Tough times for the rare earths space on the ASX. Prices for...

Tough times for the rare earths space on the ASX. Prices for rare earths have been smashed by a combination of artful quota management by the world’s number one producer China and the general economic malaise.The impact of China’s quota management of rare earths cannot be underestimated. It has spent more than 30 years making rare earths what Beijing once called a version of Saudi Arabia’s oil riches, and it is not going to let its dominance fade without a fight.By managing prices lower it is trying to scare off the new competition coming from the groundswell of political will in the non-China world to break free of the country’s near complete control of the supply chain.Drive prices lower and less non-China projects will be built, unless governments around the world want to foot the bill. They will to a certain extent, but there is going to be lots and lots of rare earth projects left on the shelf if current prices prevail.Only the very best projects will see the light of day because to compete with China’s low-cost and state-supported production, they will have to be the very best.All that is by way of background to a research note by Canada’s Sprott Capital Partners (SCP) on Meteoric (MEI), mentioned here previously when, as a tiddler in December, it landed the Caldeira ionic clay project in Brazil’s mining heartland of Minas Gerais.The stock has taken off since, trading a round 20c a share in recent weeks in response to a maiden resource that was off the scale at 409Mt at 2,626ppm total rare earths oxide. This week there has been another leg up to 24c, with suggestions big lines of stock were being sought.The latest leg up is no doubt due to an equity research report by Sprott. It is most the bullish thing you will read in the ASX rare earths space which it has to be said, has got a bit glum of late with the crash in (China managed) pricing.The headline of the initiation report – SCP has a 50c price target on the stock – said it all: “Our pick for best rare earth project globally”. Why, even Beijing will be seeking out a copy of this one.Tokyo also, given the Japanese authority on securing raw materials for the country, JOGMEC, walked away from Caldeira in 2020 when it baulked at the tonnes-derived payment required to secure the property from the family business that has been mining the clay for bricks for decades.Meteoric secured the property – and JOGMEC’s drill data base – for a much simpler and friendly cash and royalty deal, and quickly worked up the JORC-compliant 409t resource estimate as a starting point.SCP visited the project in April because it wanted to see first-hand why Caldeira’s size and grade were so “anomalous”.In its initiation report, which is being bounced around here there and everywhere, SCP said what stood out immediately was the huge 25x30 km caldera that the project is situated in.“We think the combination of a huge alkaline system (the right source rocks), plus strong weathering environment (5-month rainy season and ~1200-1600m elevation) plus the concentrating impact of the caldera (little to no drainage) resulted in Caldeira’s globally unique size and grade,” SCP said.There is a “billion tonne potential situated in a geological unicorn,” SCP said, adding that Caldeira is by far the best size-grade combination of any ionic clay known today, and about five times the grade of the ionic clays producing in southern China and Myanmar.“Even more impressive: the average depth of the resource (estimate) is only 10m due to the shallow drilling completed to date, and 85% of holes ended in more than 1,000ppm mineralisation.’“We think the depth of weathering could be 20-25m, which indicates potential to double the resource on the existing footprint, in addition to growing the footprint, with less than 20% of the tenement areas drilled to date.”