Companies only have to utter the words “rare earths” right now and their shares take off.
Clancy Exploration (ASX:CLY), which is now known as Sagon Resources, put out a simple update on the progress of its planned acquisition of the Cummins Range rare earths project and investors went nuts.
Shares jumped 225 per cent to 6.5c on Friday morning on the trading of over 2 million shares.
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It may well have been the mere mention of the fact the project that the newly rebranded Sagon planned to buy showed early potential for rare earths much like what heavyweight Lynas (ASX:LYC) has at its “world class” Mt Weld project.
Or it could have been the fact that the ASX reckons Sagon doesn’t need to comply with certain listing rules regarding the acquisition.
Either way, investors were happy.
Sagon revealed a week ago that it had picked up an option to buy the Cummins Range rare earths project in Western Australia via the acquisition of private company RareX.
At the time it said it was one of only two known rare earth bearing carbonatites in Australia, with the other being Lynas’ Mt Weld.
Sagon told investors today that compilation of historical data suggested that the known mineralisation remained open at depth and along strike.
Initial indications are that historical exploration beyond the existing known mineralisation has been limited.
Sagon added that this “opened the possibility for new discoveries across the 2.5km by 2.5km diatreme complex much like what occurs at Lynas Corporation’s world-class Mt Weld diatreme complex”.
The company has now completed its due diligence and is planning a maiden drilling program.
Rare earths is all the rage right now thanks to the continuing trade war between China and the US.
Sagon was previously focused on gold, cobalt and nickel. Its change of direction was prompted by China’s threat to “weaponise” its rare earths by cutting off supply to the US.
The Cummins Range project is considered prospective for neodymium and praseodymium (NdPr), which are used to make ultra-strong permanent magnets for micro-motors and the drivetrains of electric vehicles.
Back in May, Chinese President Xi Jinping visited JL MAG Rare-Earth Co, a Chinese rare earth magnet manufacturer, raising concerns that China may use its dominance of rare earths in the trade war with the US.
President Xi was accompanied by Vice Premier Liu He, one of his most trusted advisers and China’s top trade negotiator.
At the same time, China is no longer allowed to source rare earths from neighbouring Myanmar.
