Kristie Batten: Axel REE hitting the high notes to draw rare earths and gallium interest

One of Australia’s top mining journalists, Kristie Batten, writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

Axel REE (ASX:AXL) has only been listed on the ASX for about 15 months but is building momentum after recently reporting two separate resources for its Caladão project in Brazil’s Lithium Valley.

In late August, the company reported an initial inferred gallium resource of 100 million tonnes at 42 parts per million gallium for 4200 tonnes of contained gallium, using a 35ppm cut-off.

“We believe that we are the only company with a discrete gallium resource,” Axel non-executive chairman Paul Dickson told Stockhead.

Nearly two weeks ago, the company followed it up with an initial inferred rare earths resource of 233Mt at 2143ppm total rare earths oxides with 22% high-value magnet rare earth oxides, using a 450ppm TREO cut-off.

Both resources sit in the 33km2 Area A, which is only a fraction of the total project area, with the gallium resource starting at surface in the lateritic soils and the REE resource limited to the saprolite layer.

The REE resource estimate capped metallurgical recoveries at 31%, significantly less than Axel’s preliminary metallurgical results, completed by ANSTO, of up to 52%.

Applying recoveries of over 50% would more than double the potential tonnage under the resource model.

“There’s enormous potential, because there’s potential to improve the recoveries and then the grade, and then the size of the resource will improve,” Dickson said.

“There’s been some really good successes fairly recently in recoveries for rare earths from Brazilian companies as well, so we’re quite confident that we can certainly do better on recoveries.”

Gallium sweetener

Gallium prices have surged this year to over US$1200 per kilogram.

Caladão is the only discrete gallium resource in Brazil not occurring as a by-product of bauxite.

Preliminary metallurgical testwork achieved up to 25% recovery through acid leach tests with further work to be conducted.

The resource averages just 10m depth.

“When you look at which projects get chosen in the end by the markets to develop, (they) will be the ones that have the best economics,” Dickson said.

“Ours starts from surface. Instead of the overburden being a cost, that’s where the gallium is, so it’s a massive benefit.

“When that’s US$1233/kg, the two heavies (rare earths) are US$135/kg and $557/kg, and then the NdPr is at around US$40/kg (each), it changes the maths.”

Interest growing

Dickson said the company had been receiving inbound interest but was keen to get the resources out first before entering any discussions.

Interested parties included groups from Japan, South Korea and the US.

That interest could heighten given China’s took its restrictions on rare earths further with a new set of export controls announced last Thursday.

“I think you’re seeing a cold war in commodities, to be quite frank,” Dickson said.

Axel has also signed memoranda of understanding with the Federation of Industries of Minas Gerais, State Secretariat for Economic Development and the Instituto de Desenvolvimento Integrado de Minas Gerais, Invest Minas in Brazil.

“Don’t forget Brazil, because you’ve got BYD constructing a very large EV factory and battery producing factories in Brazil,” Dickson said.

Dickson said Axel was open to developing Caladão with a partner.

“I think we’ll probably look to be a bit different to other people, and get it to a point where you get a good indicated resource, do your scoping studies and things, and then look for a major partner,” he said.

“Sometimes you can go it alone and pretend you’re all things to all people, but you can run out of money and fail, and if you get the right partners then they help fund you along the way and ensure that you remain there and get it done.”

Closing the value gap

In terms of market capitalisation, Axel is one of the smaller ASX REE plays focused on Brazil.

Dickson admitted the company had struggled to gain market traction since listing in July 2024.

“When we listed in July last year … the whole sector was on the nose, and as soon as we listed, we just got killed in the rush of people selling,” he said.

“It takes time to recover and then to prove your credibility as well.

“We still have $8 million-odd in the bank and a very low enterprise value, around $6 million or thereabouts, but what we’ve done is in the 15 months that we’ve been listed we’ve delineated two JORC resources.”

The next step for Axel is infill drilling at Caladão, as well as further metallurgical testwork.

The 58km2 Area B and newly discovered Area C will also be a focus of drilling.

The company will also drill its high-grade Caldas project in southern Brazil, with the aim of defining a resource in the next few months.

AXL shares have run some 68% higher YTD as enthusiasm for critical minerals juniors has grown and dovetailed with its JORC resource announcements.

At Stockhead we tell it like it is. While Axel REE is a Stockhead advertiser at the time of writing, it did not sponsor this article.