Montero proves up phosphate play to develop rare earths

Montero Mining and Exploration (MON-V) has proven up an asset that it will likely never develop.

That’s because the bulk of the company’s capital and energy are going into its Wigu Hill rare-earths project in Tanzania. Even still, Montero knows that if it hopes to raise the capital needed to build a mine at Wigu Hill, it will help to monetize some of its other assets.

Towards that end the company has filed an updated preliminary economic assessment of its Duyker Eiland phosphate project in the Western Cape Province of South Africa.

Inferred resources at the project stand at 32.8 million tonnes, grading at 7.15% P2O5 and the study calculated a net present value (NPV) of $126 million using a 10% discount rate and an IRR of 38%.

Montero has brought in AltaCorp Capital as an advisor as it searches for parties to develop the project which sits roughly 30 km north of the Port of Saldanha.

The latest revision to the study did reflect a rise in operating costs, which grew to $109 per tonne from the $99 per tonne level that was reported in the initial release in late February.

Those higher costs mean higher on-going capital requirements, which in turn affect the capex estimate as it rose to $132 million from $129 million.

That money would buy an investor a project that would mine an average of 4.5 million tonnes of rock at a stripping ratio of 0.57 to 1 and would yield an average annual production of 490,000 tonnes of 33% P2O5 concentrate over an 11-year mine life.

The sooner those metrics can entice a partner to come on board, the closer Wigu Hill will move towards a construction date. The project is described as a high-grade, light rare earth element deposit. Montero has a National Instrument 43-101 resource estimate on the asset that it’s looking at updating, and the company is advancing the hydro-metallurgical testwork as well.

The company’s plan is to fast-track a portion of the Wigu Hill deposit to the mining and production stage while defining a larger deposit.

In Toronto on April 13 the company’s shares were off 5% or a penny to 17¢ on 4,000 shares traded.