Australian rare earths company Hastings Technology Metals has signed a binding terms sheet with GR Engineering Services (GRES) for the development of the Yangibana rare earths project.
The terms of the $210m contract outline key aspects of the engineering, procurement, and construction (EPC) works related to the beneficiation plant and related infrastructure.
GRES will design and construct the Yangibana plant, including engineering, manufacture, supply, installation, commissioning, and testing of the facility, within 18 months.
The plant will be designed to have a feed capacity of one million tonnes per annum and a rare earth concentrate output capacity of 35,000 tonnes per annum.
The mobilisation and construction are expected to start in the Q3 calendar year 2023.
Hastings said that the $210m EPC contract is below the cost estimates for an equivalent scope under the current engineering, procurement, and construction management (EPCM) model.
The costs include a $180m fixed price component for the beneficiation plant and a $30m provisional component for earthworks related to the beneficiation plant and tailings storage facility.
Hastings chief executive officer Alwyn Vorster said: “Considering the current construction industry cost pressures, the EPC contract with GR Engineering is a positive step to reduce overall cost and schedule risk for our shareholders and lenders.
“Hastings also acknowledges the quality engineering and design work completed by DRA Global since 2019, which has enabled Hastings to progress critical path activities during the early stages of the project.
“The EPC contract is an important outcome of the project review initiatives which are close to being finalised and will set out the overall project execution strategy, capital cost and schedule, enabling the Company to clarify its medium to long term funding requirements.”
Hastings and GRES are expected to sign a final agreement encompassing agreed terms and other standard industry conditions, by the end of July this year.
The parties will also enter into an early works agreement which allows GRES to immediately start works, pending the signing of the final agreement.
In 2019, Hastings engaged DRA Global as its EPCM contractor to undertake the front-end engineering and design (FEED) work for the early design stages of the project.
DRA Global has delivered updated design and engineering work, with about 50% design maturity achieved under the existing EPCM-type services contract.
After a complete and systematic review, Hastings decided that a fixed-price EPC contract is the preferred alternative to reduce the overall risk related to the Yangibana project.
GR Engineering managing director Tony Patrizi said: “GR Engineering is pleased to have received the binding term sheet for this world-class rare earths project in the Gascoyne region of Western Australia.
“It will be exciting to work on this project as it is focused on globally critical minerals that are used as key components for electric vehicles and wind turbines. We look forward to engaging closely with the Hastings team to deliver safe and successful outcomes for this project.”
