IPO WATCH: Resouro ready and set to join Brazil-focused rare earths plays run on ASX

Resouro Strategic Metals continues trend of Brazil-focused rare earths plays listing on the ASX as it closes public offer heavily oversubscribed
It is expected to list on the ASX on 4 June, 2024
The Australian-led company is currently listed on the TSXV in Canada where its shares have almost tripled in the past 12 months
Flagship Tiros project has potential to become an industry-leading rare earths and titanium mine as western countries race to develop diversified sources of critical minerals

Special Report: In the latest salvo fired in the US-China trade and tech war, the Biden Administration has imposed a 25% tariff on rare earths rich permanent magnets from the world’s largest supplier.

The new tariff – to be imposed from the start of 2026 – is especially significant because it’s the first of its kind for critical minerals, which are essential for the clean energy transition.

As western countries race to shore up non-Chinese supply chains of rare earths Brazil is stepping into the breach – and Australian investors have easy access to the opportunities.

Brazilians trend on ASX

Scheduled to be the latest Brazil-focussed rare earths company to trade on the ASX is Resouro Strategic Metals.

A public offer with shares priced at $0.50 each has closed heavily oversubscribed, raising the targeted $8 million for a $46.1 million market capitalisation on the expected 13 June listing date.

Strong support came from cornerstone Regal Funds Management and small cap mining investors including Jeremy Bond’s Terra Capital and the Flannery Family Office as Resouro aims to emulate the success of other Australian listed companies seeking to tap into mining friendly Brazil’s giant truckloads of rare earths.

Gina Rinehart backed ASX darling Brazilian Rare Earths (ASX:BRE), Meteoric Resources’ (ASX:MEI) and Viridis Mining and Minerals (ASX:VMM) are notable examples of this strategy, while Axel REE has also announced its upcoming IPO.

Tiros’s rare attractions

Proceeds of the Resouro offer will largely be used for advanced exploration activities with a goal to delineate further exploration targets and a JORC compliant mineral resource at Resouro’s flagship Tiros titanium and rare earths project.

Results released this year from its flagship 450km2 Tiros project indicate it has the potential to become an industry-leading, multi-generational mine with rare earth oxide grades comparable to the best clay style deposits in the world.

As well as hosting high-grade and highly valuable magnet metals neodymium (Nd) and praseodymium (Pr), Tiros is also one of the world’s largest undeveloped titanium oxide projects, as critical mineral titanium also faces record demand.

Untapped riches

Although Brazil has the third largest rare earths reserves globally at 21 million tonnes (Mt) the South American nation produced only a tiny 80 metric tonnes last year.

On the global rare earths league table Brazil sits behind China with its reserves of 44Mt and production of 240,000Mt in 2023, then Vietnam with 22Mt in reserves and 2023 production of 600Mt.

But it’s well ahead of another problematic supplier Russia with 10Mt and 2,600 metric tonnes production, especially since Russia’s plans to compete with China’s output have been put on ice due to the war in Ukraine.

Australia and the US come in at sixth and seventh respectively, behind India at No.5.

It’s a closely watched league table as rare earths demand is forecast to reach three to seven times current levels by as soon as 2040 thanks to renewable energy tech, batteries and EVs, according to the International Energy Agency.

Track record

Resouro is currently listed on the TSXV in Canada where its shares have almost tripled in the past 12 months.

Founder, CEO and major shareholder, Chris Eager, has an enviable track record in other small cap miners having previously been behind Asia Energy (IPO at 75p peaked at 910p) and Monterrico Minerals (IPO at 52p peaked at 600p before an eventual takeout at 350p) on the AIM market.

This article was developed in collaboration with Resouro Strategic Metals, 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.