Appia Increases Bought Deal Financing as it Ramps Up Rare Earths Drill Program

Appia Energy Corp. (CSE: API | OTCQB: APAAF) announced upsizing its previously announced bought-deal financing to $5 million that it expects to close later this month.

Appia plans to use part of the proceeds on a multi-million dollar summer exploration program on its Alces Lake property, which includes at least 5,000 meters of drilling and property-wide geophysical work. It also aims to upgrade the camp for winter use and access to extend the drilling season.

Appia is a Canadian-based mineral exploration company targeting the rare earth element (REE) and uranium sectors. The Company is currently focusing on delineating REE and uranium targets on its Alces Lake property, and plans to change its name to Appia Rare Earths & Uranium Corp.

The Alces Lake property is located in the Athabasca Basin of northern Saskatchewan, almost 30 kilometers northeast of Uranium City, which is a major centre in the area with good infrastructure including hydroelectric power, an airstrip, and an ice road connection.

The REE assays are reported as Total Rare Earth Oxides (TREO) and the Alces Lake property hosts some of the highest REE grades in the world and the second-highest average grade at 16.65% TREO.

Appia-Global-REE-Projects-Average-In-Situ-TREO-Grades

SOURCE:

Re-analyzing Previous Samples Confirm Gallium Mineralization

Since 2016, Appia has been working on the Alces Lake project and focused on uranium and the critical rare earth elements (CREE) including neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb).

Recently, Appia re-analyzed some historical samples with high-grade rare earth oxide (REO) results to determine the extent of gallium mineralization over the property and the correlation between REO and gallium.

The results returned gallium concentrations ranging from 0.01% to 0.104% Ga2O3 and a positive linear correlation between gallium and REO.

According to the Company, gallium is considered high-grade when the weight percentage Ga2O3 is greater than 0.010% and the combination of the high-grade REO system and gallium gives it the potential of becoming a world-class asset for critical metals.

Frederick Kozak, Appia’s President, commented, “The gallium concentrations on the Property are remarkable. Gallium was found in naturally occurring high-concentrations on the Property that far exceed current concentrations required for global production of gallium.”

Gallium is primarily used in electronics, semiconductors, and light-emitting diodes (LEDs) as it is able to turn electricity into light.

In March, the current price of high-grade gallium metal (99.99%) was US$376.71/kg compared to Nd at US$105/kg, Pr at US$74.95/kg, Dy at US$$424.95/kg, and Tb at US$1,468.02/kg. Being able to recover gallium would increase the ore value to Appia.

Targeting Ore from Deposit in Next 24 Months

Appia’s Alces Lake property has the REE hosted in coarse-grained monazite that is exposed at the surface in high-grade outcrops, making it economic to extract.

Monazite processing for REE extraction has a long history of economic viability and was started in the 1950s at the Steenkampskraal Mine in South Africa.

The company is following a low capital pathway to initial production by focusing on the potential of bulk mining the surface mineralization akin to a gravel pit operation and believes it could start production as early as 2023.

Appia would then use gravity and magnetic separation to create a concentrate to ship to a third-party plant and extraction facility for further processing.

Appia-Hig-Grade-Monazite-at-Surface

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Leveraging SRC’s Rare Earth Facility

In August 2020, the Saskatchewan government announced C$31 million in funding for a Rare Earths processing facility in Saskatoon that will be owned and operated by the Saskatchewan Research Council (SRC).

The SRC facility will be the first-of-its-kind in Canada and will establish an REE supply chain in Saskatchewan.

In February, Appia announced that bench-scale monazite processing and metallurgical testing had started at the SRC facility using sample materials from Appia’s Alces Lake property and SRC’s current Separation Pilot Plant.

The goal of the test is to process monazite-bearing rocks from the property to determine the ease of metallurgical processing and recovery of REE end products.

The testing results will be a factor in determining the economic viability of the project and are expected to take at least three months before a report is issued by SRC to Appia.

REE Solvent Extraction Process at the SRC Facility in Saskatoon, Saskatchewan

SRC-Rare Earth solvent extraction process2

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Shifting Towards a Green Economy

North American and European economies are focused on developing more environmentally friendly (“green”) economies by shifting to low-carbon power generation and renewable energy, including solar and wind, as well as the swing from fossil fuel to electric vehicles. REE play a critical role in these industries.

Last year, the governments of Ontario and Canada announced plans to each spend C$295 million to help Ford upgrade its assembly plant in Oakville, Ontario to start making electric vehicles.

But it is not just the green economy that requires these metals, they are critical in specialized alloys and magnets for airplanes, computer and military systems, high-speed transit, and satellites. A secure supply chain has become of strategic importance.

Governments Focusing on Critical Metals that Include REE

According to the Center for Strategic and International Studies, China produced approximately 85% of the world’s rare earth oxides and 90% of rare earth metals, alloys, and permanent magnets in 2019.  This dominance is a concern for other governments and businesses that want to ensure a stable supply of critical metals.

In 2018, the U.S. Secretary of the Interior published a list of 35 critical minerals or mineral material groups and voiced their concerns about their dependence on imports to meet the demand and supply chain risk due to the source concentration of just one or two countries.

The U.S. Defense Logistics Agency, a combat support agency in the U.S. Department of Defense that manages the global supply chain, currently stores 42 commodities, including chromium, cobalt, iridium, palladium, platinum, and zinc, with a current market value of over $1.1 billion.

In March, the rare earth’s and critical minerals sectors received another boost as the Canadian government unveiled its “Critical Minerals” list that included 31 minerals the government considers “essential to Canada’s economic security, required for Canada’s transition to a low-carbon economy, and a sustainable source of critical minerals for our partners.

The mineral list was comprised of base metals, battery metals, energy metals, and other elements, including aluminum, cobalt, copper, gallium, lithium, nickel, niobium, REE, uranium, and zinc.

The government of Canada wants Canadian mining to become a global leader and supplier of choice and plans to support Canadian critical mineral projects with policy development, coordinate international engagements, and strengthen research & development in the sector.

Canada’s list reaffirms its alignment with the U.S. on its list of “Minerals Deemed Critical to U.S. National Security and the Economy” and Canada’s commitment to a “critical minerals” cooperation agreement that was initiated in 2019 and currently in the working-group phase.

Final thoughts

Appia’s planned financing should strengthen its Balance Sheet and fund its exploration plans for 2021.

In addition, Appia is not a one-trick pony as it holds exploration rights to 656 square km (162,104 acres) in Saskatchewan, including the Alces Lake, Eastside, Loranger, and North Wollaston properties, and over 125 square km (31,000 acres) of prospective REE and uranium deposits in the Elliot Lake area of Ontario.

If you think it’s time to add some REE exposure to your portfolio, Appia might be a candidate to add to your watchlist.

Appia closed yesterday at C$0.65 with a Market Cap of C$63.4 million.




One of the world’s highest-grade tin resources, Alphamin is up 177% in last 5-months

Tin typically isn’t at the top of anyone’s list of critical materials or thought of as an important component of the green revolution. You’ll be excused for not being aware that it was on the U.S. Department of the Interior’s 2018 list of 35 mineral commodities considered critical to the economic and national security of the United States. Seriously? Tin? Who knew?

Tin is used as a protective coating or as an alloy with other metals such as lead or zinc, as well as, coatings for steel containers, in solders for joining pipes or electrical/electronic circuits, in glass-making, and in a wide range of chemical applications. It’s also a relatively scarce element with an abundance in the earth’s crust of about 2 parts per million (ppm), compared with 94 ppm for zinc, 63 ppm for copper, and 12 ppm for lead. But perhaps the most interesting statistic is that Tin prices have reached a 10 year high at US$29,932/tonne, up an impressive 97% year over year.

Armed with this information are you now intrigued by Tin investment opportunities? Then look no further than Alphamin Resources Corp. (TSX: AFM). Alphamin is a low cost tin concentrate producer from its high grade deposit at Mpama North in the North Kivu Province of the Democratic Republic of Congo (DRC). At a tin grade of roughly 4.5%, Mpama North is one of the world’s highest-grade tin resources – about four times higher than most other operating tin mines in the world. Mpama North has a current output of roughly 10,000 tonnes of contained tin per annum (and growing), amounting to approximately 3%-4% of the world’s mined tin supply. It has exploration licenses covering a total of 1,270km2 and is currently one of the top producing Tin mines in the world.

Alphamin just announced record Q1 EBITDA of US$36.5 million at an average tin price of US$23,083/tonne (versus much higher current pricing). Other highlights include the fine tin recovery plant being on schedule for commissioning during June 2021, which the Company believes can increase plant throughput by a further 5%-10%. Combine this with a planned increase to plant throughput of roughly 6% in H2 2021 could see annual Tin production increasing to as much as 12,000 tonnes per annum. At quarter end the company had a cash balance of US$11 million and debt of US$57 million with an expectation to be net debt free by the end of 2021 based on current Tin prices.

With all these impressive numbers there is still plenty of exploration upside to be had. Alphamin’s exploration initiative aims to: extend the life-of-mine at its currently producing Mpama North operation; to declare a Maiden Mineral Resource for Mpama South (located 750 metres south of Mpama North); and to discover at least one additional orebody on the highly prospective Bisie Ridge (13km strike length). At the Mpama South deposit 8,200 metres of drilling has already been completed with an additional 5,800 metres planned to be drilled between May and end July 2021. Assay results from the first two batches of samples totaling 13 of the 25 drill holes drilled in phase 1, are expected shortly with another 7 drill hole results from batch 3 expected towards the end of May 2021. Commencement of drilling at Mpama North is targeted for May 2021 with a 12,000 to 18,000 metre drilling campaign planned to test the strike and dip extension of the current producing orebody. Lastly, two drill targets 6-8 kms south of Mpama North have been identified along the Bisie Ridge to be drilled in Q3 2021.

The heavy lifting has been done to get this world-class mine into production and running on all cylinders. However, there’s always a but… It’s a single mine asset in a less than desirable geographic location. Logistically the location in central Africa means long supply lines to the ports that have caused issues in the past. For example, in October, 2019 a major bridge collapsed along the main provincial road used for exporting all concentrate and importing major consumables which took 8 weeks to repair, materially impacting that quarter’s results. Q4/20 results were affected by extreme seasonal rains impacting export road conditions. Then there’s the perception that the DRC is unstable and politically challenging, and although this is not the case currently, it could return to this state in relatively short order. On a positive note, the Company has shown to the likes of Apple, Microsoft and Samsung that its tin is 100% conflict-free.

There are no “sure things” out there, you have to take on risk to get your rewards. Enough investors are comfortable with the risk of Alphamin to have taken the stock from C$0.26/share in December 1st, 2020 to yesterday’s close of C$0.72. One of the world’s highest-grade tin resources, Alphamin is up 177% in the last 5 months.




InvestorIntel’s Peter Clausi interviews Chris Thompson on the eResearch Initiation Equity Research Report on Renforth Resources

In a recent InvestorIntel interview, Peter Clausi spoke with Chris Thompson, President of eResearch Corp. about his 29-Page Initiation Equity Research Report on Renforth Resources Inc. (CSE: RFR | OTCQB: RFHRF | FSE: 9RR).

In this InvestorIntel interview, which may also be viewed on YouTube (click here to subscribe to the InvestorIntel Channel), Chris went on to say that Renforth has four gold and battery metal projects within the Abitibi Greenstone Belt with its main project, the Parbec Gold Project, adjacent to the Canadian Malartic mine, Canada’s largest operating open-pit gold mine, and a potential buyer. Renforth recently completed a Winter drill program at Parbec to build ounces and bring historical drill results into the resource calculations. With a history of building resources and selling projects, Chris said Renforth has a NI 43-101 near-surface resource of 282,800 gold ounces at the Parbec project which he expects to double in size with the updated resource, expected this quarter.

To watch the full interview, click here

About eResearch Corporation

eResearch Corporation is a respected source for institutional-quality, equity research focused primarily on small- and mid-cap companies. The focus is on identifying companies that have interesting prospects, sound management, and significant potential for share price appreciation. The company complements its corporate research coverage with a diversified selection of informative, insightful, and thought-provoking research publications from a wide variety of investment professionals. The professional investment research and analysis is provided directly to the subscriber network of discerning investors, and electronically through its website, www.eresearch.com

About Renforth Resources Inc.

Renforth holds the Parbec open pit constrained gold deposit in Malartic Quebec, contiguous to the Canadian Malartic mine, with a 2020 resource estimate of 104,000 indicated ounces of gold at a grade of 1.78 g/t Au and 177,000 inferred ounces of gold at a grade of 1.78 g/t Au. This resource estimate is now considered by Renforth to be out of date due to the results received in a 15,569m drill program which has been recently completed. This program was planned to twin, infill and undercut existing drill holes at Parbec, to support a rebuild of the geological model and a resource estimate restatement. In addition to this Renforth has discovered a nickel bearing ultramafic, coincident with a copper/zinc VMS, over ~5km of strike in the western end of the 20km central anomaly at Renforth’s wholly owned 215 km2 Surimeau property. This prospect was discovered on surface and the subject of a very short, shallow drill program, a more robust drill program is planned for Spring 2021. Renforth also holds the Malartic West property, the site of a copper/silver discovery, and Nixon-Bartleman, west of Timmins Ontario, with gold present on surface over a strike length of ~500m.  Renforth is well funded, with ~$6 million in cash and securities on hand (*as at 03/15/21), in addition to the gold contained in our gold deposit.

To learn more about Renforth Resources Inc., click here

Disclaimer: This interview, which was produced by InvestorIntel Corp. (IIC) does not contain, nor does it purport to contain, a summary of all the material information concerning the Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete. 

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation.  Forward-looking statements are based on the opinions and assumptions of management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken,  as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on www.Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please email info@investorintel.com.




Jack Lifton interviews Search Minerals’ Dr. David Dreisinger who says “the time for rare earths is now”

In a recent InvestorIntel interview, Jack Lifton spoke with Dr. David Dreisinger, Director and Vice President Metallurgy at Search Minerals Inc. (TSXV: SMY) about Search’s results around magnetic separation testing for producing rare earth concentrates from in the Port Hope Simpson Critical Materials District in SE Labrador.

In this InvestorIntel interview, which may also be viewed on YouTube (click here to subscribe to the InvestorIntel Channel), Dr. Dreisinger went on to say that Search Minerals’ Silver Fox rare earths deposit hosts a very high occurrence of zirconium and hafnium. With a plan to extract these critical materials as co-products with the rare earths, Dr. Dreisinger describes this as a “big breakthrough” for reducing overall cost in the extraction processes. He also discusses how the world is moving towards a non-Chinese supply chain of many critical materials and that  “the time is now for rare earths”.

To watch the full interview, click here

About Search Minerals Inc.

Led by a proven management team and board of directors, Search is focused on finding and developing Critical Rare Earths Elements (CREE), Zirconium (Zr) and Hafnium (Hf) resources within the emerging Port Hope Simpson – St. Lewis CREE District of South East Labrador. The Company controls a belt 63 km long and 2 km wide and is road accessible, on tidewater, and located within 3 local communities. Search has completed a preliminary economic assessment report for FOXTROT, and a resource estimate for DEEP FOX. Search is also working on three exploration prospects along the belt which include: FOX MEADOW, SILVER FOX and AWESOME FOX.

Search has continued to optimize our patented Direct Extraction Process technology with the generous support from the Department of Tourism, Culture, Industry and Innovation, Government of Newfoundland and Labrador, and from the Atlantic Canada Opportunity Agency. The Company has completed two pilot plant operations and produced highly purified mixed rare earth carbonate concentrate and mixed REO concentrate for separation and refining.

To know more about Search Minerals Inc., click here

Disclaimer: Search Minerals Inc. is an advertorial member of InvestorIntel Corp.

This interview, which was produced by InvestorIntel Corp. (IIC) does not contain, nor does it purport to contain, a summary of all the material information concerning the Company” being interviewed. IIC offers no representations or warranties that any of the information contained in this interview is accurate or complete. 

This presentation may contain “forward-looking statements” within the meaning of applicable Canadian securities legislation.  Forward-looking statements are based on the opinions and assumptions of management of the Company as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein.

Any projections given are principally intended for use as objectives and are not intended, and should not be taken,  as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Prospective investors are urged to review the Company’s profile on www.Sedar.com and to carry out independent investigations in order to determine their interest in investing in the Company.

If you have any questions surrounding the content of this interview, please email info@investorintel.com.




Drolet Stock Notes on Triumph Gold: Advancing District Scale Freegold Mountain Gold and Copper Project in Yukon

Mario Drolet, President of MI3 Communications Financières Inc. (MI3), released his Drolet Stock Notes on Triumph Gold Corp. (TSXV: TIG | OTCQB: TIGCF) on May 11, 2021, for exclusive distribution on InvestorIntel. Highlights include:

  • Triumph Gold Corp. is focused on creating value through the advancement of the district scale Freegold Mountain project in Yukon.
  • Funded exploration for 2021 ($5 million in cash).
  • 2 Million Oz of contained AuEq* – Three NI 43-101 Mineral Resource Estimates on the Freegold Mountain Project: Revenue, Nucleus and Tinta Hill.
  • TIG is sitting on 50 DMA … MI3 June Target; $0.25 – 0.27
  • Support: S2; $0.15- S1; $0.17      Resistance:   R1; $0.185 – R2; $0.23

About Triumph Gold Corp.

Triumph Gold Corp. is a Canadian based, growth-oriented exploration and development company with a district scale land package in mining friendly Yukon. The Company’s 100% owned, road accessible, flagship Freegold Mountain Project is located in the Dawson Range and is host to three NI 43-101 Mineral Deposits. The Project covers an extensive section of the Big Creek Fault zone, a structure directly related to epithermal gold and silver mineralization as well as gold-rich porphyry copper mineralization. The Company, led by an experienced management and technical team, is focused on actively advancing the Freegold Mountain Project using multidiscipline exploration and evaluation techniques. The Company also owns 100% of the Big Creek and Tad/Toro copper-gold Properties, situated within the Dawson Range.

PLEASE DO YOUR DUE DILIGENCE

Disclaimer: This MI3 Technical Note produced by MI³ Communications Financières is neither an offer to sell, nor the solicitation of an offer to buy any of the securities discussed therein. The information contained is prepared by MI3, emanating from sources deemed to be reliable. MI3 Communications Financières makes no representations or warranties with respect to the accuracy, correctness or completeness of such information. MI³ Communications Financières accepts no liability whatsoever for any loss arising from the use of the information contained therein. Please take note that for compliance purposes, all directors, consultants or employees of MI3 Communications Financières are prohibited from trading the securities of the company and MI3 Communications Financières is a shareholder and do not intend to sell any shares during the distribution of this report.




Before we can climb out from the Chinese control of rare earths and battery materials – we must understand our past.

Technology is the engineering of science, and manufacturing engineering is the scaling up of engineering to enable the efficient and economical mass production of finished goods.

The scientific development of the rare earth permanent magnet and of the lithium-ion battery both occurred primarily in the United States in the greatest period of consumer technology development in American history; from 1945 until the end of the twentieth century.

Until the moon landing in 1969 the US Department of Defense (DoD), from the beginning of World War II, and NASA, from 1961-69, was the majority funding entities for both science and technology. Since then private corporations have provided the majority of funding for consumer product development.

The current awakening of government to a critical materials’ supply crisis as a security issue has highlighted the failure of American manufacturing to pay any attention to the dangers of just-in-time supply chains, made fashionable beginning in the 1980s as a technique to free up the capital required by inventories of raw materials and semi-finished goods. For the capital-intensive OEM automotive, aerospace, and allied industries this was a “no brainer.”

Overlooked completely at that time was the end of corporate subsidies for and thus the demise of stand-alone in-house education in specialty manufacturing engineering (now called “automotive engineering in the OEM automotive industry). The General Motors Institute, GMI, in Flint, Michigan, for example, was a company-owned engineering college the students of which were typically GM employees in what is now called work-study programs. This ensured continuity as older engineers both taught and worked alongside the “students” in any one of the many parts plants and assembly plants in Flint and nearby Saginaw, Michigan, where foundries and the world’s largest steering gear manufacturing operations operated.

One of GM’s parts operations in Indiana was called the Magnequench Division; it was the world’s largest manufacturer of rare earth permanent magnets.

GM and Ford were heavily invested in science. The General Motors Technical Center and the Ford Scientific Laboratory were outstanding, but the managers of the corporations were losing focus on the long term and entering the long decline in their fortunes due to just-in-time outsourcing and the emphasis on share price, not corporate citizenship, aka, “financialization.”

Hugely expensive attempts at automation in the late 1970s and early 1980s had convinced American OEM automotive that it wasn’t going to work, so instead of profit growth through technological productivity increases the managers turned to cheap overseas labor. At first American engineers were sent to organize and manage operations in “developing” countries like China. It was assumed, as a matter of faith, that the Chinese in particular would never learn how to develop “native” industries to compete with American ones in producing goods for the American home market. Poorly made Japanese cars were just then the source of much derision in Detroit’s toniest suburbs. Korean cars were non-existent.

In the last 20 years of the twentieth century, the American Big Three car makers disassembled their vertically integrated operations, their in-house engineering continuity “colleges”, and any long-term planning they might have looked at in favor of just-in-time outsourcing and management by the metric of share price only.

As I recall rare earth permanent magnets were first studied by the Russians in the late 1960s, by the 1970s both Japan’s Sumitomo and General Motors had developed and begun manufacturing and using samarium cobalt types. In the late 1970s, cobalt pricing spiked (take note of this well those who look for big increases in rare earth, lithium, and cobalt prices as a supply or demand driver!) and this caused General Motors to switch over to neodymium iron boron magnets for its miniaturization of electric motors needs. The capacity for the production of the separated rare earths needed soon overwhelmed the then Molycorp’s mine and separation capacity (7,000 tpa), and it (Molycorp) sought to outsource. The Chinese, eager for investment, and jobs, and having the large accessible deposits (as byproducts of mining the iron ore, magnetite) of light rare earths in the Bayan Obo region of Inner Mongolia, where health, safety, and the environment were of no interest soon became the biggest miners and separators of light rare earths using the chloride based solvent extraction technology proved out and gifted to them for that purpose by Molycorp.

Most commentators say that, after the above transfer of technology, the rest is history. But that means overlooking something. The Chinese did not just take over a technology and keep it static. They did at first, but soon, it was noticed by their leader, Deng Xiaoping, and soon thereafter the state underwrote a massive rare earth use and production research and development program while such programs in the west withered and died.

Rare earth mining and separating in North America ceased in 1998, the manufacture of rare earth metals, alloys, and magnets in North America ceased shortly thereafter, and the large-scale company set up originally by Sumitomo and GM for that purpose, Magnequench, which had dominated the production of rare earth permanent magnets for many years, was, after many years during which it was unable to compete with Chinese rivals, ultimately sold to a Canadian concern that moved it to China in 2004.

It is not possible to ignore the fact that competence erosion in the extraction, separation, making of metals and alloys from, and making magnets based on rare earths did not occur as these technologies left North America. It is also foolish to not consider China’s massive intellectual property developments in all of those rare earth sourcing, refining, and in the development of and manufacturing of rare earth enabled product technologies can be just ignored by those who think that throwing money and university research at a problem can miraculously overcome a generation of neglect and a criminal discontinuity of engineering skills.

Whether or not the US can re-create a total domestic rare earth enabled products supply chain will depend on whether or not the management of such attempts has enough perspective to find engineers, still alive who created the rare earth refining, metal and alloy making, and permanent magnet industry and entice them to train a new generation. I personally think we can still do this and be globally competitive, but I am skeptical of financiers who know nothing of how technologies are commercialized.

And until there is a focus for this work in the form of a commitment by, for example, the US DoD to take or pay for enough tonnage of rare earth permanent magnets and to pay for the tooling to produce the more than 500 different specifications of rare earth permanent magnets used in weapons systems, nothing will happen.

European manufacturers of products using rare earth permanent magnets still have a small domestic supply chain that has maintained continuity for 45 years. But Europe has no rare earth mines. America has such a mine, and North America has many such deposits in development. America also has the only licensed and capable processor of purchased monazite in the Western World. That project is up and running. It will deliver the first multi-ton lot of radiation-free mixed rare earth carbonate to a European customer next month. That customer will separate the rare earths and deliver the magnet ones to a British company that will turn the delivered oxides into metals and alloys, which in turn will go to a German company to be made into magnets for a German OEM automotive company’s EV powertrains.

The question now is will the US government wake up to the fact that it must use Title 7 of the Defense Production Act to assemble an industrial panel to address this issue.

The Chinese are watching intently.




With the largest single rare earths processing plant in the world, Lynas stock price has risen 224% in the past year

With the recent doubling of NdPr prices, global leading rare earths miner Lynas Rare Earths Limited (ASX: LYC (“Lynas”) stock price has risen 224% (3.4x) over the past year. The question for investors right now is, can Lynas keep moving higher from here.

And the answer?

Well, that depends on your view of NdPr prices going forward and on Lynas’ expansion plans.

Lynas Rare Earths Limited 1 year stock price

Source

NdPr demand & supply and pricing forecast

A March 2021 Adamas Intelligence report forecast:

  • Annual NdPr oxide shortages of 16,000 tonnes expected by 2030: Constrained by a lack of new primary and secondary supply sources from 2022 onward, Adamas Intelligence forecasts that global shortages of neodymium, praseodymium and didymium oxide (or oxide equivalent) will collectively rise to 16,000 tonnes in 2030, an amount equal to roughly three-times Lynas Corporation’s annual output, or three-times MP Materials’ annual output, of neodymium and praseodymium oxide (or oxide equivalents).
  • Market for magnet rare earth oxides to increase five-fold by 2030: With total magnet rare earth oxide demand forecasted to increase at a CAGR of 9.7% and prices projected to increase at CAGR of 5.6% to 9.9% over the same period, Adamas Intelligence forecasts that the value of global magnet rare earth oxide consumption will rise five-fold by 2030, from US $2.98 billion this year to US $15.65 billion at the end of the decade.”

A five-fold demand increase this decade with constrained supply suggests we will most probably see strong long term prices for magnet rare earth oxides (includes NdPr oxide). Given the massive startup CapEx and environmental issues with rare earths mining that should also prove to be a strong barrier for entry for new start-ups.

Lynas’ current operation and an update on their expansion plans

Lynas currently extracts their rare earth ores from their Mt Weld Mine in Western Australia, does initial processing at the Mt Weld concentration plant, then sends the concentrate to Malaysia for final processing into high quality rare earth materials. Lynas’ rare earths deposit in Mt Weld is acknowledged as one of the highest grade rare earths mines in the world. The Malaysia rare earths processing plant is the world’s largest single rare earths processing plant.

Lynas Rare Earths Limited has a strong track record of producing rare earths with a falling cost of production

Source: Lynas Rare Earths corporate presentation

Lynas’ 2025 projects

Lynas has a 2025 plan to grow their processing capabilities. This includes two key parts:

  • A planned rare earths processing facility in Kalgoorlie, Western Australia.
  • A commercial light rare earths separation plant in the U.S. This may also include processing of heavy rare earths and specialty materials.

The proposed Kalgoorlie facility has commenced site preliminary works and is fully funded and progressing to schedule. It is targeted to begin operations by July 2023. You can read more details here.

The proposed U.S light rare earths separation plant has recently achieved a signed agreement with the U.S. Government with initial contracts for financial support signed with U.S. DoD. Lynas stated:

This project is scheduled to be completed in accordance with the Department of Defense timetable and as part of our Lynas 2025 plan. Detailed costings are still being finalized; we expect Department of Defense funding to be capped at approximately US$30 million. Lynas will also be expected to contribute approximately US$30 million under the agreement. The plant is expected to be located in Texas. Once operational, the plant is expected to produce approximately 5,000 tonnes per annum of Rare Earths products, including approximately 1,250 tonnes per annum of NdPr. The plant will be able to receive material directly from the cracking & leaching plant that Lynas is developing in Kalgoorlie, Western Australia.”

By 2025 Lynas plans to have a production capacity of at least 10,500 tonnes pa of NdPr (last quarter production was 1,359 tonnes) and their Kalgoorlie facility to be able to feed to downstream operations in the U.S. and Malaysia.

Lynas’ current and planned global rare earths operations

Source: Lynas Rare Earths corporate presentation

After a loss in 2020, Lynas is forecast to have a net income of A$137 million in 2021, A$266 million in 2022, and A$349 million in 2023. This equates to Lynas having forecast PE ratios of 37 in 2021, to 21 in 2022, and 15 in 2023. This compares favorably with MP Materials as I discussed recently here.

As of March 31, 2021, Lynas had a closing cash balance of A$568.5 million.

Closing remarks

Lynas Rare Earths Limited has had a great past year helped by strongly rising rare earths prices. Looking ahead Lynas has the 2025 growth plan that has the potential to raise Lynas to the next level. Lynas looks to be in great shape and is well worth consideration for investors that are bullish on the outlook for rare earths, notably NdPr.

Disclosure: The author is long Lynas Rare Earths Limited (ASX: LYC) and MP Materials (NYSE: MP).