Mineral exploration company Ionic Rare Earths [ASX:IXR] is focused on developing its flagship Makuutu Rare Earths project in Uganda. Today, the company confirmed technical and financial viability Stage 1 via a Definitive Feasibility Study (DFS).
IXR’s shares were rising by more than 3%, not long after the announcement was posted to the ASX — trading around 3 cents a share.
The IXR share price has dipped 14% in the past month and a staggering 52% in the past twelve months.
Peer miner Arafura Rare Earths [ASX:ARU] has risen by 118% in the year. ARU recently posted about strong demand with China’s recent resource shortage:
Source: tradingview.com
Makuutu Stage 1 DFS Results Explained
Ionic Resources has confirmed a 35-year mine life for Makuutu and expects to deliver an EBITDA of AU$2.29 billion, with a post-tax free cash flow of AU$1.46 billion.
The miner also posted net present value (NPV) pre-tax, of AU$580 million, and an internal rate of Return (IRR) of 32.7%.
These were the rest of the miner’s DFS highlights:
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‘Stage 1 production of a value-added product, mixed rare earth carbonate (MREC) (including Scandium), via a modular heap desorption processing plant, amounts to a total Capital Expenditure (CAPEX) of US$120.8 million
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‘Stage 1 plant capacity is 5.0 million tonne per annum (Mtpa) Run of Mine (ROM) throughput
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‘Stage 1 TREO production of 40,090 tonnes (t) REO equivalent product, with 71% magnet plus heavy REO content
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‘Stage 1 Rare Earth Oxide (REO) anticipated production capacity is ~ 1,300 tpa REO over first 10 years, averaging ~1,160 tpa over 35-years of production
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‘Maiden Ore Reserve for the Makuutu Stage 1 over RL 1693 of 172.9 Mt at 848 ppm TREO, or 584 ppm TREO — CeO2, and 30 ppm Sc2O3’
Ionic believes it is now uniquely positioned to become a long-term sustainable magnet and heavy REO producer with its first MREC production target set for the fourth quarter of 2024.
In addition to that, further staged development and expansion options will consider the total mineral resource at Makuutu.
Source: IXR
Makuutu behind the scenes
The Makuutu Stage 1 study was put together to support the application for a mining licence over RL 1693. The process involves a prior Mining Licence Application (MLA), initiated in September 2022, covering only the central area of the greater Makuutu resource area.
The company anticipates that the mining licence for RL 1693 will be granted in Q2 2023.
A further staged development approach, including additional MLAs over the other five tenements at Makuutu, will be progressively considered to cover the total Mineral Resource at Makuutu.
Ionic’s Managing Director, Mr Tim Harrison, stated:
‘This Stage 1 study provides a path to production at Makuutu, which has the potential for significant growth into the future through the conversion of the other tenements at Makuutu towards additional MLAs over the coming decade. The intent is to significantly increase production from the Stage 1 initial focus at Makuutu, and expand into the forecast increase in demand that will far exceed supply for the most readily sought after rare earths, being Dysprosium and Terbium. These rare earths, are critical for the production of the magnets required to drive electric vehicles, offshore wind turbines and support a number of specialised defence applications.’
Makuutu is now advancing towards a Final Investment Decision intended to provide more heavy rare earths from Stage 1 annually.
Drill baby drill
The diverse range of raw materials is an industry making massive bull market-like gains.
This is in the face of recession, high-interest rates, and low market sentiment.
Several booms could happen for every single metal that can be found on the periodic table.
It’s been described as a ‘new golden age’ for junior explorers — and for investors who get in early.
But how do you tell which ones?
You may need a little help from our commodities expert James Cooper.
He’s found six ASX mining stocks headed for the top of the charts.
Regards,
Mahlia Stewart,
For The Daily Reckoning
