The placement will support fresh exploration drilling, an updated resource estimate and the finalisation of a scoping study – the first proper look at the economics of the globally significant Makuutu rare earths project.

The issue price of 4c per share represents a small 7 per cent discount to the volume weighted average price (VWAP) over the past 10 trading days, and a 12.7 per cent premium to the 30-day VWAP of IonicRE’s (ASX:IXR) shares.

The extra $12m greatly de-risks the development timeline at the Makuutu project says the company, which is aiming to complete an advanced Feasibility Study (FS) by October 2022.

IonicRE Managing Director Tim Harrison says Makuutu will become an increasingly important strategic asset as the implemented export restrictions in critical and heavy rare earth from China take effect.

“The Chinese dominance in supplying over 95% of the world’s heavy rare earths production comes from their depleting reserves of ionic adsorption clays,” he says.

“Recent policy to prioritise and stockpile critical and heavy rare earths for Chinese domestic supply means less exports.

“The two factors combined materially increase the value of Makuutu as a long-life, low-capital and high-margin critical and heavy rare earth asset.

“Global rare earth requirements to support investment commitments from world governments in electric vehicles, wind turbines, communications, defence and other technology applications extends well beyond just the supply of the light rare earths NdPr.”

The strong response to the $12m placement reflected the potential of Makuutu as a unique critical and heavy rare earth development opportunity, Harrison says.

“The extremely strong support we have received from institutional and existing shareholders has provided us with the opportunity to secure the required funding to now commit to key activities required to meet our accelerated timelines, as well as move IonicRE’s interest from 51% to 60% upon completion of the Feasibility Study,” he says.

“We are excited to secure this support from institutional investors at this defining moment of the company’s development.”

Accelerated activity at Makuutu

The company remains on track to complete the revision of the Mineral Resource Estimate (MRE) by the end of February 2021, which will then feed directly into a revised Makuutu scoping study which is expected to be completed by the end of Q1 2021.

This extra $12m allows IonicRE to confidently progress key activities at Makuutu, to advance the project to completion of the Feasibility Study (FS) by October 2022.

 

The company intends to use the net proceeds from the placement on:

  • A drilling program across the project, including initial drilling on the newly acquired exploration license; EL00147 (which has the potential to increase the scale of the
    project a further 50%);
  • Phase 2 metallurgical variability test work across Makuutu;
  • The next stage of site based activities including geotechnical and sterilisation programs for project development;
  • The next stage of Environmental and Social Impact Studies which includes enhanced community and stakeholder engagement program;
  • Additional evaluation studies across the project which has the potential to unlock additional value at Makuutu; and
  • Milestone payments

 

This article was developed in collaboration with IonicRE,   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.

 

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