Mr. Chairman and members of the committee, Quest Rare Minerals is a Canadian-based exploration and development company. We are in the enviable position right now of providing the basis for the foundation of a new and very promising Canadian industrial sector, the rare earth supply chain.
Before going forward, I'd like to add that I also am a member of the steering committee for CREEN, the Canadian Rare Earth Elements Network. At the end of my presentation, I'd be very happy to answer more global issues related to the rare earth industry.
Quest has a vision to become not just an extractor of rare earth ores but also a major global supplier of refined rare earth oxide products.
It starts with our Strange Lake project in northern Quebec, which we've been developing since 2008. It contains the largest proven deposit of rare earth elements outside China, with a large proportion of that being from the more valuable heavy rare earths.
Quest plans to operate the largest rare earth processing facility in North America. It will be located at Bécancour, Quebec. We fully expect to start delivering product by 2018.
I believe you've been well briefed on the world market challenges for these critical strategic materials. You know that a stable western global producer of heavy rare earths is critical to western economic interests. From previous presentations to this committee, you've been made aware of what a rare opportunity this is for the Canadian mining and manufacturing sectors.
Here's what Quest brings to the table: a unique opportunity for Quebec and for Canada to be a major supplier of very critical and strategic materials in the industrialized world; the opportunity to provide the nucleus of a whole new industrial base adjacent to the aviation and transportation related industries in southern Quebec and Canada; a major boost to employment with an overall complement of over 840 jobs, of which 380 would be highly skilled technical jobs at our processing facility in southern Quebec; and a stable supply of rare earth elements essential to so many industries, including energy efficient technologies and green energy applications.
You may think our plans are very ambitious, and they are, but we are well on our way, and third party studies that have thoroughly examined our project are very encouraging.
Quest has completed a pre-feasibility study which, at maximum production assumptions, shows a life of mine in excess of 30 years, a capital requirement of approximately $2.6 billion, and annual revenues in the order of $1 billion. It shows a robust internal rate of return of 25.6% pre-tax and a net present value at a 10% discount rate of $2.9 billion.
I would like to add that our deposit resource circumstances are enviable, containing material in excess of a hundred years of operation at our notional production rate. Production from Quest’s operation is anticipated to account for approximately 20% of projected world demand for heavy rare earths when it starts up in 2018.
The bankable feasibility we're currently working on will modify the implementation plans of the pre-feasibility study and address the type and volume of rare earth oxides to be produced, products for specific end users, and the chemical engineering and flow sheet. We will target a capital requirement in a revised study to bring Strange Lake into production in the order of $1.5 billion, with a minimum internal rate of return of 20%. The feasibility study will further demonstrate the viability of our Bécancour refinery.
We have a particularly robust executive team and recently named a veteran metallurgical engineer and chemist with global process plant credentials, Dr. Dirk Naumann, as my executive VP of development. He will lead our feasibility study efforts. He and his team have already identified numerous efficiency and operational improvements to our base case presented in the pre-feasibility study. These improvements will further reduce project capital and operating costs, increase product yields, and lessen supply shocks, and will be included in the feasibility study.
We are funding major deposit and metallurgical research and development activities in the sector that truly needs it. To date we have invested more than $15 million in R and D on our project, with anticipation of a further $10 million being required through to feasibility. A small pilot facility in Mississauga, Ontario has previously tested and verified our rare earth process design assumptions. Quest is currently preparing for the construction of a pilot mill, scheduled to commence operation in 2014.
I know you are concerned about the environmental and social impacts of rare earth projects both at mines and at processing facilities. Let me assure you that Quest’s public approval for this project, or its social licence to operate, is as important to us as is meeting and exceeding the regulatory requirements to operate.
Quest is committed to ensuring that the Strange Lake mining project sets the highest standards for sensitivity to local environmental and aboriginal concerns. We will maintain or improve the environment in which Quest operates, especially at the mine site, including cleaning up of legacy waste from previous land users and protecting sensitive wildlife during active operations around the mine.
Quest has been meeting with local aboriginal leaders since 2008. We will provide job training and education through mine-supported training facilities. We will provide new health care facilities. In January 2013 a draft memorandum of understanding was presented to affected aboriginal groups. This will serve as the basis for negotiations, to commence in 2014, on impacts and benefits agreements.
At Bécancour, Quest will consult with local stakeholders to anticipate their concerns, and will consider changes to the project, if necessary, before the official environmental impact assessment public hearings commence. This year we are launching our environmental impact assessment, EIA, for all project components after submitting a project description to relevant government authorities. The EIA studies and associated public consultations are expected to take approximately two years. The EIA process in Bécancour, Québec could involve public hearings led by the Bureau d’audiences publiques sur l’environnement, also known as BAPE.
Finally, I will say a word about the seemingly daunting yet achievable requirements we need to bring the integrated project to operational reality.
First, the compelling net present value of the Strange Lake project and the significant volume of product output from Quest’s processing plant definitely support the required capital investment.
Second, we are in active discussions with global players who specialize in separation and refining technology. These industrial players include leaders in the field of rare earth refining and specialty chemical products manufacturing.
Third, we are receiving significant interest from major users of heavy rare earth products in Europe and North America, in the defence industry, the lighting industry, and other technology applications. These meetings and presentations are ongoing and are highly encouraging.
To sum up, we firmly believe the project is a winner for Quebec and Canada, a mining and industrial play whose time has come. We have an unrivalled basic mineral resource, a world market that will face supply shortages as we come online in 2018-19, and the largest state-of-the-art processing facility right here in Canada to meet rapidly growing global demand.
Thank you very much.