Ionic Rare Earths gets major backing to build out supply chain after $30 million placement
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Investors have signalled their backing of Ionic Rare Earths in a $30 million placement that will fund a mineral resource estimate (MRE) and key feasibility study on is Makuutu project.
The ‘significantly oversubscribed’ 7.4c a share placement led by Canaccord Genuity and co-managed by Sprott, will also bankroll development work on Ionic’s (ASX:IXR) newly acquired Seren Technology Rare Earth separation and refining and magnet recycling business and entry into the US and European rare earths supply chains.
Makuutu is an exciting development as one of the few large-scale ionic clay-based rare earths deposits outside China.
These kinds of deposits in southern China have been the dominant source of supply for rare earths in recent decades, including over 98% of the supply of high-value magnet metals dysprosium and terbium.
Located in Uganda, Makuutu has the potential to be a long-life, low-cost project, with a current mineral resource of 315 Million tonnes at 650 ppm TREO, at a cut-off grade of 200 ppm TREO-CeO2.
With the revised mineral resource estimate expected within weeks, and feasibility study and mining licence expected in Q4 this year, Makuutu will be the largest beneficiaries of the raising, with around $14 million to be put toward finalising Makuutu feasibility study ($7.23m), a demonstration plant ($3.17m) and a financial investment decision ($3.63m).
The other major items will be rare earth refinery feasibility studies ($3.67m), Seren Technology operating costs ($3.2m) and a Seren Technology demonstration plant ($5.72m).
The rest will go towards working capital and expenses related to the issue.
Ionic Rare Earths managing director Tim Harrison hailed the capital raising as a ‘very positive milestone’ signalling both a rise in global interest in IXR and a step change in interest globally for rare earths elements used to produce permanent magnets for electric vehicles and wind turbines.
He said the strong response from existing shareholders and new institutional backers in Europe, North America, Asia and Australia reflects the company’s potential as a unique magnet and heavy rare earth development opportunity.
Indeed it could become one of the few companies in the world to be an end to end vertically integrated rare earth and magnet supply chain, from mining to refining to magnet recycling.
“The global interest in the capital raising is a testament to the potential of the Company and we are excited to secure this support from institutional investors at this defining moment of the company’s development,” Harrison said.
“We are seeing a significant step change in interest for the magnet rare earth and heavy rare earth content from Makuutu.
“With a greater end user understanding on supply risk for key magnet rare earths, we believe that the Company’s integrated business will become an increasingly important strategic asset as demand for a secure, sustainable supply of magnet and heavy rare earths increases and geopolitical tensions remain high.”
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.