Viridis Mining and Minerals puts huge US$1.86B value on Brazilian rare earths play

 Viridis Mining and Minerals Colossus project lies in the world-class mining jurisdiction of Poços de Caldas in Brazil.

Viridis Mining and Minerals’ (ASX:VMM) DFS is predicting its Colossus rare earth project in the Brazilian State of Minas Gerais to pump out a whopping US$5.97 billion (A$8.39 billion) in earnings before interest, tax, depreciation and amortisation (EBITDA) over a 25-year mine life, from total revenue of US$8.54 billion (A$12 billion).

The company revealed its much-anticipated definitive feasibility study (DFS), highlighting an economically powerful project with a pre-tax net present value (NPV) of US$1.866 billion, based on an 8 per cent discount rate, along with a pre-tax internal rate of return (IRR) running at an impressive 47 per cent.

The after-tax NPV is US$1.196 billion and the after-tax IRR is calculated at 36.4 per cent, pointing to a payback of just 2.7 years.

The project is expected to generate an average 2843 tonnes per annum (tpa) of light rare earths neodymium-praseodymium (NdPr) from an annual five million tonne per annum (tpa) operation, with ore sourced predominantly from its Northern concessions ground.

The production figures are based on the project’s rare earth grades of 3061 parts per million (ppm) total rare earth oxides (TREO) and 774ppm magnet rare earth oxides (MREO).

Rare earths production is further boosted to 2967tpa of MREO when including the higher-value heavy rare earths of dysprosium and terbium.

The company says the project’s initial development will cost $US449 million to get the mammoth Colossus operation up and running.

Notably, the DFS highlights a 41-year ore reserve inventory of 200.1 million tonnes, based on an annual five million tpa operation, indicating the potential to extend the future mining life of Colossus.

Viridis believes the Colossus DFS demonstrates a globally leading low-cost operation, with all-in sustaining costs estimated at US$26.7 (A$37.4) per kg of Nd-Pr, against expected revenue of US$129 (A$181) per kg, based on prevailing Chinese market prices.

Although the DFS used a low-case price of US$102 (A$143) per kilogram of TREO to produce its headline numbers, the company was keen to point out that even at an ultra-conservative US$72 (A$101) per kilogram, Colossus still spat out a solid post-tax NPV of US$555 million and a 22.4 per cent post-tax IRR.

Viridis says its project benefits enormously from its true ionic-adsorption-clay (IAC) mineralisation, with the metallurgical advantage of a simple, efficient leaching process to produce high rare earths recovery levels. Demonstration plant recoveries have further supported this by exceeding the numbers produced in extensive testwork conducted by the renowned Australian Nuclear Science and Technology Organisation.

The completion of the Colossus DFS is a defining milestone for Viridis. It confirms not only the industry-leading economics and resilience of Colossus, but importantly the significant maturity the project has achieved across engineering, metallurgy, commercial arrangements and execution.

Viridis Mining & Minerals Managing Director Rafael Moreno

Moreno said the majority of the first five years is supported by proved ore reserves and key offtake commercial terms, which have been finalised. He noted Viridis is now positioned to award the engineering, procurement and construction management contract and place orders for critical long-lead equipment, while Goldman Sachs is leading the company’s advanced project financing process.

To enable fast-tracking of Colossus from DFS stage into execution mode, the company has secured US$120 (A$168) million in strategic equity funding from multiple institutions.

One Investment Management, a global investment manager, has entered into a binding agreement to stump up US$75 (A$105) million of capital via two tranches, leaping onto the company’s share register as a cornerstone investor.

A group of strategic investors, predominantly Brazilian, have reached into their pockets for a US$40 (A$56) million investment and existing Viridis investors, Brazilian asset management firms - ORE Investments Ltda and Régia Capital Ltda - have also joined the party.

The two Brazilian firms have agreed to advance US$5 million from their previously agreed-upon funding deal as part of the new capital raising, leaving US$20 million still available in the kitty from the ORE/Régia investment.

Viridis is sitting on a US$14 million cash stash, bringing the total potential equity funding for the Colossus development to US$154 million. The company previously indicated it was targeting US$135 million in funding under its proposed 70 per cent senior debt and 30 per cent equity project financing structure.

The company has a myriad of possible financing options on the table for the 70 per cent debt component and is in discussions with renowned lenders such as Export Finance Australia, Export Development Canada and Bpifrance.

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