While electronic vehicle (EV) sales may have taken the backseat for now, along with lithium prices, decarbonisation is clearly a megatrend set to hang around.
What that means in the current landscape is that projects in a position to exploit critical green tech metals demand at low costs will be favoured by the market.
And companies like Ark Mines (ASX:AHK) are a prime example of this.
The company – a base and critical metals explorer – has recently pivoted into rare earth elements (REEs) at its QLD-based Sandy Mitchell project 300km west of Cairns in the state’s far north.
It also retains the Pluton gold project; the Mt Jesse copper and iron project, and the Gunnawarra lithium project.
But, Sandy Mitchell – given the REE project’s multiple strengths – has found its way to flagship status.
REEs are used in EVs?
Lithium and nickel are only part of the story when it comes to decarbonisation, and particularly, EVs.
EVs are known to require a lot of copper, but they also need a lot of rare earths.
Most notably, high-value magnetic rare earth oxides (MREOs) like neodymium and praseodymium – both of which are also required in wind turbines and other green tech, giving providers exposure to other markets at a time when EV sales slow down.
Before I mentioned the market will be looking for projects producing these metals at low costs.
And when it comes to low cost – few on the bourse threaten to overtake Ark Mines as the cheapest junior REE explorer out there, according to the company.
Ark Mines
Ark Mines is one of many junior poly metal explorers on the ASX, but the nature of its Sandy Mitchell project stands out.
That project is prospective not only for REEs but also heavy minerals like zirconium and titanium (as well as phosphate) – with high-value magnet rare earths being the key focus.
First, let’s take a quick look at metrics. All of the below is accurate as of 11:30 am AEDT on Thursday, February 22 2024.
- Market cap: $11.09 million
- Cash at Dec 31: $2.38 million
- Volume (4w avg): 26,544
- Shares on issue: 55,446,413
- Share price: 20 cents
There’s one thing about the Sandy Mitchell project within Ark’s portfolio that should have investors watching closely.
The company isn’t mining REEs from hard rock, and definitely not the hard-to-process clay – instead, the company is mining REEs from sand.
In fact, Ark says that its Sandy Mitchell play is the “only inland surface expressed placer deposit to host REEs on the ASX.”
To understand why this is important, we need to dive into what a placer deposit is.
In short: at surface, and easy to mine. Placer deposits are those where target minerals can be found in grain form (thanks to geological time) just sitting amidst sand deposits waiting to be extracted.
“Placers are a type of mineral deposit in which grains of a valuable mineral like gold or the rare earths are mixed with sand deposited by a river or glacier,” the US Geological Survey (USGS) writes on its website.
One doesn’t need expensive tunnel boring equipment, nor the regulatory headache of planning an open-cut mine, where placer deposits are involved.
In fact, a company can use a bulldozer if they wish, or any other means of cheaper alternatives.
Looking at Ark’s Sandy Mitchell project
Sandy Mitchell is located 300km west of Cairns within the boundaries of permit EP28013 covering some 147sqkm.
A further 138sqkm area has been pegged to the north for further exploration, but for now, drilling has hardly covered all of the EP38013 permit – with early-stage drilling and metallurgical results already promising.
The company notes that sands on-site “mostly [contain] monazite but also xenotime, zirconium and titanium” – all heavy metals – while also containing niobium, one of the high-value MREO constituents.
Niobium is highly sought after in the aerospace industry for when added to steel it produces a product with superior strength that actually weighs less than traditional steel of the same strength.
As Ark Mines sees it, it’s developing a new REE mineral province for the entire state of QLD to benefit from.
What’s more: the company has found multiple drillholes confirm that mineralisation extends from surface to bedrock – confirmed by a third party assay laboratory.
Given that the company only needs to sift through sand, as opposed to crush tonnes of hard rock, it stands on the cusp of what could potentially be massive tonnage – with only a slither of the cost.
What makes it better than the rest?
There’s one word why Sandy Mitchell stands out against competitors: money.
Or, perhaps more accurately – the lack thereof required to bring the project into production.
The future of production isn’t a just a maybe-it-will-maybe-it-won’t possibility at Sandy Mitchell – it’s already in the pipeline, with Ark Mines expecting to commence concentrate production in the next 15 months (read: early 2025.)
The company has already confirmed significant recoveries of total rare earth oxides (TREOs) are achievable in beneficiation tests conducted on sand feedstock from Sandy.
Downstream processing is expected to be extremely competitive (read: cheap,) given that basic gravity-based processes well utilised across the entire Australian mining industry are sufficient to do the job.
Given that the company’s assay results already show cheap-to-access and consistent mineralisation, Ark inked a Memorandum of Understanding (MOU) with privately held Australian resources player Currumbin Metals.
That MOU “sets out a framework for the supply and delivery of Heavy Mineral Sands (HMS)” from Sandy Mitchell at a plant owned by Currumbin Metals.
That facility is located in southeast Queensland.
Further assays are due to the company in Q1 of 2024 – which will then form part of a maiden JORC Mineral Resource Estimate (MRE) for Ark Mines’ shareholders to absorb.
What’s more – Ark is confident that demand for its materials is set to remain reliable.
“In view of the outlook and based on drilling results, [the relationship with Currumbin] is expected to act as a catalyst for Ark to rapidly move from exploration to development,” the company recently wrote.
“This includes offtake sales which will generate revenue and the company expects to provide more updates in the near-term.”
Ark Executive Director Ben Emery is bullish on the move – and sees Currumbin offtaking REE concentrates also produced at Sandy Mitchell.
“Ark Mines is well-placed to benefit from Currumbin’s expertise in end-to-end logistics, including the transport of raw materials and the potential export and sale of HM and REE concentrate,” Emery said.
“Recent drill results reaffirmed the Company’s view that Sandy Mitchell has the potential to develop into one of Australia’s premier REE projects, highlighted by strong mineralisation with simple extraction through beneficiation by gravity processing.”
Key takeaways
Ark Mines stands to offer investors something not many other companies on the ASX can.
The company does not need to conduct expensive drilling and blasting operations; and nor do its geotechs need to worry about clay-bearing geology.
At depths of ten metres, target minerals are close to surface and all things in order set to reflect a lower cost extraction process compared to competitors with deeper-lying hard-rock mineralisation.
Ark states it will not need a tailings dam; nor a waste facility, nor chemicals like acids stored on-site, helping to boost ESG credentials and run down overall capex. The company’s sand restoration plans also help make the play appealing to eco-conscious investors.
But perhaps the biggest strength is Ark Mines’ ability to proceed straight to in-situ processing using simply gravity-based processing methods well understood by industry and not likely to pose any risk of degradation to surrounding farmland.
All in all: low cost, with a potential for high returns.