American Rare Earths scaling up to meet critical US demand
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American Rare Earths (ASX:ARR) is building scale in the US at the same time the world’s largest economy is scrambling to shore up its own supply of rare earths.
The US has signalled plans to potentially spend trillions to boost and secure its military capabilities and roll out more “green” infrastructure.
But the US’ ability to secure its own rare earth supply chain had a spanner thrown in the works a few years ago when it lost control of its only rare earths producing mine, Mountain Pass, after owner Molycorp went bankrupt and the Chinese gained ownership and started exporting the product to China.
Since then, tensions between China and the US have escalated, making the US more determined to build its own rare earth supply chain in the event China decides to stop selling its rare earths to the US.
Mountain Pass is again in the hands of the Americans, with Las Vegas-based MP Materials the current owner of the mine.
But one mine doesn’t make for a secure supply chain. The US is looking for more players to help boost its rare earths game.
On that front, American Rare Earths is adding another US rare earth project to its portfolio in a bid to position itself as a key player in the space.
The company has struck a share purchase agreement to acquire Zenith Minerals’ (ASX:ZNC) wholly owned subsidiary, Wyoming Rare Pty Ltd, which owns the Laramie rare earth elements (REE) project in Wyoming.
American Rare Earths also owns a rare earths project, called La Paz, in Arizona.
This new acquisition comes complete with data, including samples and maps, for the Laramie REE project and exploration permits.
The deal is conditional on the grant of one or more Wyoming Lands Trust state mineral leases for rare earth minerals.
Until one or more mineral leases are granted, American Rare Earths holds an initial three-month exclusive right to acquire the Laramie project in exchange for a non-refundable payment of $10,000.
If the company goes ahead with the acquisition it has agreed to issue 2.5 million shares priced at 2c each (equal to $50,000) and pay $50,000 in cash.
“The acquisition broadens ARR’s portfolio of US targets for an attractive price,” chairman Creagh O’Connor told investors.
News of the deal provided a lift to American Rare Earths’ share price on Thursday, which advanced as much as 8 per cent to 2.7c. Shares have more than doubled since mid-March.
Director Keith Middleton told Stockhead the acquisition gave American Rare Earths the scale and technical capabilities to develop the two projects.
“When you have a deposit of the scale and significance that we have with our La Paz deposit and then obviously the acquisition that we’ve just announced, we believe that provides us with a significant presence of yet-to-be-developed rare earths assets, and obviously scale is important,” he explained.
“When it comes to development of such an asset for both investors and also for our ability to secure support from the various subsidies and various incentives, scale is relevant.
“So by having two assets across two jurisdictions puts us in a very favourable position when we go and talk to the US Administration.”
Middleton said American Rare Earths was already in “close contact” with the US government around the strategic significance of rare earths and the country’s desire to create an independent supply chain.
“The Americans have publicly stated their desire to have greater control of the supply chain because of the strategic importance of rare earths that go into the manufacturing in multiple high-tech industries such as the military,” he said.
Wyoming is home to several major mining operations and is historically known to host rare earths, O’Connor says.
He noted that the Laramie project showed some similarities and should complement American Rare Earths’ La Paz project.
“ARR’s next steps include further mapping, surface sampling and geophysical surveying to establish the overall extent of the mineralised zone(s) and target highest grade areas for drill testing, along with further mineralogical and beneficiation studies,” he said.
Initial rock grab sampling and mapping previously done by Zenith at Laramie in three key areas 2-3km apart returned up to 0.6 per cent total rare earth oxides (TREO).
Zenith said in November last year follow‐up sampling returned consistent, strong REE mineralisation along the entire lengths of nine traverses.
Results included 80m at 0.40 per cent TREO, 60m at 0.39 per cent, 60m at 0.37 per cent, 137m at 0.37 per cent and 332m at 0.26 per cent.