Special Report: Red Mountain has completed the acquisition of the Mt Mansbridge heavy rare earths project and is planning to kick off drilling in the second quarter of 2020.

The company made the decision to proceed with the acquisition due to current market conditions, which favour growing demand for critical minerals such as heavy rare earths.

Read: Heavy rare earths prices are due some hefty gains in 2020, says Lynas

Concurrently, Red Mountain Mining (ASX:RMX) has also decided not to proceed with acquiring the Mt Kokeby kaolin project after careful consideration of project and market conditions.

Mt Mansbridge covers 324sqkm in the Kimberley and hosts over 33km of outcropping rare earths.

Notably, it is one of the few Australian projects prospective for xenotime, a rare earth mineral that hosts the heavy rare earths dysprosium and terbium.

Dysprosium is vital for the electric vehicle industry and is used in lasers, wind turbines, nuclear reactors and other military applications, while terbium is used in low-energy lightbulbs and solid state devices.

Red Mountain has completed the compilation of a comprehensive database including historical geochemistry, geophysics and drilling data for Mt Mansbridge.

The company has now started a geological assessment and reprocessing of geophysical data to delineate existing drill targets as well as generate new prospects.

Once the wet season is over, the company will start a heritage survey and a reconnaissance field trip over areas of interest in April.

This will be followed by a drill program early in the second quarter of 2020 to fully test the Mt Mansbridge area for rare earth mineralisation.


Project consideration

The company’s decision to proceed only with the acquisition of Mt Mansbridge has resulted in the reduction of the upfront consideration while conserving cash and reducing share dilution by not acquiring Mt Kokeby.

Red Mountain will acquire 100 per cent of Mt Mansbridge for 100 million shares and a payment of $100,000.

Further consideration will be payable only on achieving three project milestones.

The first payment of $50,000 and 30 million shares is due on Red Mountain defining a resource of 3 million kg of total rare earth oxides (TREO) at an average grade of at least 1.5 per cent TREO, with heavy rare earth oxide making up at least 80 per cent of the total resource.

The company will pay a further $500,000 in cash, $1m in shares and a 1 per cent net smelter royalty on completion of a feasibility study with pre-tax internal rate of return (IRR) of at least 20 per cent and a net present value (NPV) to capex ratio of at least 0.8.

The higher the NPV and IRR, the more profitable a project is.

The final payment of $500,000 in cash and $500,000 in shares will be made on signing a binding multi-year offtake or tolling agreement for at least 500,000kg of rare earth oxides per annum.

Read: ‘Insatiable global demand’ for critical minerals leads Australia to up its game


This story was developed in collaboration with Red Mountain Mining, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.