Kanyika
Niobium Project
Overview
The Kanyika Niobium Project in Malawi will produce high purity niobium pentoxide and tantalum pentoxide powders.
Globe identified niobium and tantalum mineralisation in 2007 at Kanyika has been undertaking exploration and resource development activities since.
Drilling programs totalling 33.8 kilometres of percussion and core drilling have confirmed the extent of mineralisation. Structured and progressive engineering studies have resulted in the current (JORC 2012) resource statement and given rise to significant improvements and simplifications in the process flowsheet, from that first imagined.
In addition, Globe has undertaken substantial metallurgical optimisation work and commissioned a pilot plant to demonstrate and further optimise metallurgical processes. Metallurgical optimisations studies have improved recoveries from 62% in 2012 to 75% today, through simple novel patented metallurgical processes.
The Kanyika operations will produce a pyrochlore mineral concentrate that contains both niobium and tantalum in commercially valuable volumes to be shipped to a refinery for advanced processing into high purity materials.
Mineral Resources and Ore Reserves
On 11 July 2018, Globe published an updated Mineral Resource Estimate for the Kanyika Niobium Project (KNP) calculated in accordance with 2012 JORC guidelines.
The resource calculated was unchanged from the previous Mineral Resource Estimate published on 7 January 2011, calculated in accordance with the 2004 JORC guidelines, and is as follows:
Note: no additions or changes have been made to the Mineral Resource Estimate since it was last published.
The Company has established an Ore Reserve which can only be used for internal purposes at this stage primarily due to a conservative approach and until the Company can be assured that a Mining Licence will be granted by the Government. The Ore Reserve is based on substantial studies including, environmental and environmental impact, social, legal environment, geological, mineralogical, geotechnical, hydrology, metallurgical, project location, mining, process flowsheets, transportation, project management, marketing, risk assessment, mine closure and rehabilitation, policy and operational management procedures, capital estimates and operating estimates. The Company will release this Ore Reserve statement on finalisation of the Development Agreement or when security of a Mining License can be reasonably assured.
Feasibility Study
Globe has undertaken scoping, prefeasibility and pilot plant studies in the engineering development of the project.
In 2018, Globe commenced work aimed at updating and finalising the technical components of the engineering program in order to support project funding initiatives, in light of the changing outlook for the mining and resources industry, and feedback from the Government of Malawi on anticipated progress of the development agreement for the mining licence. The development agreement has been substantially delayed with the gazetting of a new mining act and key personnel changes in government.
Following the grant of a mining licence for the Kanyika Niobium Project in August 2021 conferring on Globe the right of tenure for 25 years, Globe released the results of its updated Feasibility Study which highlight a robust project with strong financial returns.
The study highlights are as follows:
Kanyika Niobium Project is positioned to be the first ever niobium mine in Africa and Globe the first new producer in 50 years.
Over 90% of niobium is used in the manufacture of High Strength Alloy Steels. Steel production growing year on year. Intensity of usage in steel rising rapidly as market, and in particular China, moves towards manufacture of higher quality steels.
Niobium’s unique characteristics make it central to many of the world’s past, present and future technologies with scientists and manufacturers only now beginning to imagine the range of technological applications for niobium.
Niobium is critical to military, aerospace, space, medical industries and becoming increasingly important in quantum electronics, in the manufacture of semiconductors and in electrical vehicle industry.
Globe to target high-end, high-value applications for niobium.
Mine life of ~23 years with capability to extend mine life to 38 years subject to conversion of inferred resources through further drilling.
Estimated average annual production of 3,250 tonnes of niobium and 140 tonnes of tantalum.
High metal recoveries of ~75% for niobium and ~73% for tantalum.
Patented metallurgical advancements (commercial in confidence) provide competitive advantage allowing substantially simpler beneficiation with greater recovery and lower process OPEX.
Pre-production capital costs of ~USD250m.
KNP will generate revenues of USD5.6B over its 23 year mine life, valued at a base price of US$55/kg for Nb2O5 and US$410/kg for Ta2O5
Net Present Value of $1B (pre-tax) at a discount rate of 8% per annum.
Internal Rate of Return of ~50% (pre-tax).
Payback period of ~1.5 years (from first production).
All engineering, mine design, and mine operations planning is complete.
All approvals in place to immediately commence construction upon funding and relocation of affected persons.
Globe initially commenced its feasibility study in 2009 and suspended further work in 2012 whilst it undertook further studies and awaited issue of a mining licence. In 2018, Globe commenced updating and finalising the technical components of the engineering program in light of the changing outlook for the mining and resources industry, and feedback from the Government of Malawi on anticipated progress of the mining licence.
As part of the update of the feasibility study, Globe obtained updated capital and operating cost estimates and updated its financial model for revised capital costs, revenues and operating costs in order to determine key metrics including but not limited to project revenue, profitability and payback.
The quality of the engineering studies for a large proportion of the plant design qualifies the project as a Class 3, FEL3 standard under AACE[1] practices with components at Class 4, FEL2. Since the study has been completed a significant time has passed related to the negotiations on the Development Agreement with the Government, resulting in the associated quotations and related cost estimates being outdated and requiring update. Parts of the plant where intellectual property has enhanced project metrics are at prefeasibility status where a capital estimate has been allocated but the quantum is not significant to total capital costs but is material to operations.
As a consequence, to take the Project forward, the Company must now prepare detailed front end engineering designs for the mine and refinery, incorporating recent study results, and finalise its product suite in order to progress to marketing and financing.
[1] “Association for the of Advancement of Cost Engineering” that is referencing practice for the AUSIMM Cost Estimation handbook Monograph 27.
Summary of Project Flowsheet
Mining and Processing
The Malawi Kanyika operations involve a small-scale conventional drill and blast mining operation that mines and transports ore to a processing plant. On average the mine will produce 1.5 million tonne of ore per annum for feed to the process plant, and an additional 2 million tonne of waste rock that is hauled to waste rock dumps. At the processing plant, ore is crushed and then ground to less than 0.1mm for treatment to recover pyrochlore – a mineral containing niobium and tantalum. Through a series of simple magnetic separation and flotation stages, a pyrochlore mineral concentrate is produced grading about 40% niobium and 1% tantalum. This concentrate is filtered and packed for export.
Refining
Refining involves the treatment of pyrochlore mineral concentrate with strong acids to liberate niobium and tantalum products. Solvent extraction recovers niobium as niobium pentoxide and tantalum as tantalum pentoxide - both grading better than 99% purity. The refinery could alternatively produce a tantalum salt (K2TaF7) used in the electronic industry, dependent on customer demand. This process technique was chosen as the refinery will be able to recover and sell both niobium and tantalum creating a value-added outcome. The alternative process route, smelting, would result in a niobium product with no credit for the content of tantalum and therefore does not result in the best commercial outcome for the project. The recovery and sale of tantalum products results in an additional 15% of revenue to the value of the mineral concentrate and refinery operations. This additional revenue is expected to almost cover the total operating cost of mining and refining operations.
Production
The current optimised operational design results in the life-of-mine average production of 3,250 tonne per annum of niobium products and 120 tonne per annum of tantalum products. Some production is higher in the early stages of the operation due to high ore grades in the mining schedule.
Products
The Company’s operations will produce both high purity niobium and tantalum pentoxide products. Based on customer specifications, these products can then be further refined to other high-purity high-value products.
Development Timeline
The development and construction works include the Front End Engineering Design (FEED) programs as well as community compensation and relocation programs.
The programs for community compensation and relocation is dominantly controlled by the Government. So that the community has adequate time to plan relocation a 12-month notice period will be provided. The FEED program and tendering for construction services will require 12 months, and both can be undertaken in parallel with community notices. Construction should take 24 months from the commencement of on-site construction and includes 3 months commissioning.
Development Agreement
The Kanyika Exclusive Prospecting Licence (EPL0188) was due for expiry at the end of December 2014. In early December 2014, Globe applied for a Mining Licence. Globe received notification in June 2015 from Malawi Ministry of Natural Resources, Energy & Mining (now the Department of Mines) that its application for a Mining Lease, currently registered as AML0026, has been approved subject to completion of a Development Agreement. Globe also has an exploration licence EPL0421 separate to and bordering onto AML0026.
The Development Agreement negotiations are continuing in good faith with the Government of Malawi, however, Globe has experienced delay from time to time in meeting with key officials due both to safety measures taken in relation to the COVID-19 pandemic, changes to key government personnel and changes to Government. This has slowed the finalisation and execution of the Development Agreement, but it otherwise remains on track for execution in the current calendar year.
A key outcome of the project is the flow of financial, community and social benefits to the Malawian people and communities. Over the life of the operation, the commercial model forecasts a government mineral royalty of 5% that will generate US$86.5M in cashflow, a 0.45% community mineral royalty that will generate US$10M in direct local cash contributions, while other community social responsibility programs and community development agreement programs will generate additional local opportunities. This is all in addition to commercial forecasts of taxes on profits of about US$225M over the life of the operation, as well as payroll tax and social contributions.
Community
The relevant members of the Kanyika community affected by development, construction and operations activities will require relocation from the Kanyika project area. The Company has made a commitment to provide 12 months of notice to the affected members before relocation and compensation, with such compensation governed by Government regulations and guidelines. In addition, relevant sites of historical significance and graveyards will also be preserved or relocated where necessary. These works will be carefully undertaken with supervision and management by local residents and independent consultants. The Company has no legal right to provide notice or relocate affected members of the Community until the development agreement has been signed and a mining licence issued. The Company is working diligently with the Government on all these issues and has at all times abided by the directions of the Government.
Environmental Studies
Globe has completed environmental and social impact assessment studies for the upgrade of 30 kilometres of road from Chataloma on the M1 highway to the Kanyika Project site and been issued EIA certificate number 41.7.4. In addition, the Company has completed the Kanyika Project environmental and social impact assessment and been issued EIA certificate number 43A.4.5 for site works and operations. In May 2020, the Company updated and resubmitted this report such that it complies and accounts for changes with the amended Environmental Management Act (2016) and the new Mines and Minerals Act (2018). A copy of this report is available on the Company website.
Project Development and Financing
The Kanyika Project remains ready for development subject to execution of the Development Agreement and initiatives with marketing and finance. The executive team continue to advance plans and discussions with regulators and other stakeholders as regards project development and to examine opportunities for project enhancement, including reconfiguration of project arrangements. In addition, the executive team continued its dialogue with various parties regarding marketing and financing; although it is noted that the ongoing delay with finalisation and execution of the Development Agreement and the impacts of COVID-19 pandemic have prevented the executive team from meeting face-to-face with these parties, delaying progress in this area.
Project Development and Financing
In Malawi, for mining and processing operations, a capital estimate of US$150M (to an accuracy of -5% to +15%) includes all Plant Property and Equipment (“PPE”) for the mine and processing plant, offices and accommodation facilities and upgrading road infrastructure from the main highway.
The current estimate for the refinery is in the order of US$30M to US$50M. This cost will be dependent on the location of the refinery – an exercise that is not yet complete – and will be dependent on the infrastructural services and commercial environment where the refinery will be located. It will also depend on the types and qualities of product that customers will need. For instance, producing a 99.99% niobium pentoxide will require a larger washing plant, and if a customer wants a portion of production as a tantalum salt (K2TaF7) then relevant equipment will be required. The refinery may even produce a portion of production as a high purity ferroniobium metal for sale into the master or superalloy metal industries. These additional refinery equipment costs will all depend on customer needs and sales contracts.
In addition to direct costs for capital, the development phase will also need capital for administration and development support services estimated at US$10M, and working capital estimated at US$20M, during the commissioning and early production stage. Working capital is used to maintain operations costs until the first sales revenue is received.
Therefore, the total estimated capital cost is in the range of US$210M to US$230M.
Debt finance can typically range from 30% to 70% of this capital cost, but will be dependent on the structure, length and value of the sales agreements. Banks are an important part, and a partner, in the structure of sale and marketing agreements with customers. The Company believes that debt finance of 50% is achievable. Therefore, the remaining capital, equity finance, will need to sort from existing or new investors. Some of this capital could even come from customers or current industry participants who may want access to a secure supply of products.
Sales Agreements
The Company preference is to have long term strategic partners for the offtake of production. Some smaller volume contracts with shorter contract terms (say, of up to 3 years) may also be accommodated. Some of these sales relationships may also create opportunities to be involved in partnerships for downstream processing. The Company anticipates that Japan, the greater Europe region, Russia and the Americas will be a significant focus in sales agreements.
Competent Person Statement
The information on this website that relates to Mineral Resources is extracted from the report titled “Kanyika Niobium Project – Updated JORC Resource Estimate” released to the Australian Securities Exchange (ASX) on 11 July 2018 and available to view at www.globemm.com and for which Competent Persons’ consents were obtained. Each Competent Person’s consent remains in place for subsequent releases by the Company of the same information in the same form and context, until the consent is withdrawn or replaced by a subsequent report and accompanying consent.
The Company confirms that is not aware of any new information or data that materially affects the information included in the original ASX announcement released on 11 July 2018 and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the original ASX announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons’ findings are presented have not been materially modified from the original ASX announcement.
Full details are contained in the ASX announcement released on 11 July 2018 titled “Kanyika Niobium Project – Updated JORC Resource Estimate” available to view at www.globemm.com