TIDMGLR
RNS Number : 8682B
Galileo Resources PLC
12 June 2019
For immediate release
Dissemination of a Regulatory Announcement that contains inside
information according to REGULATION (EU) No 596/2014 (MAR).
12 June 2019
Galileo Resources Plc
("Galileo" or "the Company")
Rare Earths project - Possibilities For Re-Activation
Galileo draws its shareholders' attention to the recent trade
dispute between US and China, and the latter's top economic
planning body reportedly (1) studying proposals to establish export
controls on rare earths (RE) to US, if the dispute between the two
nations deepens. China supplies about 80% of US rare earths (2) and
accounts for more than 70% of global output of RE.(1)
A US strategic minerals report released in December 2017
reportedly (1) stated "If China were to stop exports of critical
minerals, including RE, for a prolonged longed period , similar to
the China's RE embargo 2010, an extended supply disruption could
cause significant shocks throughout the U.S. and foreign crucial
mineral supply chains".
The Company's shareholders are reminded that it holds a 34%
interest in the Glenover Rare Earth- Phosphate project (the
Project").
Two advanced exploitation options for the Project have been
studied, 1) preliminary economic assessment ("PEA") of primary RE
production with phosphate as a by-product (3) and, 2) primary
phosphate (P(2) O(5) ) production (4) ,for which a proposed
preliminary offtake agreement for the phosphate is in place (5) ,
and recovery of RE from the P(2) O(5) production tailings
The Board therefore considers that the project is well placed to
benefit from potential upturn in the RE market and/or from third
party major developers and they will be assessing the possibility
of reactivating the project.
Project Fundamentals as previously announced (note that should
the Project proceed then these will need to be reconsidered and
revised as appropriate)
-- Project Current Resource Estimate (6)
SAMREC Code Resource category Tonnes Attributable (b) to Galileo Total RE Oxide P(2) O(5)
Million Tonnes Million % %
Stockpiles (a) Inferred (a) 2.685 1.188 1.94 22.21
------------------------------- --------- ---------------------------- --------------- ----------
In Situ o/pit Indicated (a) 7.407 3.277 2.20 17.57
------------------------------- --------- ---------------------------- --------------- ----------
Total 10.092 4.465 2.13 18.80
--------- ---------------------------- --------------- ----------
Rare Earth Development Option (3)
-- PEA (2015) net Present Value ("NPV") of US$ 512 million using
a rare earth oxide (REO) basket price (c) of US$60.79 per kg (d)
(of 99% REO )and a discount rate of 8%.
-- Internal Rate of Return ("IRR") of 34.5 % for the Project
-- REO production of 167,100 t (tonnes) in mixed high-grade REO
chemical product over 24-year life of mine (LOM) on current
resource estimate
-- Ore production rate from 2.7 Mt stockpiles at 400,000 t per year 1 to 7
-- Open pit mine ore production from 7.1 Mt at 400,000t per year from year 8
-- Initial capital investment US$233M, including a contingency of US$34M but excluding
$57M for working and deferred capital
Phosphate Development Option (4)
-- Major phosphate producer (MPP) undertakes expenditure of
upwards of US300,000 pursuant to a proposed off-take agreement
("Agreement") on a pilot plant phosphate flotation study to produce
phosphate concentrate for testing by MPP . Work continues by the
MPP under this Agreement
-- Extensive related testworks have taken place and negotiations
to formalise the Agreement accepted by Galileo are on-going pending
final phase pilot studies (5)
-- The ultimate objective of this Option would be either to
develop the Project or sell the Project in whole or part to MPP
-- Grant of a Mining Right for Phosphate production is pending a
decision from the Department of Mineral Resources; such process
remains ongoing
-- Rare-earths from the tailings of any future phosphate
processing of the ore by MPP, would be available for further
beneficiation and or recovery.
Whilst the US has RE mine reserves, 93 times the nation's output
last year (2) , 80% of US demand for REs is for the so called
lighter lanthanum and cerium REs , both of which are oversupplied
around the world. (7) However, export restrictions , which could
cover relatively higher priced and less abundant light REs
(Neodymium, Praseodymium) and heavy RE dysprosium, all widely used
in permanent magnets in motors in industries from automobiles, to
consumer goods (and wind turbines) would be a "devastating" blow to
the US economy (1.) These less abundant and higher priced REs form
nearly 30% of the suite of REs in the Project's deposit (8) .
Colin Bird, CEO of Galileo said, "In 2011, the west were much
concerned with China's dominance of rare earth (RE) market against
an increasing western requirement for REs including in military
use. This concern prompted several western governments to take
initiatives including the USA having a special senate committee and
other steps to develop western RE production capability. This
alternative source requirement did not dissipate but was overtaken
by subsequent relative geo- political calm thereby negatively
impacting on the RE price. This calm has now evaporated and the
spectre again of a RE deficit, particularly, the heavy REs , is
again emerging . The Glenover project , which has a good proportion
of heavy REs, has had an independent preliminary economic
assessment produced, which showed robust figures and good material
processing characteristics. Galileo now intends with its project
partner FerMinOre, to reappraise the market with the anticipation
of improved RE prices, to restore value that temporarily left the
project."
Sources/References
1 Bloomberg News June 5 2019
2 US Geological Survey
3 Galileo RNS announcement 7 March 2013
4 Galileo RNS announcement 12 June 2017
5 Galileo RNS 12 February 2018
6 Galileo RNS 30 May 2013
7 www.cnbc.com/markets/ 3 June 2019
8 GBM Preliminary Economic Assessment - Executive Summary -
0468-RPT-027 Rev 1
Notes
a inferred resource The SAMREC CODE defines an Inferred Mineral
Resource as " that part of a Mineral Resource for which volume or
tonnage, grade and mineral content can be estimated with only a low
level of confidence. It is inferred from geological evidence and
sampling and assumed but not verified geologically or through
analysis of grade continuity. It is based on information gathered
through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes that may be limited in
scope or of uncertain quality and reliability. The stockpiles,
which are inferred mineral resources, require rigorous SAMREC
compliant sampling applied to them in order for them to be
categorized as mineral reserves
indicated resource The SAMREC CODE defines an Indicated Mineral
Resource' as " that part of a Mineral Resource for which tonnage,
densities, shape, physical characteristics, grade and mineral
content can be estimated with a reasonable level of confidence. It
is based on information from exploration, sampling and testing of
material gathered from locations such as outcrops, trenches, pits,
workings and drill holes. The locations are too widely or
inappropriately spaced to confirm geological or grade continuity
but are spaced closely enough for continuity to be assumed.
b 4.24% attributable to Galileo after earn-in of the agreed 51%,
with the balance of 5.76% attributable to Black Economic
Empowerment shareholders
c The REO basket price is calculated as the weighted average of
the individual REO prices based on estimated future (2015) prices
at the relative proportions in which the REOs occur within the
Glenover project deposit. No value was assigned for oxides of the
five rare earth elements: Holmium, Erbium, Terbium, Ytterbium and
Lutetium; these REOs have limited niche applications and would not
form part of a standard off-take agreement. Based on preliminary
assessment of market conditions, and a process of benchmarking
other similar projects producing similar high-grade mixed REO
product, a discount factor of 35 % has been applied to the basket
price used in this PEA. This factor reflects the effective loss in
value, to off-takers, of generally around 35% of the contained
mixed REOs in further refining of the mixed product to produce
oxides of the individual rare earth elements.
d estimated weighted average of individual REO prices 2019 without discount $30/kg
(prices https://mineralprices.com/rare-earth-metals/
You can also follow Galileo on Twitter: @GalileoResource
A copy of the announcement is available on the Company's website
www.galileoresources.com
Technical Sign-Off
Andrew Sarosi, Technical Director of Galileo, who holds a B.Sc.
Metallurgy and M.Sc. Engineering, University of Witwatersrand and
is a member of The Institute of Materials, Minerals and Mining, is
a 'qualified person' as defined under the AIM Rules for Companies
and a competent person under the reporting standards. The technical
parts of this announcement have been prepared under Andrew Sarosi's
supervision and he has approved the release of this
announcement.
For further information, please contact: Galileo Resources
PLC
Colin Bird, Chairman Tel +44 (0) 20 7581
Andrew Sarosi, Executive Director 4477
Tel +44 (0) 1752 221937
Beaumont Cornish Limited - Nomad Tel +44 (0) 20 7628
Roland Cornish/James Biddle 3396
--------------------------
Novum Securities Limited - Joint
Broker
Colin Rowbury /Jon Belliss +44 (0) 20 7399 9400
--------------------------
Shard Capital Partners LLP - Tel +44 (0) 20 7186
Joint Broker 9952
Damon Heath
--------------------------
Technical Glossary
Phosphate (P(2) O(5) ): an oxide of phosphorus
Rare earths (RE): a set of fifteen chemical elements in the
periodic table specifically
the lanthanides (plus yttrium ad hoc and scandium) and by
convention categorised as light REE (the first seven elements plus
yttrium) and heavy REE (the other eight lanthanides)
REO (rare earth oxide): the oxide form of the rare earth elements
TREO: total rare earth oxides
The major rare earth elements in the Glenover deposit are:
Ce: Cerium Uses include cathode ray tube glass to prevent age
discoloration, in auto catalytic converters, rich red colour
pigments, low energy light bulbs, film studio carbon-arc lighting
and minor use in self cleaning ovens
Eu: Europium Uses include bright red coloration in television
tubes; industrial street lighting to give a more natural light,
thin film superconductor alloys and in lasers
Gd: Gadolinium Uses include neutron capture capability and in
compounds as a contrasting agent in radiography and magnetic
resonance imaging in medical diagnostics
La: Lanthanum Uses include carbon-arc lighting, additive to
glass for lenses and new treatment for bone disease
(osteodysrophy). Potential use for hydrogen (H) storage for
H-fuelled vehicles: being able to absorb hydrogen as much as 400
times its volume
Nd: Neodymium Uses include alloyed with iron and boron to make
one the most powerul permanent magnets known (see also Samarium
below) and found in modern vehicles using motorised devices; in
welders protective glasses and power lasers
Pr: Praseodymium Uses include as an additive to give glass a
pure yellow colour and brilliant pastel greens and yellows for
glazes
Sm: Samarium Uses include alloyed with cobalt to produce
permanent magnets ten thousand times more powerful than iron and
has the highest resistance to demagnetization; in masers (microwave
lasers) capable of cutting steel and bouncing off the surface of
the moon
Y: Yttrium Uses include lasers, as host for europium in TV red
phosphor, alloyed with boron and cobalt high temperature
superconductors and microwave filters
This information is provided by RNS, the news service of the
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END
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