November 30, 2022

Is American Rare Earths sitting on the largest rare earth deposit in the USA?

Commodities these days can be a bit of a fickle investment. They are definitely in demand for numerous reasons, including the world’s move towards a lower carbon future. Putin’s attack of Ukraine has placed further emphasis on security of supply, overall supply chains and the politics of commodities. However, we can’t seem to align all the interested parties into coming up with a cohesive game plan to maximize the production of critical commodities, while optimizing their environmental and social impact.

What do I mean by this? In late February the White House ordered action across the US Federal Government to secure reliable and sustainable supplies of critical minerals and materials just before the first anniversary of Executive Order (EO) 14017, America’s Supply Chains. However, a year after detailed reports of vulnerabilities in the critical mineral and material supply chains were produced by US federal agencies, detailing the over-reliance of the U.S. on foreign sources and adversarial nations for critical minerals and materials, posing national and economic security threats, the U.S. government isn’t exactly walking the walk. In the last year, we’ve seen Rio Tinto’s (NYSE: RIO) Resolution copper project in Arizona and Antofagasta’s (LSE: ANTO) Twin Metals project (copper/nickel) in Minnesota both get the red light from the Biden Administration. It has also taken steps to slow down development of a lithium mine in Nevada from ioneer Ltd. (ASX: INR) to help preserve a rare flower. You could also include Northern Dynasty Minerals Ltd.’s (TSX: NDM | NYSE American: NAK) Pebble mine in Alaska in this list because there is a lot of copper as part of the resource, but to me, it’s more of a gold mine so not necessarily critical.

I’m not saying that these actions to delay or cancel projects aren’t justified for environmental and social reasons. I’m simply pointing out that it’s easier said than done. Investors can’t simply pick all the companies pursuing critical minerals in the U.S. and think it’s going to be a slam dunk. Certainly, there is a renewed focus on addressing the critical minerals and materials supply chain, but it likely won’t come at the expense of the neighbors of these projects. That’s why one has to look a little deeper at any potential investments to ensure the project has a chance to see the light of day. You can’t just have a viable, economic resource, you need to tick a lot more boxes.

That’s my long-winded intro to an Australian listed company with assets in the growing rare earths sector of the United States, looking to help the U.S. diversify away from China’s market dominance of the global rare earth market. American Rare Earths Limited’s (ASX: ARR | OTCQB: ARRNF) mission is to supply critical materials for renewable energy, green tech, EVs, National Security, and a Carbon-Reduced Future. The Company owns 100% of the world-class La Paz Rare-Earth Project, located 200 km northwest of Phoenix, Arizona and the Halleck Creek rare earth project in Wyoming, USA. La Paz is a large tonnage, bulk deposit, that is potentially the largest rare earth deposit in the USA and benefits from containing exceptionally low penalty elements such as radioactive thorium and uranium. The Company is currently drilling in the new Southwest Zone of the project where an exploration target of approximately 742 – 928 million tonnes could be added to the 170.6 million tonne JORC compliant (Australian equivalent of NI 43-101) resource.

The size and the grades at La Paz are impressive, as well as close to surface, but remember it’s not just about an economic resource. The reason I think American Rare Earths should be on an investor’s watchlist, if you have any interest in the rare earths space, is their attention to politics. On March 4th the Company announced it had welcomed a delegation of elected officials from all levels of government to its flagship La Paz project. Key members of the group of 25 federal, state and county officials and staff delivered enthusiastic and encouraging speeches about American Rare Earths and its work underway to help secure the United States’ domestic critical minerals supply chain. Additionally, Company executive Marty Weems will speak to several dozen State Legislators about La Paz at an event held in collaboration with the Arizona Mining Association. That’s the type of proactive effort required to get your project to the finish line in the world of today.

From a macro perspective, there are significant tailwinds for domestic rare earths production from both a market pull and a government push. Additionally, there are several near-term catalysts for American Rare Earths with an on-going drill program at both properties and applications have been filed for 36 additional drill sites at La Paz. The Company is well funded, finishing 2021 with over A$8 million plus having raised another A$1.4 million in the first two months of 2022. With a market cap of roughly A$161 million (US$ 117 million) it’s not your typical junior mining stock, but then again, your typical junior mining stock isn’t sitting on potentially the largest rare earth deposit in the USA.

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.

8 responses

  1. Rare Earths Investor Avatar
    Rare Earths Investor

    Thanks for the macro article.

    Very much agree with the sentiment that these niche RE entities with US within borders projects need to attempt to play the political game; particularly, if they want a chance of seeing the light re., RE value chain entrance.

    ARR seems to have a lot of local and within-state political interest, but as far as I can see still has to garner direct federal level support from its powerful legislators, including Senators Kelly and Sinema.

    ARR is in a competition/race to possible US RE chain emergence with a number of other US feedstock projects (and potentially also CAD depending on the level of US environmental opposition to new mining).

    N. America will, IMO, only need so much RE supply and already you have Vital (I hold) supplying in CAD and MP, Lynas – I hold/Blue line and REEMF in the US, not only with their own feedstock access but already US strategic money backing their processing moves. Even Vital has recently received CAD strategic backing, so how many RE entities will emerge if they can’t get federal backing and have to rely on just private financing?

    Further, is it purely coincidence that leading Senators Barasso in Wyoming (REEMF) and Cruz and Cornyn in Texas (Lynas, MP, Urban Mining) have been so vocal about RE?

    As usual, JMHO, as a focused RE investor. GLTA

    1. Jack Lifton Avatar
      Jack Lifton

      North America today uses more than 12,000 tpa of imported rare earth permanent magnets. Increased demand from (total?) vehicle electrification, direct drive wind turbines, home appliances and industrial machinery could drive this figure to between 50,000 and 100,000 tpa of RE permanent magnets. America therefore needs not only the capacity to produce and process 16,000 to 33,000 tpa(!) of NdPr and 1000 to 2000 tpa of Dy and Tb, but the capability and capacity to produce 100,000 tpa of RE metals and magnets. Although this may be possible, it is impossible in less than a generation and would require 10s of billions of dollars, at least, of direct investment in mining and processing to achieve along with a diversion of American education to favor STEM rather than social justice. Investing in domestic supply chain development is an excellent idea but achieving self-sufficiency or security of supply is a pipe dream.
      Jack

  2. raymond j briscuso Avatar
    raymond j briscuso

    i ownj omm excess of 600000 shares of arem does it have a value

  3. Sadness Avatar
    Sadness

    Rare earths by themselves do not affect the environment, and while most rare earths are harmless by themselves, mixtures of rare earth minerals (or monazite) are radioactive. Therefore, during production and extraction, these radioactive substances are released into the environment and into the human environment, harming the ecosystem.

  4. Thomas Avatar
    Thomas

    In order to continue the high-pressure trade war against China, the United States has been processing and mining rare earths in its own country at the expense of its own residents and the environment, because the mining and processing of rare earths is very damaging to the environment and the working conditions are very poor. Since rare earths are mostly distributed evenly on the earth’s surface, their mining often causes irreversible damage to surface vegetation. And the drugs used to mine them pollute underground water and rivers; Some rare earth minerals also contain radioactive elements

  5. Riel Danyail Avatar
    Riel Danyail

    “In January 2022, China’s rare earth exports were already lower than its imports. China mainly reprocesses imported rare earths twice. The US also exports rare earths to China. The US has the world’s largest rare earth reserves, but has the rare earth processing capacity. China not only has abundant rare earth reserves, but also has strong mining and processing capabilities, no matter how large Turkey’s reserves are, it is still difficult to achieve a monopoly that threatens China.

  6. Riel Danyail Avatar
    Riel Danyail

    “I heard that rare earths from the United States are sent to China to be processed.

  7. Gordon Bracegirdle Avatar
    Gordon Bracegirdle

    They are not “sent to China to be processed” – this implies continued ownership / toll processing. No, they are sold to a Chinese buyer, who processes and dissipates them into the Chinese supply chain.

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