It has been a tough start to the year for the ASX-listed rare earths stocks. Just ask Lynas boss Amanda Lacaze.
The stock got smacked in 2023 and is down another 20% so far this year to $5.70 (mid-week) on continuing weakness in the price of rare earths.
The fall in the leading rare earths stock is despite the company confirming on February 3 it had been talking with the US rare earths group MP Materials about a combination to create a new Western world force to take on the globally dominant Chinese industry.
The good news in the rare earths space is that prices for the all-important NdPr oxide used in high end magnets has stabilised at around $US60/kg, and prices for exchange traded funds covering the sector have turned for the better in recent times.
Demand growth for rare earths for the medium and longer-term remains unchallenged, as does the new driver of interest in the sector – the almighty push by the Western world to encourage new non-Chinese supplies due to ongoing geopolitical concerns.
So while things might be tough for the ASX-focussed rare earths stocks at the moment, the broad expectation is that things could be looking a lot better in the second half of the year, certainly in years to come.
That has been coming through in the sharp share price response in the market to positive news from the explorers in recent weeks, most notably American Rare Earths (ARR) and Red Metal (RDM).
ARR has shot from 13.5c to 30c mid-week for a $132 million market cap in response to its February 7 announcement of an increase in the resource at its Halleck Creek project in Wyoming to 2.34 billion tonnes grading 3,196ppm total rare earth oxides.
It is a disseminated rare earths deposit that AAR reckons could be amenable to direct acid leaching in tanks at lower than usual temperature. A scoping study is not far off and given its scale and US address, it has clearly got the market interest up.
But Garimpeiro’s real interest today is in Red Metal which was trading mid-week at 18.5c for a market cap of $55 million.
It was a 9.5c stock two weeks ago ahead of releasing what it described as breakthrough metallurgical leach test results for its 2023 Sybella discovery near Mount Isa in northwest Queensland.
Sybella already had a world class smell to it before the met test results because of its potential scale, with the unusual host granite some 12km long by 3km wide. So the resource tonnage potential is vast.
But wait, there’s more… than Sybella
But there is no point having something huge if the metallurgy does not stack up for profitable extraction. Red Metal said its initial met testwork was breakthrough stuff, pointing as it did to the potential for a heap leachable source of rare earth oxides at ambient temperature.
That suggests the potential for low capital and operating costs like ionic clay deposits but without the clay handling issues.
Red Metal boss Rob Rutherford explains all to Garimpeiro in an Explorers Podcast for Stockhead. Well worth a listen as it is not every day that investors get the lowdown on what could well be an emerging world-class project.
There’s lots more work to do but it’s one to watch. The recent run up in the share price reflects the building interest in the project now that the met results have given the company the incentive to get cracking on working up a development opportunity.
Having said that, Red Metal is more than Sybella.
It also owns 52% of Maronan Metals (MMA), a company it spun-out in 2022 with the specific task of getting its namesake silver-lead and copper-gold deposit near Cloncurry in northwest Queensland to the development starting stalls.
Red Metals’ stake is being valued by the market at about $20 million.
The company also has a full portfolio of high-risk-high reward greenfields exploration projects.
One to watch as the year unfolds is the Yarrie project in Western Australia’s Paterson province in a greenfields discovery alliance with BHP.
The planned drilling program will test geophysical targets with affinities to the big Havieron gold-copper discovery in the region by the Newmont/Greatland joint venture.
The post Barry FitzGerald: This potentially cheap, massive rare earths producer has a whiff of world-class about it appeared first on Stockhead.
