Peak Resources sees end to licence stalemate

ASX-listed Peak applied for a special mining licence (SML) - the final step in Tanzania's permitting process - for its Ngualla project in August 2017 - but, like gold miner OreCorp, has yet to receive approval.Davis joined Peak in December with the task of finalising the SML and negotiating a framework development agreement with the Tanzanian government.Speaking to Mining Journal on Friday, Davis said Peak was "very well positioned to secure that approval in the not too distant future".The death of Tanzania's president John Magufuli last month has been hailed as something of a turning point for miners in the East African nation."A lot of the public comments by [new president] Samia Suluhu Hassan have been very positive around things like importance of foreign investment, re-engaging with business community, dealing with some issues around tax collection, international relationships, and, importantly for us, the importance of progressing with major mining and resources projects - all of that is encouraging," Davis said."We have done everything that we need to: significant engagement with the Ministry of Minerals, the minister and senior bureaucrats. They've gone and they've done their technical review and an analysis. So, there's nothing else required from our end; it is now just a matter of being presented and approved by cabinet," Davis added.Peak has been encouraged by the fact Tanzania signed a framework agreement with UK private player Kabanga Nickel to develop the Kabanga nickel project as recently as January.Davis said the Kabanga agreement would also serve as a good precedent for Peak's framework agreement.Peak describes Ngualla as one of the world's largest and highest grade neodymium and praseodymium (NdPr) projects. The company plans to ship its mined product to the north of England for processing at a facility it is looking to build in the Tees Valley.According to its bankable feasibility study update, Ngualla will produce around 8,000 tonnes per annum of NdPr product over a 26 year mine life at a break-even cost of around US$32.24 per kilogram ($32,240 per tonne), making it one of the lowest cost producers going. It boasts an NPV10, post-tax and royalties, of US$444 million and an IRR of 22%, with pre-production capex for the mine and refinery of US$356 million.NdPr oxide prices were around US$90.49/kg at the beginning of March, compared to a price assumption of US$77.50/kg in Peak's BFS.Investor interest has been strong in rare earths miners in recent months, driven by a combination of a surge in demand for green-focused technology and potential shortage of supply.Peak's plan to mine and ship its product straight to the UK for processing differs from fellow Africa-focused rare earths producers such as Pensana PLC, which plans to send its material to China for processing before its UK processing plant is up and running."We're very reluctant to become a contract miner. The danger is if you're selling a concentrate into China, you're heavily exposed to the Chinese refiners, as well as changes to Chinese policies and regulations within the rare earths sector," said Davis.Pensana has generated strong interest from UK investors over the past year, with shares in the company up 740% since the company listed in London in July 2020.Despite healthy investor appetite for so-called green-focused mining stories in London, Davis said a London listing was not on the menu in the short to medium term."It's something that we will continue to continue to monitor; we don't have a pressing need to do that at this stage but is something that we can continue to assess as we as we progress our projects," said Davis.Once the SML has been granted, Davis said Peak would likely work towards updating its BFS"There was a little bit of optimization work done subsequent to that [April 2017 BFS]. So we'd like that covered off, as well as updated opex and capex, and then that would simply lead in to a EPCM process," said Davis.In terms of financing, Davis said there had been "strong interest" from export credit agencies "driven by the nexus of rare earths to decarbonisation and electrification of transport, renewable energy, etc"."We certainly see strong appetite for our project, for those sector and geopolitical reasons, but also for the nature of our underlying project; we've got one of the largest, highest grade undeveloped, rare earth projects in the world," said Davis.Tanzania is ranked seventh from bottom in Mining Journal Intelligence's investment risk index, as featured in its World Risk Report 2020.Despite Tanzania's lowly ranking, Peak can consider itself unlucky with developments over the past few years.The company completed its bankable feasibility study in April 2017, after which it ran headfirst into Barrick/Acacia's dispute with the Tanzanian government, which took until October 2019 to iron out. Changes to the country's mining legislation then followed, along with COVID, elections in October 2020 and Magufuli's death.

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