Today's announcement confirms that the very valuable Rare Earths at Innouendy are easy to separate and extract from this enormous, shallow, thick, high-grade Rare Earth deposit in WA.
We are getting closer and closer to a major rerating event for Desert Metals with each milestone ASX announcement like today's being released one at a time.
Desert Metals, with every ASX announcement, is basically validating to institutional investors and to potential strategic investors, Innouendy's massive low capex, low opex, high cashflow Rare Earth deposit in WA.
You can be sure, given the critical importance to increase supply of Rare Earths Elements to the Global Markets, that Australian and International Institutional and Strategic Investors, would be keen to take a position in a low risk high grade, large tonnage, very high recovery REE deposit like Innouendy, will be running the ruler over DM1's announcement today>
They will be analysing all the detailed data that Desert Metals has included on Pages 2-10 of today's announcement.
The indepth Assay High Grade results coupled with the and Exceptional Leach Recoveries will give these instos and potential strategic investors the information they need, to be make their own calculations and investment decisions about Desert Metals.
A strategic investment, by a mining magnate or Tier 1 mining company (Australian or Global), would see a significant rerating in DM1 overnight IMHO. (See Resources Rising Stars article below).
As would a Maiden High Grade, Very High Recovery, Large Tonnage REE JORC Release and/or Off Take Agreements.....
This is what I'm expecting to see at the tipping point for Desert Metals in the coming weeks are more and more announcements are released.
Given what we have seen in the last 3-4 weeks in the hot Rare Earths sector (See article below)
There are significant geopolitical as well as enomous future profits for Rare Earths miners, that have accelerated investment and acquisitions in the Rare Earths sector in recent weeks and months. (see article below)
Andrew Forrest and Gina Rinehart's significant investments in REE explorers in the last 3-4 weeks is just the beginning.
We just need to let Dr Rob Stuart and Dr John Mair continue to step out drill Innouendy's thick, large, shallow and high grade and very high recovery Rare Earth Clay deposit at Innoendy (outside the current 21km x 2.5km footprint) as well as within it over the coming weeks and months to validate its consistency of thickness and high grade/ exceptional recovery REEs.
Since the Rare Earth Clay deposit at Innouendy is Open in All Directions, as Step Out Drilling announcements confirm an increase in Strike Length (21kms) and Width (2.5kms), I'll adjust the numbers in blue below to estimate the conservative Rare Earth Clay tonnages until a Maiden JORC REE is released.
It will be institutional investors that rerate Desert Metals and lifts the share price to new all-time highs, once a tipping point is reached (as per all these explorers) on the back of drilling/assay/recovery results.
As we are seeing with Billionaire Mining investors like Andrew Forest and Gina Rinehart's recent investments in Rare Earths projects, not keyboard warriors on Hotcopper.
They are looking at the future of electrified energy and the minerals and metals desperately required to meet these global emissions targets.
This is the best time in Australia's History to be developing one of the world's largest Rare Earth Clay deposits in WA.
Supporting critical minerals projects (exportfinance.gov.au)
The Australian Government’s Critical Minerals Facility
In 2021, the Australian Government established the $2 billion Critical Minerals Facility, which is managed by Export Finance Australia. Projects that are aligned with the Australian Government’s Critical Minerals Strategy, and are otherwise in Australia’s national interest, may be able to access finance through this facility.
https://www.resourcesrisingstars.com.au/news-article/rinehart-forrest-appetite-rare-earths-plays-speaks-volumes-about-sector%E2%80%99s-hot-outlook
Great article on Resources Rising Starts discussing the red hot Rare Earth sector below.
Australia’s richest, Gina Rinehart and Andrew Forrest, have turned some of their mining billions into positions in rare earths.
The key role of rare earths in the energy transition – each EV has 1kg of the stuff and wind turbines require 200kg for each MW of capacity - is well understood.
So too is the critical importance of the world weaning itself off China’s dominant supply position, which is why much of the investment in the sector in recent times has been soft-dollar financing by Western governments, including Canberra, to encourage more supply.
But the arrival of Rinehart and Forrest in the sector is something else given that the investment advice they receive is at another level to what the rest of us get by on.
Our number one and number two richest are buying into the sector because demand for high-performance rare earths permanent magnets (NdPrB) is going through the roof, and a serious supply shortage is on the cards from around 2027.
Specifically, Rinehart’s Hancock Prospecting has pumped $60m into Arafura (ASX:ARU), giving it a 10% stake in the company. Arafura is advancing the $1.6 billion Nolans rare earths project to the north of Alice Springs, just off the Stuart Hwy to Darwin.
It has also been recently reported that Hancock Prospecting put its hand up for some of the $21m pre-IPO raising by Brazilian Rare Earths ahead of its planned listing next year.
And there was Forrest’s privately-owned Wyloo making a $150m investment through an exchangeable note in Hastings Technology (ASX:HAS) which is developing the Yangibana project in the Gascoyne region of WA.
The Wyloo funding underpins Hastings’ acquisition of 22% stake in the Canadian-listed Neo which is one of the few Western-world companies involved in rare earths processing and permanent magnet production.
Arafura and Hastings have a combined market cap approaching $1.2 billion, making them the sorts of stocks that billionaires like to dabble in.
For the less well heeled, there are plenty of junior stocks on the ASX providing leveraged exposure to the rare earths thematic.
Two of them – RareX (ASX:REE) and Australian Rare Earths (ASX:AR3) - were out and about last week pitching their stories at the RRRS Summer Series conferences in Sydney and Melbourne.
RareX:
RareX spotted the rare earths thematic back in mid-2019 when it picked up the Cummins Range project near Halls Creek in the Kimberley region of WA.
It is the same carbonatite-type deposit as Mount Weld, the geological marvel in WA that underpins the $8 billion market cap of the established ASX rare earths producer Lynas (ASX:LYC).
RareX has since growth the resource at Cummins Range into one of the biggest on the ASX (18.8Mt at 1.15% rare earths and 9.9% phosphate), and its mix of its rare earths “basket” is pretty much the same as Mount Weld, including the split of the magnet oxides (20% NdPr).
Most of the resource is in the indicated category (80%) which allowed the company in September to release a scoping study into a potential $430m development, with first production possible in 2026, just when the forecast supply deficit is due to hit.
Based on conservative rare earths price assumptions, and with by-product phosphate production, the capex payback was put at 2.8 years. Net present value was assessed at $633m, and the internal rate of return at 29% pre-tax.
If there was one issue the market got hung up on, it was the short project life of 12 years. But the fix for that is well and truly in hand as a resource upgrade in March next year will blow away the current estimate.
Managing director Jeremy Robinson told the conferences that based on on-going exploration results, Cummins Range “will become a very, very large project in the year ahead”.
A push out in resources to the 100Mt mark seems likely, albeit at not at quite the same grade. The additional scale will make Cummins Range more appealing to strategic partners/offtakers, and who knows, potential acquirers.
All that is kind of interesting given RareX is trading at 5.2c for a market cap of $30m, or an enterprise value of $24m after its $6m in cash is taken into account.
Australian Rare Earths:
The company has already established a big resource position at its Koppamurra project near Naracoorte in south-east South Australia.
It is of the Chinese-style clay-hosted type and stands at 81.4Mt at 785ppm. But a resource upgrade is due in the March quarter next year and the expectation is that AR3 will be well on the way to reaching its exploration target of 200Mt.
It recently singed a (non-binding) MOU with Neo (mentioned above) which covers a joint development agreement and the potential for Neo to take 50% of Koppamurra’s production, with AR3 targeting first production in 2025/26.
Importantly, Koppamurra’s “basket” of rare earths includes both the light magnet metals (NdPr) and the heavy (dysprosium and terbium), with the latter two produced almost exclusively in China and Myanmar from clay-hosted deposits.
Shallow clay-hosted deposits like Koppamurra deposits have the potential for low-cost, low capex production if the metallurgy is right. AR3 has been kicking goals on that front.
It is trading at 34c for a market cap of $45m. It has been much higher in the last 12 months but like the other rare earth stocks has come back on the fall in NdPr prices from a peak of $US175/kg in March to $US90-$US100/kg recently in response to global recession fears, and China’s COVID shutdowns.
Both are short-term factors in comparison to the multi-decade thematic of a decarbonising world, one to be increasingly filled with EVs and wind turbines.
(20min delay)
