Ionic is chasing value maximisation with rare earths refining facility
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While its Makuutu ionic adsorption clay-hosted rare earths project already has the potential to be extremely lucrative, Ionic Rare Earths is already pushing ahead to maximise its value.
The company has now approved the formal evaluation of the business case for developing a standalone, wholly-owned critical and heavy rare earths separation and refining facility to process mixed rare earth carbonate from its project in Uganda.
With most existing refining capacity located in China, Ionic Rare Earths (ASX:IXR) has concluded that having its own dedicated facility could be substantially earnings-accretive while enhancing the engagement and participation of potential strategic partners.
It noted that there is strong interest in the development of mine-to-market sources of rare earths via alternative, secure and traceable supply chains, an understandable opinion given the growing interest in supply chain security.
Managing director Tim Harrison says that with the potential for HREO demand to dramatically exceed supply in the future, the company had identified a compelling opportunity to provide mine-to-market CREO and HREO capacity to maximise returns from Makuutu’s unique and valuable basket of rare earth elements.
“Our timeline to production from Makuutu remains firm – the focus is set on 2024,” he added.
“As we ramp Makuutu up over the rest of the decade to 2030, IonicRE also wants to ensure we can build separation and refinery capacity to match that scale of production proposed at Makuutu. To meet those goals, now is the time to start this activity.”
He explained that the potential to produce a dominant 73% CREO/HREO basket that is free of radionuclide issues that plague hard rock projects, and lower capital requirements for downstream refining, was a fantastic opportunity for the company.
“Additionally, the company sees the development of a standalone rare earth separation and refinery facility as being key to providing optionality for the future,” Harrison said.
“With limited HREO refining capacity forecast to be developed outside China in the near term, the development provides direct exposure to maximising value from product with a CREO/HREO dominant basket with greater future demand forecast and diminishing existing supply in years to come.”
The facility is expected to have initial capacity to process about 4,000 tonnes per annum of REO equivalent feed.
It will convert the mixed rare earth carbonate feed into refined products with a focus on magnet REOs and other high-demand products such as yttrium and scandium that collectively make up about 93% of the Makuutu basket value.
Future expansion of the facility, and broadening of the separation capacity, will be developed in consultation with demand from potential strategic partners.
Ionic added that the wholly-owned facility will increase payability attained from the MREC basket (70% payability) produced at Makuutu to 100% payability for refined individual REO products.
The company currently holds 51% of Makuutu though it will move to 60% on completion of the feasibility study before October 2022. It also has the pre-emptive right to acquire the remaining 40% of the project.
It seeks to complete the downstream scoping study by mid-2022 with preliminary metallurgical testwork already underway to support process modelling which will underpin the process design using conventional solvent extraction.
Ionic has started engagement with a global technology provider with first-hand experience developing a REO separation and refining circuit and is reviewing alternative technology options that will be assessed during the scoping study.
This article was developed in collaboration with Ionic Rare Earths, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.