Australian (ASX) Stock Market Forum

AR3 - Australian Rare Earths

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AR3 is trying to be a good minnow, and it's pathway towards processing appears different to other REE hopefuls, as per the nature of the deposits. Early days, and lots of risks; will rewards follow? More cash will be needed, and sentiment towards the sector is lower than a year or so ago. SP at 36c is well off highs, and not much above the IPO price.


Metallurgical test results indicate viable processing pathway for Koppamurra Rare Earths Project

Leach optimisation test work has resulted in excellent recoveries of the four key magnet rare earth elements while reducing acid consumption and impurity dissolution providing potential for both an environmentally sound and commercially attractive process pathway to economically produce a high-quality specification product.

Highlights
• Excellent results from leach optimisation test work undertaken by ANSTO on drill composite samples taken from the Koppamurra prospect
• Results demonstrate a 50% reduction in acid consumption while maintaining average recoveries of 65% and up to 77% for the four key magnet Rare Earth Elements (REE) being Neodymium, Praseodymium, Terbium and Dysprosium providing potential for both an environmentally sound and commercially attractive process pathway
• High recoveries of the valuable magnet rare earths (Nd, Pr, Tb & Dy) have increased confidence of consistent metallurgical response over spatially diverse locations within Project area. Diagnostic leach recoveries for 10 composite samples collected across the extent of the recently announced updated Mineral Resource, (81.4Mt at 785ppm Total Rare Earth Oxide (TREO)), show notable consistency of response and very high tenor of recovery
• Impressive leach response of a high-grade sample, 15,502 ppm TREO, provides additional confidence the proportion of accessible REE in high grade samples is consistent with the representative composites in the Mineral Resource.
• 850kg of material extracted from the Trial Pit completed at Koppamurra earlier this year currently being processed by ANSTO for rare earth recovery and product specification analysis
• This is a significant step-up in the scale of test work and will pave the way for testing a 500 tonne bulk sample and advanced flowsheet development
 
Non-binding Memorandum of Understanding signed by Australian Rare Earths Limited (ASX:AR3) and international rare earths producer Neo Performance Materials Inc. (TSX:NEO)

Highlights
  • MOU provides for good faith negotiation of a joint development agreement between AR3 and Neo, setting out the key deliverables that will accelerate the development of Koppamurra through to production of a mixed rare earth carbonate product
  • MOU provides for good faith negotiation of an offtake agreement pursuant to which Neo may purchase 50% of Koppamurra’s MREC capacity from the initial module, with a right of first refusal to secure up to 50% of production from a subsequent module
  • AR3 and Neo to collaborate to identify and develop future clay-hosted rare earth projects in Australia and New Zealand, with AR3 to receive a first right of refusal to participate in such projects, and Neo to receive a first right of refusal on any offtake from developed projects
  • On execution of the joint development agreement, AR3 to issue Neo 3,500,667 unlisted options exercisable at A$0.48, expiring three years from the date of issue, serving to further align Neo with the success of AR3 and the Koppamurra Project

up off lows , to 36c
 
Market Sensitive Announcement made, earlier in the week ; seems to have taken a while for market reaction

• Strong assay results reveal significant extensions of clay-hosted mineralisation in the Koppamurra Project beyond the current Mineral Resource and Exploration Target areas.
• Koppamurra JORC Resource recently doubled to 81.4Mt at 785ppm TREO (total rare earth oxide); This includes an initial Indicated Resource of 45Mt at 835ppm TREO (see ASX release dated 4 July 2022)
• Recent metallurgical test results indicate a viable processing pathway for Koppamurra
• Leach optimisation test work has resulted in excellent recoveries of the four key magnet rare earth elements (REE) while reducing acid consumption and impurity dissolution.

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(a couple of Chi-X trades at 43c but now spread has returned)
 
AR3 appear to be the first company to produce carbonate from the ionic clay deposit. Whether this process is scalable remains to be tested, but it's a start.
Screenshot_20230311-111401_Drive.jpg

And maybe, just may be, the SP has turned up.
Screenshot_20230311-111334_CommSec.jpg
 
Robert Gotliebson writing in the Evil murdoch press must have some shares in AR3 that he needs to offload.
Over Easter, the global electric vehicle and wind turbine enterprises were celebrating the major expansion of an Australian rare earths discovery that now has the potential to rank with China and Myanmar’s ionic clay mines.
China’s mines and treatment plants supply 95 per cent of global output of the rare earth permanent magnets that are an essential part of the motors in EVs and wind turbines.

And by coincidence, the Australian announcement came as speculation swept the world that China might retaliate to US chip export restrictions by clamping the export of essential rare earths.
https://www.theaustralian.com.au/business
Tesla also announced was attempting to eliminate rare earths from its EV magnets because of the China dominance.

The Australian deposits are in ionic clay – similar to the low cost deposits in China.

They contain not only the neodymium and praseodymium rare earths but dysprosium and terbium that on current technology are essential for EVs and wind turbines.

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China has a 95 per cent stranglehold on the dysprosium and terbium markets, although its reserves are dwindling.

The Australian deposits with the potential to challenge China are on the South Australian-Victorian border, some 300km east of Adelaide and 450km west of Melbourne.

These days, the most exciting mineral exploration in Australia is conducted by small enterprises – usually light on cash.

The clay-based Australian dysprosium and terbium discovery has been made by one such company – Australian Rare Earths, which has a market capitalisation of just $30m.

Reflecting the current lack of market interest in mineral exploration, its shares are selling below the June 2021 float price and a later higher priced placement.

At December 31 it had $9m in cash.

I must warn readers that drilling has so far only isolated 101 million tonnes of 818pm of total rare earth oxide, which includes dysprosium and terbium.

This is sufficient for a small plant, but it will not change the balance of world supply.

But in the Easter announcement directors declared that the resource is open in all directions and has a potential target of 1400 million tonnes – a five-fold increase on 2022 forward estimates.

If reserves were proved at that level, it would enable an operation of Chinese scale.

Australian Rare Earths remains Australian owned, although Canadian giant NEO Performance Materials were early believers and took a small shareholding in the 2021 float and have signed non-binding a memorandum of understanding for a “joint development and offtake agreement” which is now being processed into a binding agreement.

NEO Performance is expanding its Estonia plant to produce neodymium and praseodymium, but not dysprosium and terbium.

The Lynas operation makes Australia a significant producer of neodymium and praseodymium, but we currently produce only token amounts of dysprosium and terbium.

I normally leave commenting on small company mineral discoveries to the mining writers but given the potential international importance of this find I will delve into some history.

Up and until 1989-90, Australia was the supplier of about 25 per cent of the world’s rare earths through the export of monazite, primarily from the mineral sands operations in WA.

In 1989 the French government withdrew approval for the disposal of the radioactive waste associated with the processing monazite at Rhone Poulenc’s plant at La Rochelle.

This proved to be the catalyst for China to steadily increase its share of rare earths production.

During the Poseidon nickel boom of the 1970s, a company called Carr Boyd Minerals floated at a huge premium.

One of Carr Boyd’s prospects was WA’s Mount Weld hard rock rare earth areas.

The Carr Boyd leases later became part of diamond miner Ashton Mining. Dudley Kingsnorth was Project Manager of the Ashton’s Rare Earths Project between 1990 and 2000.

Kingsnorth is now Chairman of Australian Rare Earths.
Click to expand...


The Londoners at Rio Tinto purchased Ashton Mining for its diamonds and had no interest in rare earths. The Mount Weld assets launched Lynas which is now capitalised at around $6bn.

The Mount Weld high value rare earths are in hard rock rather than clay and have radioactive disposal issues on treatment.

Lynas built a treatment plant in Malaysia, but the radioactive issues caused concern in Malaysia, so Lynas is now building an early processing plant in Kalgoorlie to remove the radioactive material prior to Malaysian processing.

Lynas received a $14.8m grant from the Coalition government to help finance the plant.

But the desperation of the western world (including Australia) to become less reliant on China for rare earths has been underlined by a second local rare earth development – the Iluka group.

Iluka is a major WA Mineral sands operation but has a major tailings dump in Eneabba WA that is rich in monazite.

The Coalition Australian government made a “soft” loan of up to $1.2bn for 16 years at low interest rates to enable Iluka to construct a refinery in WA to extract the rare earths from the Eneabba tailings dump and also process the Iluka Victorian rare earths which will be railed to WA

Iluka and the other Western Australian rare earth projects, including Mt Weld, are based upon monazite.

While monazite contains neodymium and praseodymium, the contents of dysprosium and terbium are negligible.

Iluka also has an agreement with Northern Minerals to purchase a radioactive xenotime concentrate for processing at Eneabba for dysprosium.

The Australian Rare Earths deposit called Koppamurra has as all four of the rare earth required to manufacture REPMs and is hosted in clay not more than 10 metres deep above a limestone base.

Mining and treatment facilities cost less than 20 per cent of the hard rock rare earths, and there are no radioactive material issues.

Production is expected to start in 2025 at a low level and then ramp up.

If reserves reach the expected level, the company will obviously consider a refinery in Adelaide or Portland.

The founders of the operation, Rick Pobjoy and Bryn Jones, own about 23 per cent and total director holdings are 26 per cent of the capital.

Pobjoy has long studied mineralisation in the Murray basin.

He located the deposits from his analysis of SA government drilling.

Pobjoy and Jones have always believed they were onto a deposit of global significance, but others are also searching for clay deposits and significant rare earth deposits in ionic clay have been found in Brazil Chile and Uganda.

China’s days of dominance may be coming to an end.
Click to expand...
Wait till the market opens to see how well he does,
Mick
 
mullokintyre said:
Wait till the market opens to see how well he does,
Mick
Click to expand...
Would 100% lift this morning be enough?

(more attributable to upgrade and update of a few days b4, imo?)

Since listing:
Screenshot_20230411-101237_CommSec.jpg


The spectre of previous REE rallies, in ARU, LYC, HAS, even ASM, from earlier decades looms large. Find resource, prove up, raise capital, seek end users, develop production line... long, long lead times.
 
Dona Ferentes said:
Young Bob, haha ?
Click to expand...
Back trading after the halt and reply to ASX

If the answer to question 1 is “no”, is there any other explanation that AR3 may have for the recent trading in its securities?

The Company confirms it is in compliance with its continuous disclosure requirements.

Notwithstanding this, the Company has become aware of increased commentary surrounding its Koppamurra Ionic Clay Rare Earth project in the national publication The Australian, where an article entitled “Rare Earths Boom Looms” was published on Tuesday 11 April 2023. This increased commentary has come on the back of recent media speculation regarding potential restrictions being imposed by China on its exports of certain rare earth magnets technology, which could severely disrupt global supply. The global rare earth market remains heavily dependent on Chinese processed rare earth supply, with particular reference to the ionic clays produced in China/ Myanmar which are currently the sole source of some critical minerals essential in the production of rare earth permanent magnets.

Additionally, the Company is aware of increased commentary in industry relevant publications, such as Sprott equity research report dated 3 April 2023, Australianmining.com.au, and a weekly newsletter by Far East Capital regarding both the rare earths sector globally and the Company’s Koppamurra project located in the southeast of South Australia.

Other possible considerations with regard to the increased volume and price of the AR3 stock include two recent price sensitive announcements made by the Company to the ASX.

On 3 April 2023 the Company released an ASX announcement “Koppamurra Mineral Resource Up 25%, Indicated Resource up 40%, drilling points to a rare earth mineral province”, which reported that the JORC resource at the Koppamurra project (the Project) had increased by 25%, with the exploration target for the Project increasing fivefold to up to 1.4 billion tonnes and with potential for further significant near term upgrades once pending assays are received.

On 9 March 2023 the Company released an announcement to the ASX “First Koppamurra Mixed Rare Earth Carbonate produced” of the successful pilot scale production of a Mixed Rare Earth Carbonate (MREC) containing all the rare earths needed to produce rare earth permanent magnets which are essential for increasing the efficient use of the power the world generates. This achievement is a a first for an Australian ionic clay hosted rare earth resource and is being met with interest by potential downstream customers, especially in light of an increasing awareness that the world currently lacks the sustainable diversity of rare earths supply required to meet the growing demand of a carbon-free global economy.
.... off the highs but still up 60%
Screenshot_20230411-152929_CommSec.jpg
 
.Warwick Grigor ignited it

Resources Top 5: Rare earths stocks spark to life as China threatens export ban​

Mining
19 hours ago | Reuben Adams
  • ASX REE stocks surge on Chinese threat to throttle exports
  • Small cap leaders in early trade Tuesday include Prospech, Australian Rare Earths, Peak Rare Earths
  • Labyrinth reports high grade 95,710oz resource at the historic Comet Vale project in WA
The ionic rare earths play caught a rocket after it was featured in a weekly column written by Far East Capital (FEC) analyst and founder Warwick Grigor.
Grigor, a veteran broker/analyst who formed FEC with Andrew Forrest over 25 years ago, says China’s threat to ban exports again could mean “fun and games coming for the REE sector”.
“A dispatch overnight said that China was considering banning exports of various rare-earth magnet production and process/refining technologies as a response to the US targeting the Chinese chip-making industry,” he says.
“The last major official rare earth policy shift by Beijing saw NdPr prices skyrocket when exports to Japan were suspended in 2010, over the Senkaku Islands.”
He highlights AR3, which flew out of the gates post 2021 IPO before falling back into the pack, as one to watch.
The flagship Koppamurra project is big and getting bigger, with its 101Mt at 818ppm TREO resource bolstered by an exploration target of between 330Mt and 1.4 billion tonnes.
“The market capitalisation of AR3 is a modest $23m but if you add the stock that is escrowed until June this year, this figure increases to $31m,” Grigor says.
“Now that the hot air in the stock price has cooled down, it may be that the shares are very modestly priced as these levels for a company operating in a sound jurisdiction like South Australia, having achieved the progress already reported.
“Traders might wait for a rare earths pricing signal before moving on the stock, but longer-term investors could get set at these levels without competing with hot money.”
The AR3 share price is now at its highest point since August last year. It had just over $9m in the bank at the end of December.
Large REE players making gains today on China speculation include Lynas (ASX:LYC), Arafura (ASX:ARU) and Iluka (ASX:ILU)."
 

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