Rare earths in abundance for RareX as resource soars 500%

RareX (REE) was not joking a couple of weeks ago that it was close to announcing a significant increase in the resource estimate for its Cummins Range rare earths-phosphate project in the Kimberley region of Western Australia.

As noted at the time when RareX was a 4.2c stock for a market cap of $25 million, Cummins Range was already a handy 18.8Mt at 1.15% total rare earth oxides (TREO) and 10.9% phosphate.

That has been blown away, with the resource upgraded some 500% to 397Mt at 0.33% TREO and 4.2% phosphate, establishing the resource as the second-biggest undeveloped Australian rare earths deposit.

It is just the sort of stuff that anxious governments in the US, Europe and Asia want to hear as the world sets a bout weaning itself off a reliance on China for rare earths, most notably the “light” NdPr-type going into permanent magnets for EVs, windmills and so on.

The grade of the latest resource obviously doesn’t match the previous estimate. By using a phosphate cut-off for the calculation rather than a TREO cut, Cummins is now classified as a very large rare earths-rich-phosphate project.

The approach captures the phosphate and almost all of the higher-value rare earths, setting up Cummins to have two revenue streams.

It is set to get bigger too as the latest estimate is for the “Rare” dyke at Cummins, with a resource estimate for the “Phos” dyke within the carbonatite pipe due in late April . It is expected to add significantly to overall tonnages of phosphate.

RareX put on 1.1c to 5.8c in Thursday’s market, a 23.4% gain. That makes it 38% higher than when it was mentioned here on March 17.

As for the hit ASX-listed rare earth stocks took following Tesla’s investor day on March 1 when it said it planned to move away from using rare earth magnets in its powertrains, things have stabilised.

Macquarie said during the week that the reaction was overdone. It is looking for the NdPr market to remain tight in the short to medium term.

“The market balance could be easily shifted by any unplanned production disruptions or restocking activities along the along the magnets supply change,” Macquarie said.

It is forecasting Nd/Pr prices to trade below $US100/kg in the next six months ahead of rising above that level as demand rebounds.

GOLD/COPPER EXPLORERS:

Quality junior gold/copper explorers are ‘’on sale” if it is assumed that in 2023 gold will trade in a $US1,900-$US2,100 band and that the absolute shortage in copper stockpiles will see the red metal consolidate on its move through $US4/lb.

Those sorts of metal prices would normally be expected to fire up interest in the junior gold/sector. So far at least, the sector has been left to languish, with all of the attention on the big end of town, including big ticket M&A action (BHP’s bid for OZ Minerals and Newmont’s bid for Newcrest).

Eventually investor interest will trickledown to juniors, particularly if the bullish forecasts out there for both metals comes to pass.. A more risk-on tone to the broader market will help.

But it is not necessarily required, as lightly-capitalised exploration juniors with quality projects come with the potential to make a game-changing discovery.

All the above means that “on sale” signs are now widespread across the junior gold/copper sector.

ANTIPA:

Hardy Paterson province explorer Antipa (AZY) is an example. It is trading at $1.8c for a market cap of $65 million (cash is $8.9m).

Shaw & Partners has a 6c price target on the stock. It noted in a recent research note that the share prices of emerging gold companies have declined significantly over the past 12 months.

“The second half of 2023 looks set to be more constructive for the small gold sector,” the broker said.

Antipa was in the Paterson before all the excitement in recent years caused by Rio Tinto’s Winu discovery and the Newcrest/Greatland discovery at Havieron.

Its strategic land position, assembled ahead of the excitement, has allowed it to cut free-carried exploration joint venture deals with Rio, Newcrest and IGO, as well as continuing to explore on a 100 per cent-basis on ground outside of the joint ventures.

While the mining majors chase the exploration upside on the joint venture ground, Antipa has been kicking goals on its own ground, most notably at its Minyari Dome project, 35km from Newcrest’s ore-hungry Telfer gold/copper mine and 54km from the Havieron gold/copper discovery.

It already stands as a 1.8Moz resource, with scoping study into a base case assessment of a stand-alone development pointing to 168,000oz annually in the first five years of a seven-year mine life at an AISC of $US1,062 an ounce.

But Antipa is now looking to bulk out and extend the back end of the project. And to do that it has tapped the brakes on a feasibility study so it can step up its 2023 exploration program starting in May to 12,000m to chase down high-priority targets identified from the 2022 program.

It will make for a bigger and better Minyari Dome, remembering too that the current resource comes with strategic appeal to those with hungry mills in the region i.e. Newcrest.

It is a point picked up on by Shaws.

“The most logical acquirer is Newcrest as Minyari is a potential source for Newcrest’s Telfer operation which is 35km away. Newcrest is also in the process of farming-in to Antipa’s Wiki project which is adjacent to the Telfer tenements, and owns 9% of Antipa,” Shaws said

SUNSTONE:

Sunstone (STM) has just reported one of the best exploration results by a junior in recent times at the Limon target within its Bramaderos-Alba gold-/copper project in southern Ecuador – 177m at 1.1g/t gold equivalent from near-surface.

That the stock has continued to trade at around the 3.6c market for a market cap of $92m ($11.2m in cash and equity investments) says the market is yet to twig on to the significance of the drill hit.

But MD Malcolm Norris, an expert in big gold/copper systems (think Cascabel in Ecuador and Tujuh Bukit in Indonesia) is no doubt.

“This is a phenomenal result which could have a substantial impact on the total resource, the overall grade and the upfront development options at Bramaderos,” Norris said.

The 177m marks the discovery of a gold-silver-base metal epithermal at Limon which is above its underlying porphyry target. The mineralisation is of a higher tenor than that of the previously announced 2.7Moz gold equivalent Brama-Alba gold-copper porphyry deposit about 3km away.

“The widths of gold and silver from surface, the high grades and the visible gold show that this is an exceptional mineralised system,” Norris said of Limon.

“The shallow and higher grades allow us to contemplate development options that may include higher grade starter pits and supports our view that Bramaderos has every potential to be a 10Moz district with multiple deposits within 4km of one another.”

In the meantime, followers of the stock will be hanging out for results from the T2 Target at the El Palmar project up Cascabel way in the north of the country. Drilling is well underway and Norris passed on the information that the “hole is currently intersecting trace chalcopyrite as it approaches the target zone”.