SOURCE: Peak Resources Limited

Peak Resources Limited

August 23, 2012 09:00 ET

Peak Resources Maiden High Grade Rare Earth Product From Metallurgical Program

WEST PERTH, AUSTRALIA--(Marketwire - Aug 23, 2012) - Peak Resources Limited (Peak) (ASX: PEK) (OTCQX: PKRLY) (PINKSHEETS: PKRLY), the developer of a potentially low cost, long term rare earth project in Tanzania, is pleased to announce it has successfully demonstrated a simple metallurgical flowsheet resulting in a high grade, high purity rare earth carbonate product from representative weathered samples from its 100%-owned Ngualla Project in Tanzania, the world's fifth largest rare earth deposit outside of China and the highest grade of the top seven. This is a significant milestone in Peak's development, reached ahead of schedule and on budget.

Highlights:

  • Milestone reached - "Proof of Concept" test work on a selected sulphuric acid leach flow sheet completed ahead of schedule

  • The sulphuric acid leach process utilises proven technology with lower capital and operating costs, and provides significant environmental advantages to other leaching methods

  • An overall process recovery of 87% was achieved

  • A high grade (50.3% REO) high purity rare earth carbonate product was generated

  • Uranium and thorium grades are 7ppm and 12ppm  respectively in the rare earth concentrate product

  • Peak is now in a position to engage strategic partners and off-take customers

  • Hatch have been engaged to commence engineering work in Q4 2012 on the process plant

The Proof of Concept is a major step forward in the development of Ngualla into a low cost, long term rare earth producer. The quality of the concentrate produced and the high recoveries achieved add further advantages to Ngualla's favourable geology of high grade mineralisation at surface, combined with the lowest uranium and thorium levels of any major deposit in the world.

Richard Beazley, Managing Director, said, "Achieving this milestone after nine months of test work is outstanding when compared to the typical time frames taken by the rare earth resource industry and reaffirms the company's target of commencing production in early 2016, a significantly shorter period to deliver than other typical rare earth projects.

"The metallurgical test work to date has indicated that the capital expenditure for this extraction process will be low to the rest of the industry and importantly the environmental advantages to this type of process against other leaching methods are significant.

"Peak is now in a position to engage with strategic partners and off-take customers to define the product specifications required, commence discussions for long term supply of product and to facilitate commercial financing arrangements to deliver to project to production."

Technical Report:

Flow Sheet Development
The "Proof of Concept" flow sheet development test work has been completed at Nagrom Laboratories, in Western Australia, ahead of schedule. Work was undertaken on the T19133 composite, a representative sample of weathered bastnaesite mineralisation grading 3.6% REO collected from 25 x two metre drill intervals from six reverse circulation (RC) drill holes within the Southern Rare Earth Zone (SREZ) at Ngualla.

During the test work it was determined that it was possible to selectively remove the cerium early in the flowsheet. This produces a separate high grade concentrate of approximately 65% cerium oxide.

Subsequent processing has produced a cerium depleted, potentially higher value rare earth carbonate product with a grade of 50.3% REO (Figure 1).

The removal of the majority of lower value cerium at the early stage provides additional options in terms of products for further processing or sale and reduces the size of plant required for the later stages of the hydrometallurgical process.

Photographs of the high grade rare earth concentrates produced by the hydrometallurgical test work see figures 2 and 3.

An overall total process recovery from process feed to rare earth product of 87% was achieved. This recovery is significantly higher than other rare earth projects and is the result of the direct acid leaching of mineralisation without preliminary physical beneficiation processes such as gravity, flotation or magnetic methods, which inevitably result in some losses of recovery.

Optimisation
Optimisation of the selected flow sheet has commenced with the first stage (sulphuric acid leach) now complete. This work has determined that greater than 90% of the total rare earths can be leached from the T19133 composite sample using moderate acid strengths and temperatures under atmospheric conditions. This will play an important part in ensuring a low capital and operating cost for the commercial plant.

Process optimization of the subsequent precipitation and purification stages is continuing and will be completed in the third quarter of 2012. This will allow for the design of the pilot plant to commence thereafter.

Metallurgical Variability
With the leach parameters now optimised, leach variability testwork will commence on a further 111 samples to confirm the suitability of the above flowsheet across the SREZ. This will also provide valuable data to improve statistical confidence in the relationship between geology, mineralogy and leach efficiency throughout the deposit.

This work is scheduled to commence in August and will be complete early in the fourth quarter of 2012.

Scoping Study
Hatch has been appointed as the metallurgical engineering group to provide input into the rare earth processing facility. Hatch will be working with Emerson Stewart under the direction of Peak's Chief Development Officer, Lucas Stanfield to produce the Scoping Study on the Ngualla Rare Earth Project.

The process study brief is to produce detailed process flow sheets, reagent and energy costs, equipment lists, mass balance and capital / operating cost estimates based on the selected sulphuric acid leach flow sheet. This work will be complete in the fourth quarter of 2012.

Metallurgical Development Schedule
Below is the timetable for the delivery of the metallurgical test work to feed into the Scoping and Feasibility Studies.

 
Sulphuric Acid Leach Process Development Schedule  
     
Proof of Concept Process   Complete
     
Optimisation of the acid leach process   Complete
     
Optimisation of precipitation and purification processes   In progress
     
Acid Leach variability program   In progress
     
Scoping Study   In progress
     
Pilot plant design   Yet to commence
     
Pilot Plant construction   Yet to commence
     
Pilot plant operation and production of rare earth concentrates for evaluation by off take customers   Yet to commence
     

Further downstream hydrometallurgical test work to produce a range of more refined products from the initial rare earth carbonate concentrate is planned to commence in the fourth quarter of 2012. Separated rare earth products may represent a significant value add opportunity and a schedule for this test work will be released to market once resources are confirmed.

The hydrometallurgical process design work is on track to support the Company's development schedule for rare earth production from the high grade weathered portion of the deposit by early 2016. 

The information in this report that relates to Metallurgical Test Work Results based on information compiled and / or reviewed by Gavin Beer who is a Member of The Australasian Institute of Mining and Metallurgy. Gavin Beer is a Consulting Metallurgist with sufficient experience relevant to the the activity which he is undertaking to be recognized as competent to compile and report such information. Gavin Beer consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 

The information in this report that relates to Exploration Results is based on information compiled and / or reviewed by Dave Hammond who is a Member of The Australasian Institute of Mining and Metallurgy. Dave Hammond is the Technical Director of the Company. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves." Dave Hammond consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Safe Harbor Statement
The information in this document has been prepared as at July 23rd, 2012. Certain statements contained in this document constitute "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and forward looking information under the provisions of Canadian provincial securities laws. When used in this document, the words "anticipate," "expect," "estimate," "forecast," "will," "planned," and similar expressions are intended to identify forward-looking statements or information.

Such statements include without limitation: statements regarding timing and amounts of capital expenditures and other assumptions; estimates of future reserves, resources, mineral production, optimization efforts and sales; estimates of mine life; estimates of future internal rates of return, mining costs, cash costs, minesite costs and other expenses; estimates of future capital expenditures and other cash needs, and expectations as to the funding thereof; statements and information as to the projected development of certain ore deposits, including estimates of exploration, development and production and other capital costs, and estimates of the timing of such exploration, development and production or decisions with respect to such exploration, development and production; estimates of reserves and resources, and statements and information regarding anticipated future exploration; the anticipated timing of events with respect to the Company's minesites and statements and information regarding the sufficiency of the Company's cash resources. Such statements and information reflect the Company's views as at the date of this document and are subject to certain risks, uncertainties and assumptions, and undue reliance should not be placed on such statements and information. Many factors, known and unknown could cause the actual results to be materially different from those expressed or implied by such forward looking statements and information. Such risks include, but are not limited to: the volatility of prices of gold and other metals; uncertainty of mineral reserves, mineral resources, mineral grades and mineral recovery estimates; uncertainty of future production, capital expenditures, and other costs; currency fluctuations; financing of additional capital requirements; cost of exploration and development programs; mining risks; community protests; risks associated with foreign operations; governmental and environmental regulation; the volatility of the Company's stock price; and risks associated with the Company's by-product metal derivative strategies. For a more detailed discussion of such risks and other factors that may affect the Company's ability to achieve the expectations set forth in the forward-looking statements contained in this document, see the Company's Annual Report on Form 20-F for the year ended December 31, 2011, as well as the Company's other filings with the Canadian Securities Administrators and the U.S. Securities and Exchange Commission. The Company does not intend, and does not assume any obligation, to update these forward-looking statements and information. Marc Legault, a Qualified Person and the Company's Vice-President, Project Development, reviewed the technical information disclosed herein. For a detailed breakdown of the Company's reserve and resource position see the July 23rd, 2012 press release on the Company's website. That press release also lists the Qualified Persons for each project.

About Peak Resources
Peak is developing the Ngualla Project, a potentially low-cost, long term rare earth project located in south west Tanzania. Ngualla has been ranked as the fifth largest deposit in the world outside China, and the highest grade of the top seven.

Ngualla has a Mineral Resource of 170 million tonnes grading 2.24% of rare earth oxides (REO). Within the resource there is a highly weathered and near-surface zone estimated at 40 million tonnes at 4.07% REO, equivalent to 1.6 million tonnes of contained REO (see Table 1 below for resource classifications). Ngualla is also a bulk deposit which is largely outcropping. These attributes place the project among the world's most notable rare earth discoveries of recent years.

Ngualla is a potential low cost open pit mine due to its shallow outcropping high grade mineralisation. The initial sighter metallurgical test work to date has been completed using a sulphuric acid leach process route suggesting a relatively less complex, potentially cheaper capital outlay and shorter time to production.

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