
The weighted average basket price for separated rare earth oxides (REOs) is presently about USD $16.00 per kilo.
“While preparing the BFS, SHL will conduct discussions with investors and customers. Rare earths are used in motors for electric vehicles. The rapid growth in the production and sales of electric vehicles has caused rapid growth in the demand for rare earths like neodymium (Nd), praseodymium (Pr), dysprosium (Dy) and terbium (Tb). Industry analysts predict that there will be shortages of these rare earths and that their prices will rise,” said Mr Blench.
With an average grade of 14.4%, Steenkampskraal is the highest-grade rare earth deposit in the world with a NI 43-101 confirmed Mineral Resource Estimate (MRE). This MRE confirms the presence at Steenkampskraal of a total of 86,930 tons of REOs, including 15,600 tons of Nd, 4,450 tons of Pr, 867 tons of Dy and 182 tons of Tb.
Steenkampskraal plans to produce 2,700 tons of REOs per year over a period of 30 years. This annual production will include 480 tons of Nd, 138 tons of Pr, 26 tons of Dy and five tons of Tb.
“Our project design makes optimum use of the existing underground infrastructure. Steenkampskraal is a former producing mine. Anglo American mined it for ten years in the 1950s and 1960s. A decline shaft, stopes, ore blocks, stockpiles of ore underground and much of the infrastructure are already in place. Much of the expenditure required to bring the mine into production has already been incurred.”
“Thanks to our high grades, we expect our capex and opex to be relatively low. To produce one ton of rare earths, we need to mine and process only ten tons of ore. Most other rare earth projects with grades of 2% or less have to mine and process between 50 tons and 100 tons of ore to produce one ton of rare earths. Their capex and opex would therefore be much higher than ours,” said Mr Blench.
“Several companies have expressed interest in signing off-take agreements with us and these potential customers could ensure a positive revenue stream soon after we start production,” he concluded.