26 Sep 2012
Stans Energy to resume work on Kyrgyz rare earth mine


Rare earth plans
Rare earth plans
LONDON (Metal-Pages) 26-Sep-12. Canadian company Stans Energy expects to resume exporation work at the Kutessay II rare earth deposit in Kyrgyzstan, following negotiations to resolve a temporary issue over its licence in the country.

Stans Energy, which also owns the Kashka rare earth plant in Ak-Tuz, had announced on 11 September that it had had to temporarily stop exploration work on Kutessay II by order of the Kyrgyz State Geological Agency. The agency claimed the company had failed to submit a firm proposal for the gratuitous transfer of a stake in its local subsidiary Kutisay Mining to the state. The work suspension order was valid until 29 September.

Stans Energy had put forward a proposal in July to form a public-private partnership on the basis of its Kyrgyz subsidiary. It was not, in fact, required by law to transfer any set percentage of its business to the state. There is also no such requirement under the new Kyrgyz mining legislation which came into force on 17 September.

In the run up to the September leadership elections, which led to the formation of the new coalition government in Kyrgyzstan, Stans Energy suffered a smear campaign by a local politician, the company told Metal-Pages, and the work stoppage was issued illegally by the old administration of the State Geological Agency (SGA). The company's management, which travelled to Kyrgyzstan this month, has been encouraged by negotiations with the new administration.

"A new director of the SGA has been appointed as have new committee members. We are working with them to resolve any outstanding issues." Stans Energy's spokesman David Vinokurov told Metal-Pages. The company is pursuing a court case in Kyrgyzstan, due to be heard in October, against the agency, which had been slow to act on company's development proposals for Kutessay II rare earth and Kalesay beryllium deposits.

Stans Energy holds a 20-year mining licence and had the terms of its licence agreement extended in July to give it more time to negotiate a framework for a PPP and to prepare the Kutessay mine for production. However Ak-Tuz-born MP Nurzhan Badykeyeva, reported to have been lobbying on behalf of third party interests, called in recent months for Stans Energy's licence to be withrawn. The basis for her campaign was a claim that the Canadian company had been too slow to implement mine development proposals under the terms of its 20-year licence.

According Stans Energy, any slowdowns in project development have been due to the previous government's own inaction, as the company was forced to wait six month for a decision on mine development after it submitted the required documentation under its Licence Agreement at the end of December 2011. Stans Energy finally got the green light for Kutessay II on 15 June. "We immediately commenced our 2012 exploration campaign to further delineate blind ore bodies what we discovered in our 2010 campaign" Vinokurov said, "Keep in mind we acquired the project in December 2009."


Undaunted by delays

The work stoppage issued at the end of August prevented the company from completing the 10th drill hole it had planned. "We have finished drilling 9 of 10 holes and a full analysis will be published in the coming weeks," Stans Energy's spokesman added. "These 'claims' are untrue, slanderous and are being promoted by people with ulterior motives. As we move closer to production we have come under attack by people who wish to steal our project." The new coalition government appears more supportive of the company's plans, he told Metal-Pages however.

Stans Energy projects in mineral rich Kyrgyzstan could go some way to break China's monopoly on rare earth production. In contrast to a number of prospective western miners at early stages of exploration and without proven processing technology, the Canadian company's portfolio of historic production assets in Kyrgyzstan make it an integrated rare earth miner and processor, with decades of Soviet-era production, exploration and research behind it.

Kutessay, Kyrgystan's largest and commercially developed deposit, had historially produced 80% of the Soviet Union's rare earths, with resources split equally between light and heavy rare earth elements. The mine and associated Kyrgyz Chemical Metallurgical Plant in Ak-Tuz (now renamed Kashka Rare Earth Plant) produced all 15 rare earth elements to up to 99.99% purity, along with lead, zinc, copper, tin, bismuth, molybdenum and thorium. Other metals present on Stans Energy's licences include niobium, tantalum, hafnium and beryllium.

Kutessay's JORC resource currently stands at 46,500 tonnes TREO, but drilling recently uncovered a potential extension to the historic deposit. "We discovered a blind orebody within Kutessay itself and the goal was to find more and to further delineate this and the relationship between the blind orebody and the known mineralised zone," Vinokurov said. Close to 50 exploration targets were found in the old Soviet records on the Aktyuz ore field that hosts the deposit, and drilling has focused on some priority targets and defining the boundary of the known mineralisation.

Meanwhile Stans Energy is modernising the Kashka rare earth plant in preparation to enter commercial production in 2014. In July the plant produced 50kg of dysprosium oxide between 99.5% and 99.95% purity.
Once fully operational, the plant is expected to have the capacity for 1m tpy raw material throughput to produce 1,500 tpy of rare earth oxides, and there are plans in future to progress to production of rare earth metals and alloys.

The projected Capex for the project is between $250m and $350m. Stans Energy currently has $14m in cash, and is proposing to raise finance through issue of equity to a consortium of investors, the company's spokesman told Metal-Pages. It has been in discussion with potential customers in Japan, Korea, Europe and North America. The company expects to have a bankable feasibility study completed by Q2 or Q3 2013.

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