Announcement PDF ASX Announcement 10 November 2015 Hastings Technology Metals Limited ABN 43 122 911 399 ASX Code: Shares ‐ HAS Level 25, 31 Market Street Sydney NSW 2000 PO Box Q128 Queen Victoria Building NSW 1220 Australia Telephone: +61 2 8268 8689 Facsimile: +61 2 8268 8699 info@hastingstechmetals.com Board Charles Lew (Chairman) Anthony Ho (Non‐Exec Director) Malcolm Mason (Non‐Exec Director) NPV OF $650‐$750 MILLION INDICATED BY NOVEMBER 2015 SCOPING STUDY CONFIRMING YANGIBANA POTENTIAL HIGHLIGHTS  November 2015 Scoping Study completed by Snowden with updated inputs from all PFS consultants  Study indicates compelling and excellent project viability with NPV10 of A$650 million – A$750 million* on the base case, extracting only current Indicated Resources over 7 years  Extrapolation over 15 years backed by current Inferred Resources plus Exploration Target indicates NPV10 of A$900 million – A$1.1 billion*  All aspects of the PFS progressing on schedule and budget for completion in Q1 2016 *Note that all financials are before depreciation, tax and interest www.hastingstechmetals.com SUMMARY Snowden Mining Industry Consultants (Snowden) has completed an updated Scoping Study on the Yangibana Project indicating compelling financial viability. Inputs to the Scoping Study were provided by each of the consultants that are working on the Pre‐Feasibility Study for the Project. Based only on the current Indicated Resources at Bald Hill South, Fraser’s, Yangibana West and Yangibana North deposits, a proposed 1.0 million tonnes per annum operation is predicted to return a net present value at a 10% discount rate (NPV10) of A$650 million – A$750 million over a life of 7 years. This scenario provides an Internal Rate of Return (IRR) of 52%. 1 Based on the mining and processing of 15 million tonnes of comparable material the Project would return an NPV10 of A$900 million to A$1.1 billion. This expanded mining scenario is based on the current Inferred Resources of 4.2 million tonnes plus an Exploration Target of 4‐7 million tonnes, in addition to the current Indicated Resources that are the basis of the high confidence scenario. The justification of the Exploration Target is provided in the body of this report. All financials reported in this document are before depreciation, tax and interest. All aspects of the Pre‐Feasibility Study are progressing on schedule and within budget and are scheduled for completion by the end of Q1 2016. SCOPING STUDY Introduction Hastings Technology Metals Limited (ASX:HAS) is pleased to announce the findings of the November 2015 Scoping Study completed by Snowden, with input from each of the Company’s consultants, to provide an overview of progress achieved on the ongoing Yangibana Pre‐Feasibility Study. The updated Scoping Study focused on the production of separated oxides of the rare earths neodymium (Nd), praseodymium (Pr), dysprosium (Dy), europium (Eu), with lesser gadolinium (Gd) and samarium (Sm). Additional rare earths could be considered for processing at a later date if suitable markets and opportunities are identified. Resources As reported in the ASX release of 6th October 2015, the current resources at the Yangibana Project are as shown in Table 1. Resource Classification Indicated Inferred TOTAL Tonnes 8,126,000 4,236,000 12,362,000 %TREO 1.07 1.07 1.07 *see explanation at end of report Table 1 – Yangibana Project, October 2015 JORC Resources A detailed breakdown of the diluted resources is provided in Appendix 1. 2 %Nd2O3‐Eq* 0.46 0.41 0.44 Mining Mining of Bald Hill South, Fraser’s and Yangibana North/West (here termed Yangibana) has been proposed using standard truck and shovel methods. Dilution had already been accounted for in the resource estimate. Snowden has completed initial pit optimisations and designs, and preliminary waste dump designs for each of these deposits. The preliminary layouts are shown in Figures 1 to 3. The resultant pit dimensions and extracted grades are listed in Table 2. All resources included in the proposed mine plan are from within the current Indicated Resources. Figure 1 – Yangibana Scoping Study – Bald Hill South pit and waste dump 3 Figure 2 – Yangibana Scoping Study – Fraser’s pit and waste dump Figure 3 – Yangibana Scoping Study – Yangibana West and North pits and waste dumps 4 Bald Hill South Fraser’s Yangibana Pit Size (kt) 21,903 12,102 39,357 Strip ratio (w:o) 6.3 20.3 10.2 Mining inventory 2,997 569 3,507 (kt) Waste (kt) 18,906 11,533 35,849 TREO (%) 0.86 0.97 1.43 Nd2O3 (ppm) 3,018 3,556 3,061 Pr2O3 (ppm) 663 869 893 Dy2O3 (ppm) 62 59 46 Eu2O3 (ppm) 76 67 95 Table 2 – Yangibana Scoping Study, Mining Inventory Total 73,362 9.4 7.074 66,289 1.15 3,083 794 54 85 The three optimised and modelled pits therefore provide just over 7.0 million tonnes of mining inventory at an average grade of 1.15% TREO to the processing plant. The pits extract a total of 73.3 million tonnes of material at an average stripping ratio of 9.4:1. For the avoidance of doubt, a Pre‐Feasibility Study has not yet been completed and Hastings has not estimated a Mineral Reserve. The “mining inventory” is indicative but conceptual in nature until completion of the appropriate technical studies. Processing The mined ore will be fed to a crushing plant for size reduction, prior to milling to reduce the feed to the required sizing for the flotation processing. Hastings has completed preliminary beneficiation test work that indicates that, at a plant throughput rate of 1.0 million tonnes per annum, a flotation plant can achieve a 95.5% reduction to 45,000t per annum of concentrate from Bald Hill South and Fraser’s feed, and a 93% reduction to 70,000t per annum of concentrate from Yangibana feed, with recoveries of 85% of the contained rare earths (i.e. loss of only 15% of contained rare earths). Tetra Tech Proteus has progressed the comminution and flotation sections of the design to include 3D modelling for more accurate costing. Images from the model include the expected mill and flotation plant as indicated in Figures 4 and 5. 5 Figure 4 – Yangibana Scoping Study, Expected Mill and Flotation Plant Areas Figure 5 – Yangibana Scoping Study, Expected Mill and Flotation Plant Areas 6 The subsequent hydrometallurgical plant leaches the 45,000t per annum or 70,000t per annum of concentrate to extract the target rare earths. The rare earths are then treated in a separation plant/refinery to produce individual or combined rare earths oxides as specified by the customers. Test work in these areas is progressing at The Core Group with work on the beneficiated concentrate from the Eastern Belt Master Composite sample (derived from Bald Hill South and Fraser’s deposits) to commence in the near future. All processes including crushing, milling, flotation, hydrometallurgy and separation are standard processes used within the rare earths industry. This further de‐risks the project. Yangibana rare earths are hosted almost exclusively in the mineral monazite that has a long and well established history in commercial processing. A number of other projects are currently considering this processing route. The predicted recovery rates incorporated in the Study are as shown in Table 3. Bald Hill South/Fraser’s Yangibana Mass Pull to Concentrate 4.5 7.0 Nd2O3 recovery 78 79 Pr2O3 recovery 78 79 Dy2O3 recovery 58 70 Eu2O3 recovery 72 76 Gd2O3 recovery 79 79 Sm2O3 recovery 79 79 Table 3 – Yangibana Scoping Study, predicted processing recovery rates Project infrastructure Locations have been selected for all items of major infrastructure including Tailings Storage Facility (currently for 10 years) Roads Accommodation Camp Fresh Water Storage Dams Temporary Concentrate Dams Water supply Air strip Applications have been made for a number of additional Mining Leases, General Purpose Leases and Miscellaneous Licences to cover areas with potential resources and/or infrastructure requirements. 7 Project Economics ‐ High Confidence Scenario Tetra Tech Proteus has established capital costs for the project based on industry standards for the basic equipment, milling and beneficiation sections, and by factoring costs available in the public arena from similar operations, that totals an estimated $411 million including a 40% contingency. Table 4 provides a breakdown of these estimated capital costs. Capital Cost Centre A$M Geology 5 Mining 4 Processing 154 Project Services 10 Infrastructure 28 Accommodation 20 Management, Services, EPCM 62 Pre‐Production 12 Contingency 116 TOTAL CAPEX 411 Table 4 ‐ Yangibana Scoping Study, Estimated Capital Costs The operating costs are based on contract mining and 90% processing plant availability. The Study assumes the sale of separate (or combined if required by the customer) rare earths oxides at site and operating costs are based on this assumption. Table 5 provides a breakdown of the estimated operating costs. Processing costs are expected to vary from $146/t ore for Bald Hill South and Fraser’s increasing to $183/t for ore from Yangibana. Estimated average operating costs are provided in Table 5. Category Operating Cost ($/t ore mined) Contract Mining 39 Processing and Administration 166 TOTAL OPEX 205 Table 5 ‐ Yangibana Scoping Study, Estimated Operating Costs The revenue is based on the commodity prices predicted by Adamas Intelligence in its 30th June 2015 report entitled “Rare Earth Market Outlook Update: Supply, Demand, and Prices from 2014 Through 2020“ as the average figure for 2019, for the six target rare earths, with no projected metal price escalation. The commodity prices used in the Study are as shown in Table 6. 8 Oxide US$/kg Neodymium Oxide 103.69 Praseodymium Oxide 92.55 Dysprosium Oxide 480.97 Europium Oxide 420.49 Gadolinium Oxide 49.57 Samarium Oxide 3.85 Table 6 – Yangibana Scoping Study, Commodity Prices A 2.5% state royalty was incorporated in the financial evaluation and a 0.75 US$/A$ exchange rate was assumed. Key financial indicators are shown in Table 7. Item Units Base Case Million tonnes per annum 1.0 Project Life Years 7.25 Net revenue A$M 3,314 Operating Costs A$M 1,449 Capital Costs A$M 411 NPV at 10% discount rate A$M 711 IRR % 52 Years 1.5 Plant throughput Payback after construction completed Table 7 ‐ Yangibana Scoping Study, Key Project Parameters Project Economics ‐ 15‐year Scenario Extrapolating the operation over an additional eight years based on the reasonable assumption that resources of the same tenor as the current resources will continue to be defined by ongoing exploration provides an NPV10 of A$900 million ‐ A$1.1 billion. Hastings considers that this case is supported by:‐ 9  current Inferred Resources totalling 4.24 million tonnes at 1.07% TREO at Yangibana West, Yangibana North, Gossan, Lion's Ear, Hook, Kane's Gossan, Bald Hill North, Bald Hill South and Fraser's; and  an Exploration Target as defined by the JORC Code, Clause 17, of between 4 and 7 million tonnes of plant feed at a grade in the order of 1.0 to 1.2% TREO. This target is conceptual but is supported by:‐  extensions of the Inferred Resources listed above, both at depth where the deepest intersections show no sign of decreasing potential and along strike supported by outcropping ironstone (the host to the bulk of the rare earths mineralisation in the Yangibana Project);  mineralisation at Terry’s Find, Yangibana and Yangibana South prospects where limited drilling by Hastings has confirmed grades comparable to those of the existing resources but where insufficient drilling has been completed to allow the estimation of JORC resources;  mineralisation at Hook South and Tongue prospects where limited drilling in the 1980s has confirmed grades comparable to those of the existing resources but where insufficient drilling has been completed to allow the estimation of JORC resources; and  numerous outcropping ironstone units elsewhere within the Yangibana Project that in some cases have returned anomalous rare earths values from rock chip samples and in other cases are yet to be assessed. The Exploration Target will be explored in the future to establish resources as required. The Exploration Target discussed here is based on rare earths mineralisation associated with the outcropping ironstone units and their depth and strike extensions. The identification of carbonatite‐ and phoscorite‐hosted higher grade mineralisation at Yangibana West, Yangibana North, Lion’s Ear, Kane’s Gossan, Bald Hill South and Fraser’s deposits establishes potential for the Project to host higher grade mineralisation at depth. This potential is not considered in the current Exploration Target. The potential quantity and grade of the Exploration Target is conceptual in nature. Confirmation of the Exploration Target will depend on the success of future exploration programmes to determine a mineral resource. There is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realised. 10 TERMINOLOGY USED IN THIS REPORT TREO is the sum of the oxides of the heavy rare earth elements (HREO) and the light rare earth elements (LREO). HREO is the sum of the oxides of the heavy rare earth elements europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb), lutetium (Lu), and yttrium (Y). CREO is the sum of the oxides of neodymium (Nd), europium (Eu), terbium (Tb), dysprosium (Dy), and yttrium (Y) that were classified by the US Department of Energy in 2011 to be in critical short supply in the foreseeable future. LREO is the sum of the oxides of the light rare earth elements lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), and samarium (Sm). NEODYMIUM EQUIVALENCE Hastings is concentrating its efforts on the recovery of four important rare earths – neodymium, praseodymium, dysprosium and europium. To portray the grade of the mineralisation Hastings has established neodymium‐equivalent figures where:‐ The Nd2O3 equivalent (Nd2O3‐Eq) values have been calculated based on the following rare earths prices. These prices have been established by independent consultants Adamas Intelligence in its report entitled “Rare Earth Market Outlook, Update: Supply, Demand and Pricing from 2014 through 20230” dated 30 June 2015, and are being used by Hastings in the evaluation of the project. For further information please contact: Andy Border, General Manager Exploration +61 2 8268 8689 Guy Robertson, Company Secretary +61 2 8268 8689 11 About Hastings Technology Metals  Hastings Technology Metals is a leading Australian rare earths company, with two rare     earths projects hosting JORC‐compliant resources in Western Australia. The Yangibana Project hosts JORC Indicated and Inferred Resources totalling 12.36 million tonnes at 1.07% TREO, including 0.44% Nd2O3‐Eq (comprising 8.13 million tonnes at 1.07% TREO Indicated Resources and 4.24 million tonnes at 1.07% TREO in Inferred Resources). The Brockman deposit contains JORC Indicated and Inferred Resources totalling 36.2 million tonnes (comprising 27.1mt Indicated Resources and 9.1mt Inferred Resources) at 0.21% TREO, including 0.18% HREO, plus 0.89% ZrO₂ and 0.35% Nb₂O₅. Rare earths are critical to a wide variety of current and new technologies, including smart phones, hybrid cars, wind turbines and energy efficient light bulbs. The Company aims to capitalise on the strong demand for critical rare earths created by expanding new technologies. In November 2015 Snowden completed an updated Scoping Study of the Yangibana Project that confirmed the economic viability of the Project and Hastings is advancing work on a Pre‐Feasibility Study. Competent Persons’ Statement The information in this announcement that relates to Resources is based on information compiled by Simon Coxhell. Simon Coxhell is a consultant to the Company and a member of the Australasian Institute of Mining and Metallurgy. The information in this announcement that relates to Exploration Results is based on information compiled by Andy Border, an employee of the Company and a member of the Australasian Institute of Mining and Metallurgy. Each has sufficient experience relevant to the styles of mineralisation and types of deposits which are covered in this announcement and to the activity which they are undertaking to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (“JORC Code”). Each consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears. The Scoping Study has been compiled under the supervision of Mr Jeremy Peters. Mr Peters is a full time employee of Snowden Mining Industry Consultants and a Fellow of the Australasian Institute of Mining and Metallurgy and Chartered Professional Mining Engineer and Geologist of that organisation. Mr Peters has sufficient experience relevant to the type of deposit and mining technique which are covered in this announcement and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (“JORC Code”). Mr Peters consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears. 12 Cautionary statement This document contains certain forward‐looking statements with respect to the financial condition, results of operations and business of Hastings. The words “intend”, “aim”, “project”, “anticipate”, “estimate”, “plan”, “believes”, “expects”, “may”, “should”, “will”, or similar expressions, commonly identify such forward‐looking statements. Examples of forward‐looking statements in this document include those regarding mineral resources, anticipated production or construction dates, costs, outputs and productive lives of assets or similar factors. Forward‐looking statements involve known and unknown risks, uncertainties, assumptions and other factors set forth in this document that are beyond the Hastings' control. For example, future ore reserves will be based in part on market prices that may vary significantly from current levels. These may materially affect the timing and feasibility of particular developments. Other factors include the ability to produce and transport products profitably, demand for our products, the effect of foreign currency exchange rates on market prices and operating costs, and activities by governmental authorities, such as changes in taxation or regulation, and political uncertainty. In light of these risks, uncertainties and assumptions, actual results could be materially different from projected future results expressed or implied by these forward‐looking statements which speak only as to the date of this report. Except as required by applicable regulations or by law, Hastings does not undertake any obligation to publicly update or revise any forward‐looking statements, whether as a result of new information or future events. Hastings cannot guarantee that its forward‐looking statements will not differ materially from actual results. 13 APPENDIX 1 Deposit Bald Hill South Bald Hill South Tenement M9/157 P9/467 Ind/Inf Ind Ind Tonnes 3,247,131 51,009 % TREO 0.82 0.78 Nd2O3 2873 2791 Pr2O3 632 602 Dy2O3 59 67 Eu2O3 72 82 Ce2O3 3236 2991 Er2O3 10.2 10.0 Gd2O3 172 196 Ho2O3 6.3 6.7 La2O3 974 862 Lu2O3 0.66 0.59 Sm2O3 339 370 Tb2O3 17.6 20.5 Tm2O3 1.00 0.91 Y2O3 153 163 Yb2O3 5.1 4.7 Bald Hill South Bald Hill South Bald Hill North Bald Hill M9/157 P9/467 E9/1049 Inf Inf Inf Total 728,619 107,515 101,703 4,235,976 0.64 0.83 0.43 0.78 2268 3011 1582 2741 500 641 327 602 53 81 39 58 58 86 43 69 2475 3047 1590 3058 9.3 13.9 7.0 10.1 140 217 105 166 5.7 8.7 4.2 6.2 698 918 482 912 0.56 0.79 0.47 0.64 271 385 201 325 15.1 23.5 11.3 17.2 0.88 1.30 0.70 0.98 140 205 104 151 4.3 6.6 3.5 5.0 Frasers M9/158 Ind 629,535 0.94 3437 838 58 65 3901 9.3 15 6.2 728 0.5 320 16.6 0.9 145 4.4 Frasers Frasers Frasers M9/158 E9/2018 Inf Inf Total 505,743 35,400 1,170,678 0.59 0.46 0.77 2115 1827 2817 500 423 680 40 16 49 42 27 54 2505 1869 3237 7.2 2.6 8.2 10 56 129 4.5 1.6 5.3 425 359 586 0.4 0.1 0.4 205 154 265 11.0 4.6 13.8 0.7 0.3 0.8 113 41 128 3.2 1.4 3.8 Yangibana West Yangibana North M9/160 M9/159 Ind Ind 1,479,893 2,718,269 0.99 1.46 2246 3061 616 910 42 43 82 89 4637 7155 5.7 5.5 187 205 4.0 3.9 1920 3058 0.3 0.3 342 394 15.2 15.5 0.5 0.5 93 92 2.5 2.5 Yangibana West Yangibana North Gossan Hook Kanes Gossan Lions Ear M9/160 M9/159 M9/159 M9/159 M9/159 M9/159 Inf Inf Inf Inf Inf Inf 294,638 471,000 220,522 348,819 577,828 842,034 1.47 1.55 1.07 1.09 1.16 1.42 3229 3235 2132 1866 2520 2844 931 962 660 611 773 846 51 45 22 30 42 42 102 94 55 49 57 81 7076 5558 5368 5513 6361 7014 6.5 6.6 2.91 3.71 5.45 4.45 239 225 113 114 147 188 4.7 4.7 2.03 2.70 4.07 3.73 2897 2300 2311 2660 2454 3114 0.4 0.4 0.16 0.22 0.30 0.21 448 408 255 203 270 343 18.5 18.2 8.27 10.18 14.69 15.21 0.6 0.6 0.28 0.31 0.45 0.37 108 109 50 64 93 84 2.8 2.8 1.39 1.51 1.97 1.74 Total 6,953,002 1.31 2746 810 42 82 6286 5 190 4 2671 0.3 356 15 0.5 90 2 8,125,836 4,233,819 12,359,656 1.07 1.07 1.07 2865 2531 2750 738 703 726 50 43 48 79 67 75 4852 4964 4891 7.75 6.28 7.25 185 159 176 5.10 4.33 4.83 1824 1960 1870 0.48 0.35 0.44 357 299 337 16.40 14.44 15.73 0.73 0.56 0.67 121 103 115 3.70 2.69 3.36 Total Indicated Total Inferred Grand Total Appendix 1 – Yangibana Scoping Study, Detailed breakdown of October 2015 JORC Resources for the Yangibana Project 14