As an investor in this space, AR3’s Koppamurra deposit seems to be a clear contender to offer a new source of rare earth elements (REE) on the global stage. It has already attracted large institutional attention which is usually a good sign of smart money in the market, yet for some reason has minimal retail interest. Nevertheless, as the electric vehicle and renewable
energy supply-chains heat-up in the coming years, they will be seeking assurances that they can get their hands on raw material that is outside of China's dominance. Therefore, AR3 seems to me to be an attractive investment proposition for the following reasons:
Low price: The Koppamurra project potentailly could be one of a few new global sources capable of competing with China and Myanmar on price. Currently, it is the only Australian ‘ionic’ clay hosted mineralised REE source and one of a few worldwide. This means potentially simple metallurgy and, together with a low-cost operation due to shallow free digging material with a low strip ratio makes it an environmentally friendlier mining operation. Especially, compared to any Hard Rock REE sources which have the added expense of dealing with radioactive waste streams and its social implications.
They have the big 4 REEs: The Koppamurra deposit contains the 4 key elements which matter most as they account for approx. 90–95% of total REE sales. This should make their project economics (depending on further recovery tests) extremely robust and profitable. They are:
Tier1 supply: The Koppamurra deposit is unique in that it is located in a low sovereign risk jurisdiction (South Australia). Also, it is within established infrastructure, close to major highways, sealed roads, power and other basic infrastructural needs. This sets them up for a safe and secure supply of material for offtake agreements, i.e., manufacturing industries need to know that their supply-chains will have minimal interruptions to be confident in investing and scaling up their in operations.
High ESG credentials for ethically investing: Environmental, Social and Governance (ESG) responsible investing is already a focus for concern of the global investing community. The Koppamurra geological resource seems complementary to local industry activities. They already have built strong community presence and have the capacity to attract a local skilled workforce that will ultimately value-add to the regional communities. All these are important considerations if they are to earn their social licence. Furthermore, South Australia is currently leading the green economy with over 60% renewable energy generation with many more renewable projects about to come online.
See story.
Institution support: With large institutional holdings, this is usually a good sign of smart money buying in on future demand.
Furthermore, with enough cash in the bank to fulfil their immediate objectives and the fast growing demands of the ‘permanent magnet’ supply-chain, AR3’s seems to have no barrier to entry – understandably it needs time to follow through the regulatory processes and systematically tick the boxes but when they do, the timing of supply into the market couldn’t be any more perfect.
What's not to like?
All IMO, DYOR
