November 28, 2022

Auxico Resources is making a splash in the rare earths world by shipping monazite from the DRC

Auxico Resources Canada Inc. (CSE: AUAG) is a new entrant into the rare earth supply chain story. This year they have made 4 shipments of monazite sands concentrate from the Democratic Republic of Congo (DRC) totaling 720 tonnes of concentrate for a combined value of US$3.8 million. Auxico keeps 15% of this amount or US$570k and the balance going to Central American Nickel (CAN). Pierre Gauthier, a Montreal businessman, is the Chairman of Central American Nickel and Executive Director of Auxico Resources. Auxico has signed a sales agency agreement with CAN and according to their website the offtake agreement is for 5 years for a minimum amount of 18,000 tonnes of concentrate, or about 300 tonnes per month (TPM), and has a target of 1,000 TPM. The recent sale was analyzed to have approximately 60% total rare earth oxides (TREO) which is good and a Neodymium (Nd) level of 14.95% and Praseodymium (Pr) of 3.4%, which is higher than Mt. Pass levels.

Looking at the prices of Neodymium and Praseodymium from July, the sales price received is around 30% of the contained value of Nd and Pr, which is in the typical range paid by the Chinese for concentrate. No destination is indicated but China would be the logical destination. The only other places would be Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) in the USA which can handle monazite or possibly Neo Performance Materials Inc. (TSX: NEO) plant in Estonia. In the future, the Saskatchewan Research Council could also be a client once their pilot plant is completed. Since the middle of the year prices for Nd and Pr have dropped around 40%, so revenues per tonne should drop accordingly to around $4,000 per tonne. Their goal is to reach 1,000 TPM by year end, which would generate total revenues of $4 million/month or $600K USD for Auxico as its monthly 15% share.

Two recent additions to Auxico are noteworthy. Frederick Kozak became President after having been President at Appia Rare Earths & Uranium Corp. (CSE: API | OTCQX: APAAF). He replaces Pierre Gauthier who had been Chairman and CEO. Also added to the board was Melissa Sanderson, a leader in ethically sustainable growth and previously served as a senior diplomat, including as Charge d’Affaires of the US Embassy in Kinshasa, DRC, so she brings on the ground experience to Auxico as it deals with ethically sourcing concentrate from North Kivu, DRC cooperatives. Melissa sits on the Board of the Critical Minerals Institute.

Auxico is also involved in projects in South America. Of note is the Massangana tin tailings project. In June of this year, Auxico announced an agreement with Cooperativa Estanifera de Mineradores da Amazônia Legal Ltda. (“CEMAL”) concerning the production of tin, niobium and rare earths from the Massangana tailings estimated to contain 30,000,000 tonnes in the State of Rondônia, Brazil. As some of you know I am a fan of tailings as a source of critical minerals as the heavy lifting has already been done to get the material out of the ground. This deposit has 30 million tonnes of tailings. A study done by the German Mineral Resources Agency and the Geological Survey of Brazil indicates that three types of products could be generated from the tin tailings: (A) a monazite concentrate; (B) a columbite Concentrate; and, (C) a cassiterite concentrate. According to their press release the following concentrates can be produced:

The TREO level in the tailings is better than some greenfield mines being promoted currently.

As noted in Auxico’s June press release a feasibility study is to be done to process 3 million tonnes per year which would give a project life of 10 years. The objective of this project is to produce 135,000 tonnes of monazite concentrate per year, 19,500 tonnes of cassiterite concentrate (tin), and 45,000 tonnes of columbite concentrate (50% niobium + 5% tantalum). If the monazite concentrate is 37% as noted above, this would produce 50,000 TPY of TREO, which is significant as this would be around 25% of the current world production, which I estimate at 175-200,000 TPY. The tin output would be around 10,000 TPY in a market which in 2019 was estimated at 310,000 tonnes, so it will not have a large impact in the market. The columbite would generate over 22,000 tonnes in a market which last year Statistica estimated at 75,000 tonnes. The largest Niobium producer is CBMM which is also based in Brazil.

Auxico uses a separation and recovery technology called Ultrasound Assisted Extraction (UAEx), which has been proven successful at recovering rare earths as well as other critical minerals.

Overall, Auxico has a lot to watch on multiple fronts.

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Disclaimer: The author of this post may or may not be a shareholder of any of the companies mentioned in this column. None of the companies discussed in the above feature have paid for this content. The writer of this article/post/column/opinion is not an investment advisor, and is neither licensed to nor is making any buy or sell recommendations. For more information about this or any other company, please review their public documents to conduct your own due diligence. To access the InvestorIntel.com disclaimer and other important legal notices, click here.

9 responses

  1. rob dubeck Avatar
    rob dubeck

    Before I became an investor in Auxico Resources, I bought into Canada Rare Earth Corp. they also have a property in the State of Rondonia in close proximity to Auxico. CREC have 70 million tons of the same tailings. Any chance Investorintel can shed a light on this property. I have emailed them and rec’d responses but maybe you could do a deeper dive

    1. Tracy Avatar
      Tracy

      I genuinely like Tracy Moore from Canada Rare Earth Corp. Thanks for reminding me to call him and personally invite him to the Critical Minerals Summit on November 9th. For the record, I have tried numerous times to get him to do an updated interview with myself and/or Jack Lifton to no avail. It is my observation that they like to to be understated. Thank you for visiting Rob and Happy CDN Thanksgiving weekend to you.

      1. rob dubeck Avatar
        rob dubeck

        Alastair, thanks for the reply on Canada Rare Earth Corp. Tracy Moore replies to my emails and I forwarded your comments to him. Rob

  2. Trevor Reid Avatar
    Trevor Reid

    In addition to the commission from CAN REE sales in the DRC, Auxico also has a separate agreement with the Lasell company to provide up to 1000 tonnes per month of tantalum ore, for which they retain a 70% take working with Kibara Minerals. Production is expected to begin at 25 tonnes in Q4 of this year. In Brazil, they have already signed an off-take agreement with Cuex Metal AG representing 60% of the tin they plan to produce.

    Anyways, this company is poised to do extremely well as they continue to sign off-take agreements in these 2 jurisdictions alone, and this article doesn’t even mention their third, which in my opinion the most promising: Colombia. I’m patiently waiting to see if the Gold and Platinum on surface will fund the entire REE operation just beneath!

    Thanks for the continued coverage of the company and the excellent news articles! Cheers, Trevor

    1. Alastair Neill Avatar
      Alastair Neill

      Thank you Trevor. There was a lot to cover on Auxico but had to focus on two aspects. I agree the Columbian project is interesting. Maybe for another day.

  3. Tracy Weslosky Avatar
    Tracy Weslosky

    We love smart and informed readers Trevor. Congratulations, you have just won a complimentary Critical Minerals Institute membership for 1-year, pending your interested. I have been trying to keep up with the AUXICO story as its growth pattern seems incredible to me. And as for keeping up with the story —- there is less than a handful of professionals globally that can cover this market sector better than Alastair Neill. We feel fortunate to have him doing this series for us. Please come again. PS I will email you the CMI details.

    1. Trevor Reid Avatar
      Trevor Reid

      What an honour! Thanks, Tracy. I am not familiar with the CMI, but quite frankly, I do not understand how it could be more beneficial than the Investor Intel YouTube channel?! Cheers

  4. Jack Lifton Avatar
    Jack Lifton

    The author states, “Auxico uses a separation and recovery technology called Ultrasound Assisted Extraction (UAEx), which has been proven successful at recovering rare earths as well as other critical minerals.” UAEx is a method of cracking ores. It is used, where found to be applicable, to disintegrate ore bearing rock so as to free the metal bearing mineral from the gangue, or, at least, to free more surface area of the mineral for leaching. It thus can replace time consuming and expensive grinding and/or ball milling of the ores. UAEx has so far proven very effective in shortening cracking and leaching time for a variety of ores, and Auxico is trying the system out on a variety of hard rock ores at its disposal. If the deployment of UAEx at scale proves commercial it will enhance dramatically Auxico’s position as a low-cost producer of critical minerals concentrates and most likely of leachates.

    1. Aaron S Avatar
      Aaron S

      yes in my very brief introduction to Auxico in the last few days, the two main advantages I see are the reduced cycle timein being able to leach as you state above, but also that the technology allows for processing of material which is hosted in silt and sand based ‘ore’, defintiely one to watch and read up on further

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