This is part two of a feature series. This article is a sponsored feature from Mining.com.au partner ABx Group Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
Not all Ionic Adsorption Clay (IAC) rare earths deposits are created equal.
As Managing Director and CEO Dr Mark Cooksey explains to Mining.com.au in part one of this feature, ABx Group (ASX:ABX) is the first company to discover rare earths in Tasmania and is uniquely positioned with a true Ionic Adsorption Clay (IAC) rare earths project.
ABx is positioned as a high-tech, listed Australian company focused on delivering materials for a cleaner future.
Cooksey reiterates his sentiments from part one that ABx is moving forward to create projects and is simultaneously progressing all the dimensions needed to get a project off the ground.
“Basically, we know what is required to get a project up and running, and we’re doing all of those things in parallel.”
No longer hiding in plain sight
In early May, ABx updated its REE Mineral Resource Estimate (MRE) to more than 20 million tonnes at the Deep Leads – Rubble Mound project in northern Tasmania.
ABx has improved its ability to find the best type of rare earths mineralisation, and the company is now drilling to expand the deposit’s size. This development, Cooksey adds, is assisting to uncover the potentially economic REE mineralisation in Tasmania.
The company has assessed the metallurgy of clay-hosted REE deposits, and is focusing on production at the ‘all-important’ pH 4, which has the same acidity as apple juice.
“The critical parameter to understand whether a clay deposit will be economic is the pH required to achieve significant extraction…”
The MD says that only true Ionic Adsorption Clay REE deposits like ABx’s can deliver high recoveries using benign, low-cost processing.
“The critical parameter to understand whether a clay deposit will be economic is the pH required to achieve significant extraction, as there are very few that achieve high extractions at pH 4. That’s the key.”
Enriched levels of permanent magnet REEs
To date, the company’s work with the Australian Nuclear Science and Technology Organisation (ANSTO) has confirmed ABx’s mineralisation as IAC, and it occurs in land that is amenable to production in an environmentally sustainable manner.
The Deep Leads – Rubble Mound project features enriched levels of the high-value permanent magnet rare earths used in advanced technologies, which, as ABx previously announced to the market, could be amenable to the “very low-cost production methods that are being tested” by the company and its specialist consultants.
The desorption test results will provide further guidance to its current drilling program, and ABx is improving its ability to identify the type of mineralisation where the REEs can be easily desorbed.
This work has put the company on the radar of many in the market.
In a research report published in mid-May titled ‘Hiding in plain sight’, Corporate Connect initiated coverage on ABx Group with a valuation of $0.33 per share. The company has been trading at about $0.10, giving it a market capitalisation of about $22 million.
Corporate Connect reports the Deep Leads prospect in Tasmania is rapidly developing into a significant rare earths deposit
With a focus on the company’s true IAC deposit, Corporate Connect reports the Deep Leads prospect in Tasmania is rapidly developing into a significant rare earths deposit, with all early metallurgical testing indicating that it is a true IAC deposit – “perhaps the only true IAC resource in Australia”.
The report notes that ABx has made quick work of upgrading the drilling program to delineate further resources, achieving a 500% increase to the MRE in under 5 months. The current MRE stands at 21Mt of inferred and indicated resources with a grade of 770ppm Total Rare Earth Oxides (TREO).
Initial testing by the Australian Nuclear Science and Technology Organisation (ANSTO) of 70 bulk samples from the Deep Leads deposit gave an average extraction rate of 40% at pH4.
In his assessment of the ABx story, Senior Equities Analyst at Corporate Connect Richard Close says: “ABx’s ANSTO testing of its Deep Leads samples demonstrated that Rare Earth Elements can be extracted under low cost/low acid conditions – paving the way for the consideration of a simple desorption process as seen for the major IAC projects in China.”
Mineral resource growing quickly
Additionally, Corporate Connect reports this outcome ‘clearly shows’ the potential of the resource to be a commercial IAC project using simple low-acid desorption techniques for the production of mixed rare earth carbonates. The report models a 1Mtpa rare earth desorption project based on a resource of 20Mt.
Meanwhile, Corporate Connect looked at the project from 2 valuation directions – a DCF modelling of a simple desorption operation processing 1Mt per year of ore and a comparable company analysis based on MRE and possible in-situ valuations. The un-risked NPV of the IAC desorption operation gave a value of $54 million, to which Corporate Connect applied a 33% probability of success for a risked valuation of $18 million.
“Interestingly, our mineral resource valuation based on peer company comparisons gave a similar valuation at $18 million,” the Corporate Connect report says.
Room for more in the market
Cooksey says: “At present, the rare earths market is dominated by China. With demand growth globally projected to be significant as the world transitions to a renewable economy, significant additional production is needed.
Electric cars are taking off, wind turbines are taking off, and magnets are essential for that.
The problem is the demand is going to go up and the pipeline of projects doesn’t satisfy that demand. The other thing that’s happening is the China-West split.”
Data released by the US Geological Survey (USGS) estimates that global rare earth minerals mine production in 2022 was about 300,000 tonnes of rare-earth-oxide (REO) equivalent, up 3.4% from 2021 (290,000 tonnes).
China retained its status as the largest producer of rare earths, with 210,000 tonnes of REO equivalent mined last year, up 25% on a year ago (168,000 tonnes). China was trailed by the US (43,000 tonnes), Australia (18,000t) and Burma (12,000t).
“The market’s growing so rapidly that there’s room for new entries, and ABx boasts a true Ionic Adsorption Clay deposit, and we’re on our way to be the next entry”
According to the report, the contribution of other countries’ mine production declined in 2022.
ABx’s MD notes: “The rare earths market is quite new, but the sector is growing really fast. The market’s growing so rapidly that there’s room for new entries, and ABx boasts a true Ionic Adsorption Clay (IAC) deposit, and we’re on our way to be the next entry.”
A background in bauxite
The initial discovery of IAC rare earths came in late 2020 when ABx geologists explored the linkage between bauxite and IAC deposits. Initial testing for REE was initiated on ABx’s existing bauxite exploration samples from the Queensland Binjour deposit and the Rubble Mound Deposit in Tasmania. The results were announced to the market in early 2021 and demonstrated that the most promising grades were located on the Tasmanian tenements.
During 2021, ABx conducted a step-out drilling campaign at the Deep Leads prospect, adjacent to Rubble Mound, and discovered further lateral extensions to the deposit with REE grades that were consistent with commercial IAC deposits in China.
ABx announced a maiden mineral resource in November 2022, some 18 months after the initial discovery of REE within the pre-existing bauxite deposit.
And this is where the ABx story essentially starts.
The company was originally known as Australian Bauxite and had a name change in December 2021 largely to reflect the progression of the company from the developer of bauxite deposits to one that now has 3 separate projects.
ABx Group is not made up of an unrelated group of projects that have been acquired opportunistically. Instead, the genesis of both ALCORE and Tasmanian rare earths is the group’s long-term focus on developing and adding value to bauxite deposits on the east coast of Australia.
The challenging bauxite export market that was prevalent after ABx had assembled the suite of deposits accelerated the company’s efforts at leveraging its knowledge of bauxite resources to other opportunities.
ABx has a small corporate footprint and is essentially a holding entity divided into the 3 projects being pursued by the company.
However, collectively, it seems the company is on track to capitalise on the new opportunities spawned by its bauxite business as the world transitions to decarbonisation.
Write to Adam Orlando at Mining.com.au
Images: ABx Group Ltd