Welcome to the January 2024 Critical Minerals Institute (CMI) report, designed to keep you up to date on all the latest major news across the critical minerals markets. Here is the CMI List of Critical Minerals or visit the CMI Library.

Global macro view

January 2024 saw a slight rise in U.S. inflation reported from 3.1%pa in November to 3.4%pa in December 2023. This has led market commentators to suggest the proposed 2024 interest rate reductions may be pushed out to H2, 2024, or be smaller in nature.  

The next U.S. Fed rates announcement is due on January 31, 2024, and no changes in rates are expected. Year to date, as of January 21, 2024, the S&P 500 is up 2.04%. U.S. GDP looks set to slow in Q4, 2023 (announcement due 25 January 2024) with forecasts for 2% annualized growth, which would result in a 2023 GDP of ~2.7%. 2024 U.S. GDP is forecast to be ~2.2%. The U.S. consumer remains resilient with U.S. employment very strong.

China continues its property led slowdown with 2023 GDP recently reported at 5.2% annualized. China’s December new home prices fell at the fastest pace in almost 9 years. Despite this the Chinese Central Bank left rates unchanged, defying expectations for a 0.1% cut.

The Russia-Ukraine war continues as does the Hamas-Israel war which last month spread to include the U.S. and UK forces bombing Iran-backed Houthis over their attacks in the Red Sea. The Middle East is a hotbed ready to explode.   

Global plugin electric vehicle (“EV”) update

December 2023 saw the usual seasonal upswing in global plugin electric car sales reaching a record ~1.5 million. China led the way with a stellar result of 1.191 million units, up 46% YoY.

Global plugin electric car sales ended 2023 at 13.6 million units (~16% market share), for a growth rate of 31% YoY (a significant slowdown from the ~60% growth rate in 2022).

• Trend Investing forecast for 2024 is 17 million units (20% market share), for a growth rate of 25% YoY.
• BloombergNEF forecast for 2024 is 16.7 million units (~20% market share), for a growth rate of 21% YoY.

We are still at the very early stage of the EV boom.

In early January, news was released that a record 1.2 million EVs were sold in the U.S. in 2023, according to estimates from Kelley Blue Book. The report noted that U.S. market share reached 7.6% in 2023 and that 55% of EV sales were attributable to Tesla (NASDAQ: TSLA).

The UK announced that their Zero Emission Vehicle (ZEV) mandate to increase electric car sales has become law. Key rules include:

• “ZEV Mandate demands makers up share of electric car sales to 22% in 2024.
• Electric vehicles currently make up around just 18% of all registrations in the UK.
• Mandate thresholds rise annually to an 80% share in 2030 – and 100% by 2035.
• Failure to meet the ZEV mandate sales targets can result in huge fines for auto makers of £15,000 per model below the required threshold.”

EV battery news

The U.S. government continues to tighten the screws towards developing their own EV supply chain independent of Foreign Entities Of Concern (“FEOC”). On January 20 Bloomberg reported: “US to ban Pentagon battery purchases from China’s CATL, BYD”. The ban will commence from October 2027 and include 4 other Chinese battery makers (Envision Energy Ltd., EVE Energy Co., Gotion High Tech Co., and Hithium Energy Storage Technology Co).

Global critical minerals update

There is an enormous amount of doom and gloom surrounding the EV and battery metals sector as we commence 2024. A key theme in recent months has been very depressed prices for many of the critical minerals, especially those related to the EV segment. A combination of the slowing EV growth rate in 2023 from ~60% in 2022 to ~31% in 2023, combined with an excess of battery inventory from 2022 and new EV metals supply has left most EV metal markets in surplus with prices collapsing.

Lithium

China lithium carbonate spot prices were flat the past month, with the price now at CNY 95,500/t (USD 13,275/t). After an ~80% fall from the high, lithium prices appear to have finally stabilized. This is logical given that prices are now at or below the marginal cost of production, especially for the higher cost China lepidolite producers.

Industry participants have been calling for a price bottom in recent months, with China Futures Co. analyst, Zhang Weixin, forecasting lithium prices to bottom out between CNY 80- 90,000/t and average CNY 100,000/t in 2024.

The other key recent trend in the lithium sector has been several announcements from lithium producers either stopping production or reducing their expansion plans. Core Lithium (ASX: CXO) announced on January 5, 2024 it will temporarily suspend mining operations. Then on January 17, 2024, Albemarle Corporation (NYSE: ALB) announced “actions to preserve growth, reduce costs, and optimize cash flow”. This includes deferring plans to build a fourth lithium hydroxide processing train at their Kemerton LiOH facility.

The China lithium carbonate spot price has stabilized near the marginal cost of production

On the topic of when we might see some recovery in lithium prices. On January 19 Fastmarkets put out a report stating: “…We expect orders to start flowing upstream again either towards the end of the first quarter or early in the second quarter.” If this proves correct and EV demand remains solid, then we could expect some lithium price recovery late Q1, early Q2, 2024.

Fastmarkets reports China lithium inventory levels are now back to the pre-boom levels with ~3 months of supply (red line)

Magnet Rare Earths

Neodymium spot prices fell again the past month to CNY 505,500/t. Prices peaked in February 2022 at CNY 1,506,530 and have been trending lower ever since then.

As discussed in a recent InvestorNews article, the consensus of industry experts is for 2024 to be a consolidation year. The article states: “2024 should see a year of consolidation for the rare earths sector as some experts are telling me. Some forecasts are for NdPr supply deficit to begin as early as 2024; however, this will largely depend on China demand, the global economy, EV sales, and new NdPr supply hitting the market.”

One interesting news item that emerged in January was of Rainbow Rare Earths Limited (LSE: RBW) (“Rainbow”) and their Phalaborwa Project in South Africa. The key aspect being that the Project consists of gypsum waste piles that contain large quantities of the magnet rare earths. Rainbow CEO Bennett stated: “We’ve got no mining cost, no crushing, no milling, no flotation. I saw the advantages to lead to a low capital intensity and low operating cost environment project.” Rainbow targets first production for 2026.

Some analysts are forecasting deficits ahead for NdPr rare earths driven by strong EV and wind energy demand

Cobalt, Graphite, Nickel, Manganese and other critical minerals

Cobalt prices (currently at US$12.90/lb) were flat the past month and remain at very depressed levels. The cobalt market is suffering from excess cobalt supply from the DRC which combined with a global slowdown in demand has led to cobalt prices dropping by almost 2/3 since their April 2022 peak. With LFP batteries gaining in popularity (no cobalt required) and a weak global consumer electronics market, there appears to be no short term turnaround for cobalt. Leading cobalt producer Glencore PLC (LSE: GLEN | OTC: GLCNF) has been stockpiling their excess material. At current prices, there is limited incentive for western producers to expand or enter the market.

Cobalt has lost two-thirds of its value since a recent peak in 2022

Flake graphite prices remain very weak with prices near the marginal cost of production and down ~2% over the past month.

A January 2024 Bloomberg report noted that natural flake graphite shipments slumped 91% in December from November 2023. Of course, sales surged prior to the Chinese export license permits being implemented in December 2023. December exports were 3,973 tons compared to the past monthly average of ~17,000t, so still a very significant fall.

Despite the spate of recent bad news, graphite is one of the EV metals with the largest demand profiles ahead this decade. Several groups are forecasting deficits ahead this decade starting from 2024/25 for the various types of graphite including flake, spherical, and synthetic. You can read more on the graphite outlook here.

Nickel prices fell again last month to USD 15,799/t. The 1 year outlook for nickel remains poor due to oversupply concerns from Indonesia. As a result of low nickel prices we saw the collapse of Panoramic Resources (ASX: PAN) in December and then on January 22, 2024, it was reported that BHP Group (ASX: BHP | NYSE: BHP) plans “to put parts of Kambalda nickel concentrator in Australia on care and maintenance” from mid-2024. This was caused by Wyloo Metals, which supplies ore to the plant, announcing a pause in mining operations due to low nickel prices.

Manganese prices were flat the past month and are now at CNY 29.25/MTU.

Uranium prices have been the exception to the rule the past year as they continue to rise, now at US$106/lb.

Uranium 5 year price chart

Conclusion

The biggest trend that looks to be emerging in Q1, 2024 for the EV metals sector is a negative supply response from producers. Producers are cutting CapEx, scaling back expansion, and in some cases reducing or stopping production. Expect to see a lot more of this in H1, 2024.

They say “the cure for low prices is low prices”. Well that’s exactly where we are now in the cycle. The next 3-6 months is likely to see the washout phase, where many miners collapse, reduce production or put their mine into care and maintenance. There is no point running a mine and selling a limited resource and making no profit. I will end with three well known sayings:

• “Bear markets are the author of bull markets”
• “Bull markets are born on pessimism, grown on skepticism, mature on optimism, and die on euphoria.”
• “You have suffered through the pain, now hang around for the gain.”

Given the EV metals markets have been in a bear market for the past 15-18 months the end is near, and we should expect some recovery during H2, 2024, assuming EV sales can grow at a reasonable rate.

With all the talk of on-shoring, near-shoring, friend-shoring, or whatever is the popular term this week, it’s easy to lose sight of the fact that most commodities are global in nature. I know I’ve become fixated on North American solutions when it comes to critical materials and rare earths but that’s a somewhat myopic view. There are plenty of countries out there, near and far, that we consider our friends and who may or may not have cost advantages that overcome any incremental transportation fees to compete in our domestic market. Thus, we shouldn’t fall into the trap of thinking that just because the U.S. Inflation Reduction Act, and other similar legislation, look to limit parts of the world from contributing to “made at home” solutions, as perhaps, North American miners and explorers aren’t necessarily the best option.

One such example is Hastings Technology Metals Limited (ASX: HAS | OTCPK: HSRMF), a Company engaged in the exploration, development, and mining of rare earths and specialty metals in Western Australia. This Perth-based company is primed to become the world’s next producer of neodymium and praseodymium concentrate (NdPr). Hastings’ flagship Yangibana Project (which comprises a mine and beneficiation plant at the Yangibana site, and a hydrometallurgical plant at Onslow), in the Gascoyne and Pilbara regions of Western Australia, contains one of the most highly valued NdPr deposits in the world with NdPr:TREO ratio of up to 52%. The Project is permitted for long-life production, with offtake contracts signed and debt financing in an advanced stage. The first product to ship is targeted for H1/2025. Hastings also owns and operates the Brockman project, Australia’s largest heavy rare earths deposit, near Halls Creek in the Kimberley.

Earlier this month, the Company increased the mineral reserves at the Yangibana Project and it now has JORC-compliant Proved and Probable Ore Reserves of 20.93 million tonnes at 0.90% TREO which includes a 37% component NdPr, making it one of the largest and highest-grade rare earths projects in the world. The company has made significant progress in advancing the project over the past few years, with a Pre-Feasibility Study completed in 2018 and a Definitive Feasibility Study (DFS) completed in 2020. The DFS confirmed that Yangibana is a highly viable project, with low operating costs and strong economic returns.

But where I find this story gets interesting is all the various financial dealings that Hastings is involved in. More than half of ~A$400 million of total debt financing required for the Yangibana Project has been secured from the Northern Australia Infrastructure Facility (NAIF), which recently increased its financial support to A$220 million with a 12½-year tenor. Hastings also completed a Two-Tranche Placement to raise A$110 million in new equity to progress the Yangibana Project in October 2022. Nothing unusual about these two deals but here’s the one that intrigues me. On October 14, 2022, the Company announced the completion of the acquisition of an approximate 19.9% shareholding in Neo Performance Materials Inc. (TSX: NEO) for an aggregate price of C$134.6 million. The acquisition was funded by a A$150 million cornerstone investment in Hastings by Wyloo Metals.

It would appear that the management team at Hastings does not doubt that this mine is moving forward. The NEO acquisition provides Hastings with a strategic stake in NEO and exposure to the global downstream processing of rare earth materials into magnets, critical components of environmentally friendly products such as electric vehicles and wind turbines. Additionally in October (seemingly a very busy month for the Company), Hastings signed a non-binding offtake Memorandum of Understanding (MOU) with Solvay, a French-based global leader in Materials, Chemicals, and Solutions. The deal outlines the intent of both parties to enter into a binding commercial offtake agreement for the supply of Mixed Rare Earth Carbonate (MREC). Under the agreement, the supply of an initial 2,500 tonnes per annum of MREC will be sent from Hastings’ Yangibana Project to Solvay’s plant in La Rochelle, France. Deals like this might explain why NAIF was comfortable increasing its financial support for the project.

Lastly, it’s worth mentioning that Hastings has implemented rigorous environmental and social sustainability standards to ensure that its operations are in line with international best practices. This commitment and transparency were recognized with an exceptional ESG risk rating by Morningstar Sustainalytics with Hastings ranked 4th out of 159 companies rated in the Diversified Metals Mining subindustry category and placed 9th out of 193 companies in the Diversified Metals industry category. Hastings also undertook an EcoVadis assessment and achieved 68/100 which placed the company in the top 5% of companies assessed. This has not only helped the company attract investment from socially responsible investors but also win recognition for its efforts.

Hastings Technology Metals looks ready to take on the rare earths supply market and become a force to be reckoned with. The Company had A$172.2 million in cash and equivalents as of December 31, 2022 and seemingly no issues raising additional capital as needed. Agreements are in place for ~70% of production for the first 10 years and there is still plenty of blue-sky exploration upside to further expand the resource at Yangibana. It appears I need to start looking past my own backyard for resource opportunities that are world-class.

In part 1 we looked at a growing trend where billionaires have started investing or taken a strong interest in rare earths companies, mines, and/or projects around the world. In particular, the story focused on James Litinski’s rise to fame at MP Materials Corp. (NYSE: MP), as well as the recent billionaire moves of KoBold Metals (Jeff Bezos, Michael Bloomberg, Bill Gates) chasing rare earths in Greenland and Gina Rinehart buying into Arafura Rare Earths Limited (ASX: ARU).

Here in Part 2 of this series will take a look at more billionaires chasing rare earths such as Andrew ‘Twiggy” Forrest, Chris Ellison, and Elon Musk.

Andrew Forrest’s Wyloo Metals and Hastings Technology Metals Ltd.

As announced on August 26, 2022, Australian billionaire Andrew Forrest’s private company Wyloo Metals has agreed to an A$150 million cornerstone investment in Hastings Technology Metals Ltd. (ASX: HAS), through the issuance of secured, redeemable, exchangeable notes. Even more interesting was that Hastings intends to use the A$150 million proceeds to acquire a 22.1% strategic shareholding in Canada’s Neo Performance Materials Inc. (TSX: NEO). Neo uses rare earths to make magnetic powders and magnets, which can later be used in the permanent magnet electric motors used in most quality EVs and wind turbines.

Hastings controls two rare earth projects in Western Australia, the Yangibana Project (more advanced) and the Brockman Project. At the Yangibana Project, Hastings plans to build a mine and beneficiation plant and a hydrometallurgical plant nearby in Onslow, to produce 8,500 tpa TREO production and 3,400tpa NdPr.

It was also revealed in November 2022 that Andrew Forrest’s Fortescue Metals Group Ltd. (ASX: FMG) has signaled the company hopes to open up a business mining and refining rare earths.

Chris Ellison and rare earths junior VHM Limited

Mineral Resources Limited (ASX: MIN) CEO Chris Ellison has been an early leader in the lithium boom, yet now he has also turned his attention to rare earths. Ellison has backed rare earths junior VHM Limited which is set to IPO on the ASX in January 2023. VHM Limited state they have “one of the world’s largest, highest-grade rare earth deposits” at their Goschen Rare Earths and Mineral Sands Project in Victoria, aiming to begin production by H1, 2025. The rare earths in the Goschen Project include neodymium, praseodymium, dysprosium and terbium.

Elon Musk’s insatiable demand for rare earths to feed Tesla’s vehicles

In 2018 it was reported by Reuters that “Tesla’s shift to a magnetic motor using neodymium in its Model 3 Long Range car adds to pressure on already strained supplies of a rare earth metal……” Musk and Tesla (NASDAQ: TSLA) had come to learn that by using the most powerful and lightweight permanent magnet electric motors they were able to save weight and improve efficiency, which improves both performance and range as well as cost (a smaller battery is needed to achieve the same range). Permanent magnet motors are currently the smallest and lightest electric motors you can buy. The only catch is they require the magnet rare earths. So this is now Tesla’s current problem. How to source the magnet rare earths in the volumes they need now and in future years as they scale to 20 million electric cars per year by 2030. Tesla’s chair Robyn Denholm gave investors a huge clue during a speech in Canberra to mining industry leaders in 2021, when she predicted that Tesla could soon consume more than $1 billion a year in Australian produced lithium, nickel, rare earths, and other battery metals. Then again in October 2022, Denholm strongly advocated that Australia can do so much more to support the EV supply chain. Tesla chairman suggested Australia is capable to do mining, refining, battery cells production, and even make electric vehicles. She said Australia has the raw materials, including lithium, cobalt, copper, and rare earths.

I would add that Canada also has this very same potential and is now focused to build up an EV supply chain, notably in Ontario and Quebec. The Canadian government has allocated C$3.8 billion of financial support for critical minerals in its 2022 budget.

Tesla’s electric cars have shifted towards using more permanent magnet motors that use the magnet rare earths

Source: iStock

Closing remarks

This “billionaires chasing the critical magnet rare earths” series has exposed a relatively new trend where several of the richest and most powerful billionaires in the world have turned their attention to the magnet rare earths, namely neodymium (Nd), praseodymium (Pr), and dysprosium (Dy). Billionaires now involved in rare earths include James Litinsky, Jeff Bezos, Michael Bloomberg, Bill Gates, Gina Rinehart, Andrew Forrest, Chris Ellison and indirectly Elon Musk via Tesla.

The reason for this unprecedented interest in the magnet rare earths sector is simple. The most powerful and efficient electric motors need the most powerful magnets, and these are made from the magnet rare earths Nd, Pr, and Dy. Also, they typically use Boron (B). Electric motors are replacing the internal combustion engine and are now central to most modern day technology especially green technology such as electrification of our transport network and renewable energy generation.

Reaching net zero carbon emissions means the next 2-3 decades will rely heavily on switching to electric motors and that will require a secure source of the critical rare earths.

Investors can also learn from these leading billionaires and invest in the magnet metal rare earths while we are still in the early stages of what looks likely to be a decade long boom.

For more information you can visit InvestorIntel’s page “Critical Minerals & Rare Earths“.

Hastings Technology Metals Ltd. (ASX: HAS), an Australian junior mining company, has recently made some interesting moves in the rare earths space.  Its major announcement on August 26th was that through an investment from Wyloo Metals in Hastings in the amount of A$150 million, it was acquiring the majority of Oaktree Capital Management’s shares in Neo Performance Materials Inc. (TSX: NEO). Oaktree acquired a controlling position in NEO in 2015 as it emerged from the bankruptcy of Molycorp. This will result in Hastings owning somewhere in the range of 20% of NEO on the same day that NEO announced a bought deal of C$65 million, which would dilute the original 22.1% position Oaktree was selling. From their press release: “Hastings views the Acquisition as the first step in its Hastings 2.0 strategy, to create a fully-integrated mine-to- magnet supply chain business. Wyloo is supportive of this vision and Hastings is pleased to have the support of Wyloo as a strategic partner.”

Wyloo Metals is a company owned by Andrew “Twiggy” Forrest, an Australian billionaire, who made his money selling iron ore from Australia. Earlier this year Wyloo outbid BHP for Noront, whose deposit in the Ring of Fire, Northern Ontario is a high-grade nickel-copper-platinum-palladium deposit with a bid worth C$616.9 million.  This recent choice by Wyloo to invest in Hastings is another move in their aim “to develop and invest in the next generation of mines”. Given the funds available from Wyloo is it possible Hastings will increase its position in NEO, given the recent record profits from NEO? They have said there is no plan to increase their holding.

On September 7th Hastings announced a A$110 million two tranche placement with the goal to accelerate its rare earths deposit in Western Australia. In addition, they announced a non-underwriting share purchase plan (SPP) to raise up to A$10 million. The aim is to accelerate the rare earth deposit they are developing, which is known as the Yangibana deposit in Western Australia. The deposit had a JORC resource reported in 2019. There are seven areas reported as shown in the chart below:

Deposit	Tonnes	TREO	Nd2O3+Pr6O11
		%	%
Bald Hill	4,405,000	1.02	0.41
Fraser’s	638,000	1.61	0.68
Auer	728,000	1.12	0.41
Auer North	148,000	1.24	0.47
Yangibana	986,000	0.93	0.44
Yangibana West	1,478,000	1.23	0.34
Yangibana North	1,964,000	1.72	0.44
Total	10,345,000	1.22	0.43

The reported percentages of Neodymium(III) oxide (Nd2O3) and Praseodymium oxide (Pr6O11) are high compared to most other global deposits, which is intriguing, as these are the main revenue drivers in all deposits globally except for ionic clay deposits, like the ones in Southern China. What is challenging is the TREO (Total Rare Earth Oxides) grade averaging 1.22%, which will increase operating costs. By comparison, MP Materials’ Mountain Pass mine in California is reported around 8%. However, Yangibana average Nd/Pr of 43% is about 3 times higher than Mountain Pass.

On February 21st of this year, Hastings announced an increase in the NPV of the Yangibana project of 84% to $1,012 million and an IRR of 26%. When looking at Shanghai Metal Markets pricing in mid-February Neodymium oxide (Nd2O3) was $190/kg USD and Praseodymium oxide (Pr6O11) was $172/kg.  Today those prices are $91.11/kg or a 50% reduction.

Looking at Hastings’ August and September presentations, their focus is not on separating the rare earths into single elements but view that as NEO’s focus. Their stated plan is to produce 15,000 tonnes per year of a mixed rare earth carbonate, which typically is around 45-50% total rare earth oxides (TREO). This would generate 6,750-7,500 tonnes of TREO.  This is over double the current capacity of NEO’s plant in Estonia. Hastings has already committed 70% of their first 10 years’ output to ThyssenKrupp and Skyrock, so this would leave 2,000-2,250 TPY for NEO.  ThyssenKrupp will likely sell the material to China as it does for Rainbow Rare Earths. Skyrock is a part of the Baotou rare earth group, so the majority of the Yangibana deposit will end up in China, unless there is an out clause and NEO expands its non-Chinese capacity.

It will be interesting to see how this new relationship in the rare earths space develops. This is certainly not the end of the story.

August is usually a slow time for business and news as it is the end of the summer holiday season in the Northern hemisphere, but this August has been a particularly busy time for Neo Performance Materials Inc.‘s (TSX: NEO) management team, especially CEO Constantine Karayannopoulos.

Announcements have been coming fast and furious. Let’s start with the most surprising news first:

• Hastings Technology Metals acquires a 22.1% shareholding in Neo Performance Materials — August 26, 2022
  

On August 26th Hastings Technology Metals Ltd (ASX: HAS) announced it was acquiring a 22.1% shareholding in Neo Performance Materials by buying out most of the position of Oaktree Capital Management, L.P. (Oaktree) fund OPPS NPM SARL. Oaktree will sell 8,974,127 shares at C$15/share. Prior to this OPPS held 9,878,155 shares. The funding comes from Wyloo Metals, a private Australian metals company formed by Andrew “Twiggy” Forrest, whose worth is reported at US$17.5 billion. Wyloo will invest the money into Hastings who in turn will acquire the shares from the Oaktree subsidiary.

• Neo Performance Materials Announces $67.5 Million Bought Deal Treasury Offering of Common Shares — August 26, 2022

On the same day as the announcement of the share acquisition by Hastings, a bought deal was announced with Paradigm Capital being the lead underwriter. The deal was done at $15/share. At the time of writing, Neo Performance Materials was trading at $14.25. There are over 40 million shares outstanding so after this deal, there will be 45 million shares. According to the press release the funds will be used for “general corporate purposes including the expansion, maintenance of global assets and the pursuit of strategic growth opportunities around the globe.” Expansion of the operations in Estonia is likely one area for the usage of the funds.  Having visited the plant over a decade ago it is a Soviet era plant which runs nitric acid to separate the rare earths. Neo Performance Materials’ two plants in China use hydrochloric acid. The nitric route is high initial capex as every component is made from stainless steel but has lower opex than the Chinese approach. At a capacity of 3,000 TPY of rare earths oxides the Greenland deposit would produce 750 TPY of Nd/Pr or about 2,500 tonnes of magnets. A nominal size.

• Second quarter results with records for revenue, Operating income and adjusted EBITDA — August 12, 2022

This is due to the high prices for the four key magnetic elements, Neodymium, Praseodymium, Terbium and Dysprosium, which hit prices not seen in the past decade. Since then, Nd and Pr have dropped about 50%, Tb 20% and Dy 35%, which means it will be a challenge for Q3 results to match Q2 numbers.

• Neo Secures $75 Million Loan to Finance Expansion and Relocation Of Its Environmental Emissions Catalyst Business — August 17, 2022

This financing came from Export Development Canada (EDC). The credit facility matures in 5 years and is available in 3 tranches of $25 million. The funds will be used to relocate its rare earth plant in Zibo, Shandong province, China, to a nearby industrial park which will provide access to water treatment and waste/water recycling. This plant produces high value materials for automotive catalytic converters. The relocation is to expand capacity from 4,000 TPY REO to 5,000 TPY REO. Based on reported analysis for Baiyan Obo this expanded capacity will produce 370 tonnes of Nd/Pr oxide which would generate an additional 1,300 TPY of NdFeB magnets.

• Hudson Resources and Neo Performance Materials Sign Agreement on The Sarfartoq Rare Earth Element Project in Greenland — August 22, 2022

This is an interesting move by Neo as they only tried to go upstream into mining once before when they got involved in a tin mine in Brazil over a decade ago. The development of this project would provide a source for their plant in Estonia which gets most of its raw material from Russia presently with the balance from Energy Fuels Inc. (NYSE American: UUUU | TSX: EFR) in the USA. The deal is a non-refundable deposit of $250k. Once the Greenland government gives approval for transfer of the license to Neo or its special purpose entity, Neo will pay Hudson Resources an additional $3.25 million. There are two projects in the deal. One is an REE project in SW Greenland and a nearby Nb/Ta. Deposit. The Neo plant in Estonia also produces high purity Nb and Ta metal as well as rare earths so there is synergy in this deal.  The 2011 43-101 report on the REE project showed an indicated resource of 5.9 million tonnes at 1.8% rare earth oxide which translate to about 100,000 of rare earth oxides. It is an underground mine opportunity which will bring added cost to the mining process. Should Neo proceed with this acquisition it will need to develop a camp onsite and decide where to upgrade the ore prior to shipping a concentrate to Estonia – all challenges Canadian companies have dealt with for decades.

If Neo Performance Materials is an indicator for the rare earths sector, one can only wonder what’s next.

“US Futures are down across the board, with no new economic data or major earnings expected. Investors are looking to the August jobs report, scheduled for Friday, as they weigh up how big a rate hike could be coming from the Fed in September.

Last week saw equity markets close the last week on a down note, as all three major U.S. indexes sold off sharply for their worst closes in months after Federal Reserve Chairman Jerome Powell said the central bank would continue fighting inflation with rate increases. Don’t expect much in the way of a reprieve in early trading as we get the day under way.” – Kevin Thomsen, Morning Chatter for August 29, 2022

Friday was an intense day of speculation and discussion in the rare earths sector. With breaking news early AM with Agreement to acquire strategic shareholding in Neo Performance Materials and cornerstone investment in Hastings by Wyloo Metals, Christopher Ecclestone put out a piece on InvestorIntel titled Neo Performance and Hastings – Will Wonders Never Cease? — that was followed later that day, with a second announcement Neo Performance Materials Announces $67.5 Million Bought Deal Treasury Offering of Common Shares.

Allow me to remind you that Constantine Karayannopoulos will be the luncheon speaker at the Critical Minerals Institute‘s summit scheduled for Wednesday, November 9, 2022.

This morning, we see indicators that the uranium sector has interest, we coincidentally have a headline story written by Jack Lifton titled Are we slaves to Russian uranium processing? It seems we are in the right place at the right time as we start out the InvestorTalk.com schedule this week with 2 uranium companies… followed by an antimony story on Thursday.

InvestorTalk.com line-up for this week:

• 9-9:20 AM EST, Tuesday, August 30, 2022 — InvestorTalk.com with John Cash from Ur-Energy Inc. (NYSE American: URG | TSX: URE), click here to register
• 9-9:20 AM EST, Wednesday, August 31, 2022 — InvestorTalk.com with Dev Randhawa from Fission 3.0 Corp. (TSXV: FUU | OTCQB: FISOF), click here to register
• 9-9:20 AM EST, Thursday, September 1, 2022 — InvestorTalk.com with Christopher Ecclestone from Molten Metals Corp. (CSE: MOLT), click here to register

Now for some highlights from the Week-in-Review for the week of August 22-26, 2022 —

The Top 10 Trending Columns on InvestorIntel.com for the last 30-days include:

1. Nano One’s cathode materials are inventing the zero-emission battery future
2. Announcing the Launch of the Critical Minerals Institute for Companies and Experts Focused on Electric Vehicles, Green Energy and Secure Supply Chains
3. The King of Tin is Alphamin
4. Rare earths expert Alastair Neill on Vital Metals
5. Lynas Bets $500 Million on Rare Earths Market Expansion
6. Zentek sets its sights on treating skin conditions as it expands potential uses for its ZenGUARD graphene coating
7. Eye on the price of uranium, Cameco brings crown jewel back into production and Ur-Energy is set to go.
8. Molybdenum – securing a domestic supply of the vital but underappreciated mineral
9. A titan of titanium – with a big HAMR
10. Valeo Pharma’s Steve Saviuk talks about the US$40M non-dilutive financing from Sagard Healthcare Partners

InvestorIntel Columns to REVIEW:

• August 26, 2022 – Neo Performance and Hastings – Will Wonders Never Cease?
• August 25, 2022 – The Dean’s List – Part 6: What cobalt companies could benefit from Canada’s commitment to critical minerals?
• August 24, 2022 – dynaCERT puts its carbon emission reduction technology to the test
• August 23, 2022 – Mining our way to the Green Revolution
• August 22, 2022 – Musk Twitter Deal, Predatory Short Selling Takes a Hit and Rethinking Greenland Rare Earths in this Week-in-Review….
• August 22, 2022 – Greenwashing – It’s not easy pretending to be green

ii8 System News Releases for the Week in Review for August 22-26, 2022:

• August 26, 2022 – West Red Lake Gold Closes $4,100,000 Flow Through Financing
• August 26, 2022 – Neo Performance Materials Announces $67.5 Million Bought Deal Treasury Offering of Common Shares
• August 26, 2022 – Agreement to acquire strategic shareholding in Neo Performance Materials and cornerstone investment in Hastings by Wyloo Metals
• August 25, 2022 – Awakn Life Sciences Signs Agreement with a Leading Drug Development Company to Deepen IP Moat for Its Lead Program
• August 25, 2022 – Rackla Metals focuses on Tombstone intrusive related gold
• August 25, 2022 – dynaCERT Advances its Verified Carbon Standard Application with Verra
• August 25, 2022 – Completion of Institutional Placement
• August 24, 2022 – Westward Gold Completes Turquoise Canyon Anniversary Payment
• August 24, 2022 – Molten Metals Corp. Announces Formation of Strategic Advisory Board
• August 24, 2022 – Bald Eagle Announces Exchange Approval for Name Change to Hercules Silver Corp. and Provides Exploration Update
• August 23, 2022 – Molten Metals Samples 39.4% Antimony (Sb) and 9.69g/t Au, at Tienesgrund, Slovakia
• August 23, 2022 – TrustBIX Inc. Announces June 30, 2022 Third Quarter Financial Results
• August 23, 2022 – Auxico Signs Offtake Agreement for Tin Concentrate from the Massangana Tin Tailings Project in Brazil
• August 23, 2022 – DOE Funds Next-Generation Rare Earths Processing Research Collaboration
• August 23, 2022 – Silver Bullet Mines Corp. Updates on Washington Mine in Idaho
• August 23, 2022 – Nano One Receives C$1.8M towards SDTC Milestone 4 and Granted 2 Patents
• August 22, 2022 – Hemostemix Announces Closing of UNIT Private Placement
• August 22, 2022 – Hudson Resources And Neo Performance Materials Sign Agreement On The Sarfartoq Rare Earth Element Project In Greenland
• August 22, 2022 – dynaCERT to Equip the City of Timmins with Winterized Carbon Emission Reduction Technology

The term “Holy Moley” is seldom, if ever, used by us but our powers of speech are severely hampered by trying to digest the implications of the latest deal in the rare earths space. Neo Performance Materials Inc. (TSX: NEO) has now succeeded in flooring us twice in two weeks.

First, there was its announcement that it was acquiring a rare earths elements (REE) mining project in Greenland and making all the right noises as if it was going to move that forward (and if anyone can, it would be them). And then we have the shock announcement that Hastings Technology Metals Ltd (ASX: HAS), the sometime REE developer in Australia, is to acquire a 22.1% strategic shareholding in Neo Performance Materials. We need not remind investors that Neo is not only a leading global rare earths processing and advanced permanent magnets producer, but it is THE leading global rare earths processing and advanced permanent magnets producer outside China, with a string of plants around the world and most particularly its Silmet plant in Estonia, which is a cornerstone of the monazite sands processing strategy of Energy Fuels Inc. (NYSE: UUUU | TSX: EFR).

The market cap of Neo, on the eve of this announcement, was CAD$605 million. The acquisition has been agreed at a price of CAD$15.00 per Neo share, representing a total consideration of CAD$135 million. Bargain basement, indeed, in our view.

According to the release, the acquisition is intended to be funded by an AUD$150 million strategic investment in Hastings by Wyloo Metals through the issuance of secured, redeemable, exchangeable notes.

Interestingly, the stake is not a de novo investment by Hastings but rather the purchase of a stake from an affiliate of Oaktree Capital Management. Those with long memories will recall that this stake dates back to the ancient history of when Molycorp went spectacularly bust just under ten years ago and Neo was reconstituted bigger and better out of the ruins. The stake being vended by Oaktree consists of 8,974,127 common shares in Neo, representing a 22.1% shareholding.

The proposed acquisition provides Hastings (and Wyloo) with a strategic stake in Neo and exposure to the global downstream processing of rare earth materials into magnets.

We have written about Hastings’ Yangibana deposit so long ago that we must fight through a veil of cobwebs to find what we wrote. The company claims that the project remains the key priority for Hastings, “with good progress being made on funding initiatives and other key milestones.” But they would say that, wouldn’t they?!

The acquisition of the Neo stake, and in particular the Wyloo investment, are subject to shareholder approval (50% voting threshold). All this begs the question as to whether Canada (or indirectly the US) will allow the crown-jewel (indeed the Queen on the REE chessboard) to pass into the hands of Wyloo Metals.