Newly listed Australian Rare Earths Limited is off to a flying start

Rare earth permanent magnets are so powerful they are the heart of modern ‘efficient’ motors that drive many electric vehicles, wind turbines and electrical appliances. Their advantage is that they achieve stronger output and therefore reduce power consumption and boost efficiency compared to other electric motors with no rare earth permanent magnets. These magnets contribute 30% of the market by volume and >90% by value.

Key magnet rare earth material prices such as Neodymium (Nd), Praseodymium (Pr) and Dysprosium (Dy) have been rising the past 2 years, partly due to the surge in electric vehicle (EV) sales and also due to supply concerns out of China.

Australian Rare Earths Limited (ASX: AR3) (“AREL”) is a newly listed Australian company focused on the valuable magnet rare earths at their Koppamurra Project in Australia. The Company listed at A$0.30 on July 1, 2021 raising A$12 million. The stock tripled in the first five days after listing reaching A$0.90, and is currently trading at A$1.08.

Australian Rare Earths Limited stock price chart (IPO at A$0.30 on July 1, 2021)

Source: Australian Rare Earths Limited

The Koppamurra Project

AREL is progressing the exploration of a significant deposit of valuable ‘clay-hosted’ rare earth elements, located at their Koppamurra Project spread over tenements in South Australia and Victoria. Past exploration of the Koppamurra region has shown it contains mineralization containing the rare earth elements neodymium, praseodymium, dysprosium and terbium as revealed from reviewing historic drilling data and samples available from State core repositories. The rare earths were found to accumulate in the shallow clay layer deposited onto a limestone base (Gambier Limestone).

The Koppamurra Project is a frontier ‘ionic clay’ rare earth opportunity in South Australia and Victoria, Australia, spread over a massive ~4,000km². Clay hosted rare earth mining is shallow-excavation mining involving progressive rehabilitation and is much lower impact than many other forms of mining. The deposits of interest are non-radioactive, which is a significant advantage over other mineral sand and hard rock rare earth element deposits.

Ionic clay projects have significant advantages over mineral sand and hard rock rare earth projects

Source: Company presentation

Current news and next steps

Prior to AREL listing on the ASX, 470 aircore, auger and push tube drill holes were completed in January 2021 and a JORC 2021 Inferred Mineral Resource of 39.9Mt @ 725ppm TREO was announced. A feature of the Koppamurra Mineral Resource is low radioactivity. Preliminary testwork at ANSTO has demonstrated that recovery improves at lower pH levels and this will be investigated further to improve optimization of metallurgical recoveries, currently around 50% to 70%.

More recently a further 79 hole drill campaign was completed with assay results pending and expected by mid to late August. Further field exploration will begin in October.

In July AREL announced that they had acquired new tenements and expanded the Koppamurra project by greater than 40%.

Board and management are highly regarded

The AREL board consists of renowned metallurgist Dudley Kingsnorth. He is an internationally recognized expert in the rare earths industry, providing advice to producers, end-users and government entities. He has over 50 years of experience in operations, project development and marketing.

Australian Rare Earths Limited reasons to invest summary

Source: Company presentation

Closing remarks

It is still very early days for Australian Rare Earths Limited and their ionic clay rare earths Koppamurra Project in Australia, already with an Inferred Mineral Resource of 39.9Mt @ 725ppm TREO. The IPO raised A$12 million which will largely be used for exploring their tenements with drill assays due out shortly in August, to be followed by a further exploration program starting in October. Ionic clay projects have several advantages including lower CapEx, faster and easier development and processing, and no radioactive waste streams.

The Board and Management are highly experienced and include renowned rare earths expert Dudley Kingsnorth. The stock price has already taken off given the excitement behind the Company’s potential. Despite this, the market cap is still reasonable at A$122 million. One to follow closely.




Rare earths directed Appia Energy embarking on a fully funded drilling program at Alces Lake

Rare earths companies are starting to gain attention as demand for the magnet rare earths in particular is forecast to boom this decade as we move further towards renewable energy and electric vehicles. The market for magnet Rare Earth Oxides (REO) is expected to increase five-fold by 2030. Two key magnet metals, Neodymium (Nd) and Praseodymium (Pr) have seen their prices rise strongly in 2021 and notably again the past month after a recent dip.

Neodymium (Nd) oxide and Praseodymium (Pr) oxide prices have spiked higher the past month

Source: Kitco

One rare earth junior (Appia Energy) has 2nd highest average rare earth element (REE) grade in the world, at 16.65 wt% TREO, hosted in favorable monazite ore.

Appia Energy Corp. (CSE: API | OTCQB: APAAF) (“Appia”) is focused on rare earths at their 100% owned, 43,434 acre, Alces Lake Project in the Athabasca Basin area of northern Saskatchewan, Canada. They also have uranium prospects in the region as you can read here.

Appia Energy’s project portfolio in Northern Saskatchewan, Canada

Source

The Alces Lake project has ‘monazite ore’ containing valuable rare earths Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy), and Terbium (Tb). Exploration since 2017 has identified highgrade Total Rare Earth Oxide (TREO) with up to 49 wt% TREO (average grades of 16.65 wt% TREO and 3.85 wt% CREO) on or near surface. Less than 1% of the property has been explored with diamond drilling.

On July 15, 2021, Appia announced that they are now embarking on a fully funded ~5-6,000m drilling campaign at Alces Lake, which is as much drilling as they have ever drilled before at the Project. The first phase of ground geology and geophysics is completed and the drilling team is about to mobilize to the Alces Lake camp, where two drilling rigs and crews will be working 24/7 on this phase of the helicopter-supported diamond drilling program.

Alces Lake Project Manager, Nic Guest, commented: “The quality of the data obtained in the first phase of ground exploration is excellent. Our understanding of the various occurrences across the property has grown and we have planned our drill program accordingly. Our first phase of 2021 drilling will give us new and important information.”

Appia President, Frederick Kozak, stated: “Approximately 5,700 metres of drilling has been planned to test the near-surface and down-plunge extents of new and existing rare-earth targets. More than 4,000 metres will be dedicated to identifying the depth potential of the WRCB zone (cumulatively the Wilson-Richard-Charles-Bell discoveries) and help complete the understanding of this significant discovery.”

The Alces Lake Project has excellent local infrastructure including mills, power, labour, highway, air strips, and well established summer and winter access routes. Appia has even recently built a winter camp site to help with all year round operations.

Highlights of Appia Energy’s exciting Alces Lake Project

Source: Company presentation

Closing remarks

Appia is sitting on a super high grade REE monazite ore deposit at Alces Lake. A huge summer drilling campaign has just begun and will help the Company potentially build up a Resource estimate. Rare earths expert Jack Lifton has also agreed to join the Appia team as a Strategic Adviser.

Appia is currently trading on a market cap of C$83 million after a recent stock price dip. For those who missed out on buying Appia earlier, now looks to be a good time to take a second look. We will let you know the drill results as they come in during the following months. Stay tuned.




Can Environmentalists Handle the Truth about Mining?

The recovery of the amount of non-fuel natural resources necessary for the world, or even just the USA, or the EU, or China, to go “green” would simultaneously entail the construction of a massively enlarged minerals processing industry the likes of which the world has not seen since the creation and growth of the steel industry, which is and will remain the structural backbone of our civilization. Much of the sourcing and processing infrastructure that is needed for its own domestic consumption of natural resources has already been accomplished by China. But for the rest of the world, such resource recovery and processing onto useful forms at that “greening” scale would require the diversion of a significant percentage of national GDPs for decades. Such an allocation of capital would mean a realignment of class structures notably the obscene enrichment of an elite industrial ownership class in the USA and the EU, and a lower standard of living for most of their populations as energy in vast amounts would have to be more and more devoted to mining, refining, and manufacturing, and the costs involved when passed down to consumers would be all-consuming.

The resources necessary for greening the world are simply not available.

The “experts” mistake the notion of “earth abundance” for economically accessible. It is a fact that, for example, neodymium is more common in the earth’s crust than lead. This fact is often cited by proponents of rare earth permanent magnet manufacture as the reason not to worry about running out of the neodymium necessary to make all of the rare earth permanent magnets necessary for the “greening” of the world. But this is nonsense. The accessible deposits of rare earths, globally, allow the new production today annually of about 30,000 tonnes of neodymium while the annual new production of lead is 12,000,000 tons, approximately 400 times the rate of production as neodymium. The key to natural resource recovery is the accessibility, physically, chemically, and economically, with current technology, of deposits able to be developed into producing mines.

The key to processing the mineral ore concentrates from the mine is the availability of technology chains that provide the separation (from the other elements in the ore), the purification, and the transformation into user forms of the metals in question economically.

The mining and concentrating of most of the ores of the metals have the same processing technology and even remarkably similar extractions from the ore concentrate of solutions of the chemical salts of most metals. But the technology chains for the separation of, the purification of, and the metal and alloy making of, and the fabrication of useful metallic forms of the metals vary dramatically, In fact, the economics of any mine depends on the costs of the technology chain downstream of the extraction from the ore of the desired (and measured as, but not yet in that form) metal values.

In the case of the rare earths, any profits derived from mining them are entirely dependent upon the existence and efficiency of the downstream technology stream from the mine. What I will call the 2011 fantasy was the belief as stated almost universally by the junior miners of the time that they would sell a “mixed con(centrate)” of rare earths and make a profit. The universal myth of the time was that Chinese rare earth processors would pay 65% of the basket price of the contained rare earth values. Then as now, that was a myth. At the time the Chinese were offering to pay at most 45% and then only counted the valuable rare earths such as neodymium, praseodymium, terbium, and dysprosium. The prices of rare earths used then, as now, in preliminary economic assessments (PEA), by junior miners were taken from the posted selling prices of rare earth finished chemical and metallurgical products in China. This was at best ridiculous and at worst disingenuous. I lean towards the latter explanation.

But the biggest problem with Chinese “lowball” pricing, which pundits saw as predatory was the fact that such prices did not include costs of health, safety, or environmental management. This did not and does not yet seem to matter to the “greens,” who acknowledge the existence of Chinese mining practices not to disparage their predatory pricing but to discourage American rare earth mining as “dirty and polluting” as is its Chinese counterpart. The so-called “greens” here display their complete ignorance of American mining practices, which are probably the most regulated in the world with regard to health, safety, environmental management, and the remediation of land after the mine has become non-economical.

There seems to be a complete lack of understanding of where resources come from and how they are found, recovered, and processed into useful forms. Even more telling is the lack of understanding that to “green” our society we must dig into the black earth, mechanically and chemically concentrate the minerals we find, chemically separate them, chemically and pyrometallurgically process them into useful raw material starting forms, and then mechanically fabricate them into end-user (consumer) forms. The production of useful, necessary, and critical forms of metals and materials is energy intensive! Solar panels and wind turbines cannot even begin to supply the concentrated power needed for smelters, steel furnaces, copper refining, aluminum production, and myriads of other energy intensive necessary processes.

Ramping up all of the necessary processes to provide the raw materials and finished goods for a “green” world would impoverish the world through the necessary diversion of energy required and the ultimate exhaustion of available recoverable resources.

The end of cheap energy and the ultimate rationing of metals and materials that would result from a “greening” of the world is the real existential crisis.




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

SOURCE:

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

SOURCE:

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.




MOU with the Saskatchewan Research Council signals another milestone for Search Minerals on their quest to produce rare earths in NA

A likely Biden victory in the USA is positive for all the rare earths miners. This is because one of Biden’s key policies is a massive $2 trillion green infrastructure and jobs plan over his first term in office that aims to have a US carbon pollution-free power sector by 2035. This would be a huge tailwind for the US renewable energy sector (solar and wind) as well as supportive to the US electric vehicle (EV) industry. Any North American rare earths suppliers who can potentially supply the USA and/or Canada with rare earths would be likely to benefit as North America embraces the green revolution.

One rare earth miner worth considering is Search Minerals Inc. (TSXV: SMY) (“Search”). Search is focused on finding and developing critical rare earth element mineral assets in Labrador, Canada.

In some very exciting recent news Search has signed a Memorandum of Understanding (MOU) with the Saskatchewan Research Council (SRC). The MOU outlines a collaboration with SRC as they build their Rare Earth Processing Facility in Saskatchewan, Canada.

Search Minerals President and CEO, Greg Andrews, commented: “We anticipate using the (SRC) conventional solvent extraction process to enable Search to validate the ability to produce the individual rare earth oxides necessary to enter the rare earth supply chain.

Recent announcements regarding building electric cars in Canada and other government led initiatives for clean and green technology provides the framework for industry access to a secure rare earth supply chain in Canada. We believe Search is well positioned to capitalize on these opportunities.”

Search controls properties in three areas of Labrador, Canada. These are:

  • The Port Hope Simpson (PHS) Critical Rare Earth Element District in SE Labrador
  • The Henley Harbour Area in Southern Labrador
  • The Red Wine Complex located in Central Labrador

Search Minerals has nearby infrastructure in place at St. Lewis, Labrador, Canada

Source

Within the Port Hope Simpson District Search’s main discoveries are the Foxtrot Resource, Deep Fox, Fox Meadow, Silver Fox, and Awesome Fox deposits which contain rare earths including dysprosium (Dy), neodymium (Nd), praseodymium (Pr), terbium (Tb), yttrium (Y), zirconium (Zr), and hafnium (Hf).

The district covers a 63 km long and 2 km wide belt. At Foxtrot the total Indicated Resource is 7.392 million tonnes with grades of neodymium oxide (1,732ppm), neodymium (1,485ppm), praseodymium (397ppm), and dysprosium (191ppm). The 14 year Life of Mine (LOM) Foxtrot Project offers an IRR of 16.7% on an after tax Net Present Value (NPV) 10% of $48M, with a CapEx of only $152M. The NPV quoted above is only for the Foxtrot Project, so once the other projects are combined into a bigger project the NPV should improve.

At Fox Meadow, 2020 channel assay results outlined two mineralized zones on the surface: The NW zone is up to 175m wide and the SE zone is up to 116m wide. Combined, the mineralization is at least 790m long and contains similar grades of the REE magnet materials (Nd, Pr, Tb and Dy) as Foxtrot and Deep Fox. This is a good result as it means Search is continuing to find more REE mineralization to potentially further grow their resource.

At Silver Fox, Search has recently successfully expanded the Silver Fox high grade zirconium-hafnium (REE) mineralized zone. In the news release Search commented: “This surface expression is significantly longer, but thinner, than the surface expressions of the nearby and related Foxtrot and Deep Fox Resources. The mineralization is similarly hosted by peralkaline volcanic rocks and contains lower grades of the REE magnet materials (Nd, Pr, Tb and Dy) but significantly higher grades of Zr and Hf.”

At Awesome Fox, the 2020 channel program (7 new channels) along with previous channels has outlined a REE mineralized zone ranging from about 4-43m thick and 850m long.

Source

Closing remarks

Earlier in 2020, rare earths expert Jack Lifton stated about Search Minerals: “I think it may well be Canada’s first commercial rare earth producer.” Given Search has completed a Resource estimate (Foxtrot, Deep Fox), a PEA (Foxtrot), has successfully produced 99% purity REO concentrate from their pilot plant and patented process, and now has a potential larger scale processing option with SRC; this all combines to suggest that Search Minerals is well on the way towards commercial production. Next steps would involve a BFS and potentially some trial production with SRC once their facility is built.

Search Mineral’s current market cap is only C$10.5M suggesting there may be plenty of upside potential ahead, especially if they continue to successfully advance towards production.




Rare earths company jumps 38.46% yesterday as the world searches for a NA supply

As good news continues to flow for the rare earths sector, today I look at one of the recent best performers, whose stock was up 38.46% yesterday as they led the pack of rare earth companies higher. Impressively, the stock is up 80% so far in 2020.

Avalon Advanced Materials leads the pack as the rare earths miners make a comeback

Source: InvestorChannel’s Rare Earths Watchlist Update – July 27, 2020

What has caused the surge in prices for western rare earth miners?

The recent price surge appears to be due to a combination of factors, all positive for rare earths:

These are in addition to several other Acts currently before the US Senate, such as:

Added to all of this the US Department of Defense recently said that it will seek $1.7 billion to purchase rare earths in the 2021 National Defense Authorization Act. You can read more on the three Acts here.

With this extremely favorable backdrop, today I take a look at yesterday’s star performer Avalon Advanced Materials Inc. (TSX: AVL | OTCQB: AVLNF).

Avalon is focused on critical minerals and cleantech materials including rare earths, lithium, tantalum, cesium, cobalt, nickel, tin, and others with near term production potential. Avalon has a very large project pipeline of promising, mostly development stage projects including:

  • Their flagship Nechalacho Rare Earth Elements Property (Thor Lake, Northwest Territories, Canada) with a 3% NSR on on the near surface T-Zone and Tardiff Zone bought by Cheetah Resources, and the 100% owned HREE Basal Zone. The Basal Zone retained by Avalon contains a rich polymetallic rare metals resource, with potential for economic recovery of several rare earth elements. A Feasibility Study was completed in 2013 on the Basal Zone resulting in a pre-tax NPV10% of $1.35 billion (post-tax NPV10% of $900m). The post-tax IRR was 19.6%. CapEx was $1.575b. Sales of the five critical REO (neodymium, europium, terbium, dysprosium and yttrium) account for over 82% of the separated REO revenues.
  • Their Separation Rapids Lithium Project (70 km by road north of Kenora, Ontario) holds one of the largest “complex-type” lithium-cesium-tantalum pegmatite deposits in the world. A PEA was completed in 2018 resulting in a pre-tax NPV8% of $156m, post tax IRR of 22.7%, CapEx C$77.7m with a 20 year mine life. You can read a company update here. Currently Avalon is working on optimizing the process flowsheet and producing new petalite product samples for glass-ceramic manufacturers.
  • Their Lilypad Cesium Property (150 km northeast of Pickle Lake, Ontario) is an exploration stage project with cesium-lithium-tantalum mineralization.
  • Their Warren Township Feldspar Project (100 km west of Timmins, Ontario) hosts a significant resource of high purity anorthosite, consisting of up to 98% high calcium plagioclase feldspar. The PFS was completed in 2003.
  • Their East Kemptville Tin Project (45 km northeast of Yarmouth, Nova Scotia) with a PEA completed in 2018.

Avalon Advanced Materials’ project pipeline are all located in North America

Source: Company investor presentation

Since Avalon did not release any new news in July, I can only conclude that yesterday’s 38.46% stock price surge was related to the very positive rare earths market news from the U.S. government and European Commission reported on July 24 as I discussed above. The fact that Avalon surged more than the rest is likely due to their lower market cap resulting in greater leverage to the positive rare earths news. Certainly having a low market cap and a very significant local Canadian rare earths project with a pre-tax NPV10% of $1.35 billion would go a long way in explaining the potential ahead. Most companies would trade on ~20% of the post-tax FS value. In this case that would mean ~20% of $900 million or ~$180 million. Even allowing for the large CapEx, using 10% of the $900 million would suggest a market cap of $90 million. The Feasibilty Study costs alone were ~$60 million. Also this does not include any value for the other projects. Avalon is trading on a market cap of just C$31 million.

Closing remarks

The good thing about western rare earths companies is they actually do better if US-China relations get worse. This is because of the implied threat that China may one day cut off or severely restrict their rare earths supply to the US as they did before to Japan.

Rare earths stand to be one of the biggest winners of the new economy this decade as the world continues to decarbonize and moves towards using powerful magnets for electric motors used in electric vehicles and wind turbines.

Investors wanting broad exposure to multiple rare earths and critical materials should consider Avalon Advanced Materials. Avalon gives investors exposure to four advanced stage projects and one exploration stage project – with exposure to lithium, tin, cobalt, indium, beryllium, niobium, cesium, zirconium and tantalum, as well as the rare earth elements, neodymium, europium, terbium, dysprosium and yttrium.




The EV sector sizzles, will rare earths be next? Spotlight on Appia Energy…

The electric vehicle (EV) sector has been one of the hottest sectors the past 3 months as investors chase everything ‘electric’. For example, Tesla (NASDAQ: TSLA) is up over 7 fold the past 14 months and is now the world’s most valuable car company. The past 3 months NIO is up 3 fold and Nikola is up 5 fold. The battery manufacturers have also surged.

So what’s next? Following the EV thematic one would say the EV metal miners should be next, and that includes the rare earths miners, as rare earths are a key component in the most powerful magnets used in EV motors. Last year Roskill reported that “Tesla extends EV range using ‘permanent magnets’ motors in Models S, X, and 3. This resulted in a 10% increase in the overall drivetrain efficiency of Tesla’s EVs, and hence an improvement in range. Roskill then expressed the following view:

“Permanent magnets that offer the best performance and optimisation potential in electric motors are rare earth neodymium-iron-boron (NdFeB) magnets. Over 90% of EV models currently use NdFeB-based permanent magnet motors as part of the EV drivetrain.”

Additionally, the US Senate will soon consider various Acts, including the ORE Act, that aim to secure US supply of critical elements such as rare earths. This has the potential to be another catalyst for the rare earths sector in the near future.

One of the most promising rare earths junior miners is Appia Energy Corp. (CSE: API | OTCQB: APAAF). Appia is currently exploring and developing uranium and rare earth deposits at its Alces Lake Property, in the Athabasca Basin area of northern Saskatchewan, Canada. They also have a promising uranium-rare earths project in Ontario, Canada.

Appia 100% own the Alces Lake property spread over 14,334 hectares. The Alces Lake property has monazite ore that is enriched in valuable critical rare earth elements, particularly Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy), and Terbium (Tb). These 4 elements account for between 23-25% of the TREO, or ~85% of the potential value at Alces Lake. Alces Lake hosts the 2nd highest average REE grade in the world.

At a 4 wt% Total Rare Earth Oxides (TREO) cutoff, Alces Lake average grade is exceptionally high at 16.65 wt% TREO. By comparison rare earths producer Lynas Corporation’s Mt Weld mine has an average grade ~10 wt% TREO, and is perhaps the most successful non-Chinese rare earth mine in the world today.

Appia Energy’s Alces Lake property has exceptionally high grade critical rare earths in Northern Saskatchewan, Canada

Source: Appia Energy company presentation

The high grade TREO at the Alces Lake Project hosted in monazite is an ideal potential western located source of the most valuable key rare earths needed in future industries such as EV motors and catalysts etc.

Rare earths key uses include powerful magnets (21% of demand and growing) used in EVs, electronics, and wind turbines etc

The Alces Lake Project’s rare earths are near surface and hence suitable for an open pit mine. Permitting should be smooth being in northern Saskatchewan Canada and the CapEx and OpEx should be reasonably low given the good grades and near surface resource. There is also an existing pilot plant and extraction facility in Saskatchewan the Project can use to start up a small scale production of rare earth oxides.

Appia Energy’s Alces Lake ticks all the right boxes

Appia Energy President and CEO, Tom Drivas, stated exclusively to InvestorIntel:

“Appia is currently exploring its Alces Lake project located in Saskatchewan Canada. Alces Lake has a number of surface zones with up to 85% monazite and can become one of the highest grade critical rare earth producer  in the world. Appia could supply the critical rare earth needed to the developing industry in the US and Canada.”

Appia recently announced that they have begun further exploration at the Alces Lake property. It is expected that between late July and early August Appia will commence -2,000 to 3,000 m of a drilling program to potentially expand the resource.

Closing remarks

Appia Energy trades on a market cap of just C$14 million, which is very low given their super high grades, valuable critical rare earths, and good location. The only possible explanation can be the relatively early stage of the project.

Rare earths expert Jack Lifton recently stated Appia Energy’s Alces Lake “is probably the best choice for development into a producing rare earth magnet materials’ mine in North America.”

Finally, Appia also offer investors exposure to several other projects in Canada that are highly prospective for both rare earths and uranium. Early investors in junior miners such as Appia have the potential for tremendous returns, especially if the Alces Lake project achieves funding and production. The recent surge in EV related companies, the US Senate considering rare earths Acts, and Appia’s potential for excellent near term news flow should all serve as strong catalysts for the stock in the year ahead.