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A bright outlook for rare earth elements after a challenging period

The date of: 2024-02-26
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Rare earth elements (REE) are used in the high-strength magnets found in new technologies such as smartphones, wind turbines, electric vehicles, and defence systems. Despite their name, REEs are not rare, although finding secure sources of supply is becoming increasingly important to countries, particularly given China's dominance of the sector.

Yet in 2023, REE prices tumbled. The price (in China) of praseodymium oxide — one of the most widely used rare earth elements — fell 34% over the year, while terbium oxide and neodymium oxide each dropped to their lowest levels last month since late 2020, according to data from Shanghai Metals Market.

It is believed, however, that further downside for rare earths is limited as prices, particularly for neodymium-praseodymium oxide, which is used in permanent magnets, are now near the production cost level after falling 38% last year.

CRU Group analyst Willis Thomas said: "We expect extra supply to be more or less cleared by end-2024, as demand catches up with supply through continually increasing electric vehicle sales and wind turbine production.”

Also helping the picture is a decision by China to increase its REE quotas at a slower rate this year.  

China issued a third batch of rare earth output quotas in 2023 — the first time it has done so since 2006 — with the total quota for the year at a record high of 255,000 tons, up 21.4% from a year earlier. Yet this year, China's quotas are expected to increase at between 10% to 15%. .

Wood Mackenzie analyst Ross Embleton said: "We do expect another increase in production quota for both mining and separation ... but not to the extent we have seen last year.”

China accounts for 70% of rare earths mining and 90% of refined output, according to the United States Geological Survey, has controlled its supply of the strategic resource through the quota system since 2006.

Looking further ahead, strong demand for rare earth elements is expected in the coming decades as governments worldwide take steps to meet energy transition targets, with REEs playing a key role in decarbonisation 

This is a good sign for ASX-listed REE hopefuls and producers, following a challenging period. 

In the spotlight: ASX-listed rare earth elements 

American Rare Earths

During the December quarter, American Rare Earths Ltd (ASX:ARR, OTCQB:ARRNF) continued to advance the Halleck Creek project as potentially the largest strategic rare earth project in the United States, completing a 2,389 metre drilling campaign, over 23 holes, that resulted in “exceptional” assay results. 

The company also completed significant mapping and sampling work at Halleck Creek that highlights the potential for a much larger, higher-grade resource at Halleck Creek. 

Metallurgical test results show recoveries of neodymium and praseodymium oxide increased 28.5% from prior designs.

CEO Donald Swartz commented on the quarter: “This was the first full quarter under the direction of the new US management team and illustrates our focus and delivery on execution. The drilling campaign was performed on time and under budget, such that the results could be efficiently processed and incorporated into our upcoming JORC resource upgrade. 

“We've not only produced phenomenal drilling/assay results but have been able to rapidly iterate and develop our first iterations of mine planning that have far exceeded our expectations. 

“Our recent metallurgical breakthroughs have unlocked a significant leap in processing, paving the way for greater efficiency and viability which will be revealed in our forthcoming scoping study.” 

“As we enter 2024, this is more than just progress, it's a fundamental shift for our company, and I couldn't be more excited about the future we're building together."

Australian Strategic Materials

In line with Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF)’s strategic business priorities, in the December quarter the company participated in a trade delegation to the US and established strong potential funding pathways with North American government agencies and export credit finance agencies. 

It also continued sample product evaluations and offtake discussions with potential Dubbo Project customers and investors. Since the quarter end, the company has successfully progressed to a shortlist of preferred suppliers in one competitive process with respect to potential offtake for the Dubbo Project. 

Critical early establishment work at the Dubbo Project was also progressed, with the scoping phase of the study successfully concluded.

The company also undertook other essential activities to help ensure it is well positioned to commence construction once a final investment decision (FID) on the Dubbo Project is made. 

Ionic Rare Earths

Ionic Rare Earths Ltd (ASX:IXR, OTC:IXRRF) is moving closer to its goal of becoming an alternative supplier of magnet and heavy rare earths critical for energy transition, advanced manufacturing and defence.

In the December quarter, IonicRE made substantial advances in its project development and operational capabilities. As an emergent key player in the global rare earths market, IonicRE not only solidified its position but also set the stage for significant growth.

The company successfully completed Phase 5 drilling at its Makuutu Rare Earths Project (60% IonicRE) in Uganda, with significant clay-hosted rare earth intersections across multiple drill holes.

Ionic also strategically increased its ownership of the Makuutu Project, with IonicRE agreeing terms to move to 94% interest.

Subsequent to the quarter’s end, the company was awarded a large-scale mining licence for the Makuutu Project, and the company has secured a new chair to help bolster and lead the Ionic board of directors as it moves into the next important growth stage. 

Advancements were also made at Ionic Technologies’ operations in Belfast, UK with the magnet recycling demonstration plant on track for 24/7 operation from early 2024. WSP Global was appointed to manage the feasibility study for the commercial magnet recycling facility.

A share placement and SPP raised $7.2 million during the quarter.

Kingfisher Mining 

Kingfisher Mining Ltd (ASX:KFM) has made a number of breakthrough highgrade rare earth elements discoveries and is advancing its lithium exploration in the highly prospective Gascoyne Region.

HIghlights from the quarter are as follows: 

Mick Well area

Three large carbonatite pipe targets were identified from a ground gravity survey at the Mick Well area. 

Carbonatite pipe targets were interpreted to be the source of high grade REE mineralisation at Mick Well.  

Six new high-grade discoveries were made around the large carbonatite pipe targets at Mick Well, increasing the strike length of vein/dyke mineralisation to more than 20 kilometres.

Exceptional high grade results were returned from newly discovered mineralisation including 26.46% TREO with 4.56% neodymium oxide and praseodymium oxide.

LK1 prospect

At LK1 surface geochemistry survey defines several large rare earth elements anomalies, with peak light rare earth oxides value of 0.21%. 

Surface geochemistry anomalies coincide with the new LK1 carbonatite pipe targets delineated from the recently completed ground gravity survey and airborne magnetics. 

Chalby Chalby targets

Broad lithium anomalies were identified from first pass, widely spaced soil geochemistry at Chalby Chalby, with lithium anomalies extending over 1,600 metres in length and 800 metres wide.  

Chalby Chalby lithium anomalies are associated with pegmatites that have been mapped over a strike length of more than 13,000 metres and have initial assays up to 0.61% lithium oxide.

Lindian Resources

During the quarter, Lindian Resources Ltd (ASX:LIN, OTC:LINIF) reported its exploration target for the Kangankunde Rare Earths Project which incorporated spectacular assays received from the deep drill program — beneath the MRE — that demonstrated mineralisation over the entire 1,000 metre intervals. 

The program demonstrated high-grade rare earths mineralisation, high levels of Rare Earths critical metal elements neodymium-praseodymium that average +20% of TREO and extremely low levels of thorium and uranium.

The exploration target and mineral resource estimate establish Kangankunde as one of the largest and best rare earths projects globally.

During the quarter, Lindian also undertook the phase 3 ‘infill mine development’ drill program and advanced the stage 1 processing plant.

Since the quarter end, the company has received assay results for the initial 21 holes of the phase 3 infill drilling program, and reported high grade rare earths mineralisation north and south of Kangankunde, saying “the mineralised system across our project is much broader and much deeper than currently defined by Kangankunde’s Central Carbonatite. As such, more extensive exploration including low-cost drilling of the North and South Knoll (NYSE:KNL) is eventually warranted.”

Lanthanein Resources

During the December quarter, Lanthanein Resources Ltd (ASX:LNR, OTC:FRNRF) announced a maiden mineral resource estimate (MRE) at the Lyons rare earth elements (REE) project in the Gascoyne Region of Western Australia. 

The MRE for the Lyons REE project stands at 0.99 million tonnes at 0.32% total rare earth oxides (TREO) and follows an extensive infill drilling program last year. 

The Lyons project is adjacent to Hastings Technology Metals Ltd (ASX:HAS, OTC:HSRMF)’s Yangibana REE deposit – an advanced project which has completed a definitive feasibility study and is advancing to construction. Lanthanein notes that the mineralisation at Yangibana is hosted in the same Yangibana Ironstones which hosts mineralisation at Lyons.

During the quarter, the company also entered into a transaction to earn up to a 70% interest in the Lady Grey lithium project on the Southern Cross-Forrestania Greenstone Belt —  a proven Tier 1 lithium mining district. 

The project is directly adjacent to Covalent Lithium’s (SQM 50% & Wesfarmers 50%) 189 million tonne at 1.53% lithium oxide Earl Grey Mine at Mount Holland in the Forrestania Greenstone Belt. 

A site visit to Lady Grey confirmed outcropping quartz core pegmatite potentially related to the Earl Grey pegmatite mineralised system. 

OD6 Metals 

OD6 Metals Ltd (ASX:OD6) managing director Brett Hazelden provided a succinct summary of the company’s December quarter activities and achievements, saying, “outcomes from exploration and advancement activities continue to meet and exceed our technical expectations.

“During the last quarter we reported the best grades, extents and thicknesses that an Australian clay hosted rare earths project has seen to date. This was complemented by continued strong metallurgical recoveries with low acid consumptions and an expansion of our clay basin areas, delivered in partnership with ANSTO and CSIRO.

“The Inside Centre prospect has emerged as a standout REE clay basin area, significantly exceeding our expectations in the factors we believe drive an economically viable project. The prospect will contribute significantly to an expected expansion of our current mineral resource estimate, which is already the largest and highest grade in Australia and will see OD6 being potentially compared to some of the existing and future producers in China, South America and Africa. 

“OD6 has emerged as Australia’s premier clay hosted rare earth company and is continuing to grow its resources, de-risk the metallurgical process, help westernise the supply chain and take advantage of the forecast demand surge. With the market yet to recognise the significant real and future potential value of the Company, there is an excellent opportunity for savvy investors to take full advantage. 

“We continue to prudently manage expenditures, with our treasury position remaining strong with over $2M in the bank at the end of the year, with current expenditure focused on metallurgical test work, research and development, and preparation works for the next round of drilling.”

Great Boulder Resources

During the December quarter the main focus of Great Boulder Resources Ltd (ASX:GBR) was two parallel processes at the Side Well gold project, outside Meekatharra in Western Australia — updating the mineral resource estimate (MRE) for the Mulga Bill and Ironbark deposits, and completing Aboriginal heritage surveys over the Ironbark trend before initial drill testing on new targets. 

The updated MRE increases the company’s resource inventory by 150,000 ounces of gold to a total of 7,450,000 tonnes at 2.8g/t of gold for 668,000 ounces. Of this, 51% are in the higher-confidence JORC Indicated category, with obvious scope to increase this proportion with a relatively small number of infill drill holes. 

The global resource also contains a higher-grade core of 496,000 ounces at 5.3g/t of gold when reported at a 2g/t gold cut-off, underlining the Side Well project’s high-grade characteristics. 

The second of two archaeological heritage surveys was completed by members of the Yugunga Nya Aboriginal group, Traditional Owners of the area. This was followed by an ethnographic survey over the whole Ironbark corridor. The final survey report was presented to the company in mid-December, allowing a small reverse circulation (RC)-aircore (AC) drilling program to be completed at the Saltbush prospect before Christmas. 

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