Arafura Rare Earths has announced updated economics for its fully-owned Nolans neodymium-praseodymium (NdPr) project in the Northern Territory, Australia.

The project update follows the execution of a binding offtake agreement with Hyundai Motor Company and Kia, earlier this month.

The project’s capital costs are updated to A$1.39bn ($94m) pre-production, and a A$196m ($130m) contingency, with an estimated production capacity of 4,440 tonnes of NdPr oxide over a mine life of 38 years.

Its operating costs have been estimated at A$61.60/kg of NdPr, with its net present value and after tax, estimated at A$48.52bn.

The internal rate of return was estimated at 19.3%, based on an NdPr price of $125.50/kg over the offtake period and $130.10/kg over the life of mine.

In addition, annual earnings from the project, before interest, taxes, depreciation, and amortisation have been estimated at A$573m.

Arafura managing director Gavin Lockyer said: “This Update re-confirms Nolans as an exceptionally valuable world-class NdPr rare earth project, with the capacity to deliver strong financial returns over an initial long mine life of 38 years.

“With NdPr offtake progress at the binding contract stage and the opportunity for strategic investment, particularly from quality partners such as the Hyundai Motor Company, we anticipate that project financing will continue to gain momentum.”

“The Nolans NdPr Project is one of the only construction-ready rare earth oxide projects of scale in the western world. The significant size of the Nolans deposit provides customers with improved security of supply for critical raw materials.”

The Nolans Project will include a mine, and a process plant, which will include beneficiation, extraction, and separation plants, along with related infrastructure.

It is planned to be constructed at the Nolans site, 135km north of Alice Springs in Australia’s Northern Territory.

The project is supported by low-risk mineral resources, which can address a significant proportion of the world’s NdPr demand.

Once completed, Nolans will be a significant NdPr project, and a major supplier of critical minerals to the high-performance NdFeB permanent magnet market.

Lockyer added: “Our ‘Ore to Oxide’ process at a single site provides comfort that the product is being derived from processes aligned with those customers’ ESG priorities.

“Forecast long-term sustained demand growth for NdFeB magnets, required to support the manufacture of electric vehicles and wind turbines, is being driven by a global commitment to a net-zero future.

“Also, given the lack of alternative NdPr sources outside of China, there is a rising imperative for nations to secure sustainable diverse supply chains.

“This market environment provides a supportive platform which positions Arafura as the next global rare earth oxide producer and the immediate impetus to move ahead with greater confidence than ever before.”