This dual project acquisition gives Red Mountain a foothold in the budding new energy sector
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Special Report: Red Mountain Mining is close to acquiring two sensational speciality metals projects – one in rare earths, the other high purity alumina. Either of these could be a company changer.
In August, $5 million market cap Red Mountain inked a deal to potentially buy the Mt Mansbridge rare earths project and then more recently, the Mt Kokeby kaolin/high purity alumina (HPA) project; both in WA.
Investors loved the news, sending the stock up 40 per cent in September alone.
Yesterday Red Mountain Mining (ASX:RMX) told investors that comprehensive due diligence on the Mt Mansbridge rare earths project was completed and, subject to things like shareholder approval, the explorer expected to proceed with the acquisition.
Meanwhile, Red Mountain has launched due diligence at the advanced Mt Kokeby kaolin/high purity alumina (HPA) project, about 100km south-east of Perth.
Red Mountain believes that together, these projects provide shareholders with excellent leverage to specialty metals that are critical to the nascent new energy industry.
Rare earths are in demand. The fact that China dominates the global rare earths trade — vital in the manufacture of things like smart phones, computers, and electric vehicles — has prompted the US, in particular, to actively look for alternative sources.
But not all rare earths are created equal, Red Mountain chairman Jeremy King says.
“As far as Mt Mansbridge is concerned, one of the aspects we view as most interesting is that the work to date has identified the presence of xenotime,” he says.
Xenotime is a rare earth element (REE) mineral which hosts the heavy REE, dysprosium — essential for the electric vehicle industry as well as its use in lasers, wind turbines, nuclear reactors and other military applications.
This – plus the fact that there are very few projects globally producing commercial quantities — makes dysprosium a highly strategic mineral.
“As far as we are aware, Northern Minerals’(ASX:NTU) Browns Range is the only producer of dysprosium in WA and one of a few globally,” King says.
And Mt Mansbridge is just down the road:
The presence of xenotime mineralisation at Mt Mansbridge and its close proximity to Northern Minerals makes the project highly prospective for heavy rare earths, King says.
“With the Northern Minerals processing plant approximately 40kms away, needless to say, we are excited to get on the ground, and begin work at the Mt Mansbridge rare earths project.”
kaolin is a special type of aluminous clay can be used to create high purity alumina (HPA), which is in demand because it helps stop lithium-ion batteries from catching fire.
In July, a CRU report concluded that HPA supply will not meet estimated demand over the next decade — even if every project in the pipeline goes into production.
But kaolin also has a wide range of industrial uses, like paper and paperboard, fiberglass, ceramics and paint. In 2018, the global industrial kaolin market was estimated to be worth $US5.4 billion, with estimates of CAGR growth out to 2025 of 8.8 per cent.
This is not a niche market – just look at the attention kaolin play Andromeda Metals (ASX:ADN) is gettingfrom offtake partners and investors right now.
Red Mountain believes the advanced Mt Kokeby project is well suited to both these markets.
“Our initial investigations have suggested that there is good demand for high quality industrial kaolin, and we intend to swiftly investigate the possibility of establishing a low capex, DSO [direct shipping ore] operation outof Mt Kokeby which is well placed infrastructure wise,” King says.
The due diligence process on Mt Kokeby includes channel sampling of the historic pit at the Murray deposit, a drill program to verify drill work conducted in the 1970s and testing of the Mt Kokeby ore to determine suitability as a high purity alumina (HPA) product.
Red Mountain says this due diligence work would eventually be used to complete a scoping study on the advanced project.
A scoping study is the first proper look at whether a resource can be mined economically.
King says there is potential synergies between the projects as both have significant electric vehicle and lithium-ion battery applications.
“In addition, each of the projects is at different stages thereby ensuring regular news flow to the equities market as the various project milestones are delivered,” he says.
“Finally, all of this is located in the first class, stable mining-friendly jurisdiction of WA – it is difficult to overestimate the importance of this fact in the context of cultivating early stage mining projects.
“You can expect RMX will be very busy over the next 12 months as we look to close out the transactions, and progress RMX’s new projects.”