MarketOpen Radar: BRE joining the bourse with Brazilian rare earth

MarketOpen Radar: BRE joining the bourse with Brazilian rare earth

November 18, 2023 Off By Tom Duggan

Increasingly a geopolitical issue, an international scramble for economic rare earth deposits outside of China’s influence has led Brazilian Rare Earth (ASX:BRE – pending) to South America and the ASX with eyes on claiming an actual ionic rare earth project with a massive scale which could catapult it towards international eminence with the backing of a commodity kingmaker.

Have Brazilian Rare Earth and The Rocha da Rocha Critical Minerals Province blipped the Radar?

Originally planned to hit the ASX early this year, a fast-advancing large-scale rare earth asset, a significant investment from Gina Rinehart, surprising interest from Whitehaven Coal, and a $50 million capital raise to acquire a highly advanced and district-scale rare earth exploration play from Rio Tinto has the explorer now poised to join public trading late in the year.

Under the BRE ticker, with a $314 million listing of 34 million new shares at $1.47, the company will look to develop one of the most significant accumulations of rare earth elements outside of Chinese borders.

What do Brazilian Rare Earths do?

Brazilian Rare Earth is a (for now) private Australian company based in Sydney rapidly advancing a Rocha da Rocha flagship, a tier-1 rare earth asset in Northeast Brazil with multiple discovered deposits with large quantities of heavy and light rare earth grades exceeding 40 per cent TREO and near-surface mineralisation within over 1400 square kilometres of highly prospective mining claims.

It has been active as a private entity, with over 18,000 metres of drilling on top of geophysical and geological surveys in the books since boots got on the ground late in 2021.

What is going on in the rare earth market?

After reaching historic heights in early 2022, consecutive quota increases from the Chinese government significantly drove down rare earth prices. Still, the continued lofty demand predictions, Chinese export curbs, United States investment, and a shutdown of significant producers in Myanmar’s loosely regulated sector have sent prices back skyward.

It has led to an international search for the next global star. With the world’s third largest reserves, a proven mining industry, and the potential for accurate ionic clay deposits, Brazil is as likely looking as anywhere to take the silver spot next to China.

BRE is looking towards the ASX with an internationally significant rare earth asset.

What is the potential of the Rocha da Rocha project?  

Brazilian Rare Earths believes its exploration findings have pointed towards its potential to become one of the world’s largest and highest-grade rare earth deposits – producing from a friendly nation as China’s grip on the market causes an escalation of rare earth prices and funding from significant world governments snapping up supplies to secure their future-facing economies and national defences.

What are Rocha da Rocha’s complications?  

Rare earths are difficult to extract, requiring large-scale mining, and the Brazilian mining sector is undergoing a spate of legal and environmental conflicts, which have even attracted the attention of vulture investment funds looking for profits from litigation.

BHP faces a £36 billion ($A69 billion) lawsuit from around 700,000 claimants in the wake of the Fundao dam collapse in one of the most significant court cases in the world, and more billion-dollar projects have been put on hold with a mining regulator stretched thin by budget cuts and staffing issues.

And there is always the crucial matter of metallurgy when developing a rare earth project. Not all ionic deposits are the same, and a simple lab test can often be the difference between an easily explored, drilled, and mined project and one with blown-out costs to extract the ordinary but scattered elements properly.

What are Rocha da Rocha’s advantages?  

Brazil’s mining sector remains a power. BRE is posted up in a mining-renowned state of Bahia with a more commodity-friendly government than its peers and several large-scale mining operations nearby.

BRE will come to the ASX table holding an inferred mineral resource of 510.3Mt at 1,513ppm, divided between an ultra-high grade 25Mt of monazite sands exceeding 10,000, with the rest lying in lower but strongly graded ionic clays.

Exploration has also revealed a large-scale geophysical anomaly surpassing many of the geophysical parameters of Brazil’s Serra Verde rare earth deposit – discovered by BRE chief geologist Alexandre de Rocha.

And then there is the planned acquisition of Rio’s Armargosa tenements, offering 30,000 metres of core for re-assay and the potential to mine bauxite with a decade’s work already done by an international miner.

If it does come to mining, the project is also accessible by sealed roads, high-voltage power lines, and a major deep-water port around 200 kilometres away.

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