Hastings Technology Metals has opted for GR Engineering Services and its A$210 million engineering procurement construction (EPC) delivery model for the proposed A$658 million Yangibana rare earths project in Western Australia over an alternative engineering, procurement and construction management (EPCM) pitch.
DRA Global has worked with Hastings since 2019 on front-end engineering and design (FEED) work, said to be 50% complete, under an “EPCM-type services contract”.
However, Hastings said this week the EPC model could reduce cost and provide cost certainty “compared to the current estimates of the same scope if delivered through an EPCM model”.
It said EPC also provided “greater certainty around the timeframe with practical completion expected to be three months shorter compared to the EPCM delivery model”.
“Change in delivery model for the beneficiation plant is an outcome of the ongoing Hastings review of the capital cost, schedule and project execution strategy,” the company said.
Hastings, which has a current market value around A$260 million, is trying to finalise a debt and equity financing structure for Yangibana, in WA’s Gascoyne region. It is hoping to have the project built by the end of next year and generating concentrate sales in the first quarter of 2025.
The company said in January this year a previously approved A$140 million loan from the Australian Government’s Northern Australia Infrastructure Facility had been increased to $220m. It about $150m in the bank in February.
Hastings said in March this year its February 2022 circa-$660 million capex estimate for Yangibana was under review and expected to rise due to “market inflation, design growth and third-party-imposed conditions”.
The binding term sheet signed with GR would see early works begin immediately under a three-month early works agreement.
“The appointment of GR Engineering, one of Australia’s leading process engineering companies, for the construction of the Yangibana plant marks an important milestone on Hastings’ path to first rare earth concentrate production by late 2024,” Hastings executive chairman Charles Lew said.
“Achieving a fixed price EPC contract significantly reduces the risk of ongoing cost increases, which was a key objective set by the Hastings board for interim CEO Alwyn Vorster when he joined in late 2022.
“With $221 million in contractual commitments already made to date on the world-class Yangibana project, we remain confident it is well-positioned to move into main construction in Q3 CY2023, establishing Hastings as a significant player in the critical minerals sector and generating strong returns for our shareholders.”
The GR-Hastings contract includes a fixed price component of $180 million for the proposed 1 million tonnes per annum beneficiation plant and a provisional $30 million for earthworks associated with the plant, and a tailings storage facility.
The plant is expected to produce about 35,000tpa of rare earth concentrate over 17 years, and 15,000tpa mixed rare earth carbonate containing about 3400tpa of neodymium-praseodymium oxide. The latter is projected to fetch an average US$112,000 a tonne over the life of the operation.
Yangibana is slated to account for 6-8% of global NdPr supply.
Hastings’ share price is down more than 40% so far in 2023.
GR Engineering’s share price has dropped nearly 11% year-to-date at $1.82, capitalising the company at $294 million.