Brazilian Rare Earths (ASX:BRE) has entered into a binding agreement with Rio Tinto (ASX:RIO) Brazil to amend the Amargosa tenement acquisition deal.
Under the original agreement signed in October 2023, Brazilian Rare Earths acquired mineral rights from Rio Tinto for US$9.3 million ($14.77 million) in cash. An additional US$40 million milestone payment was to be made within one year of starting commercial bauxite production.
The agreement has been amended with the US$40 million milestone payment being replaced with a secured, life-of-mine, fixed price production-based royalty of US$1 per wet metric tonne of bauxite sold.
Rio Tinto’s right of first refusal on bauxite sales from Amargosa has also been removed. The option for Rio Tinto to acquire 20% of any future nickel project within the tenements remains, but at a reduced price of US$25 million compared to US$50 million.
Given the potential scale and quality of the project, Brazilian Rare Earths plans to advance Amargosa and has engaged RPM Global to accelerate development activities for a resource estimate and Scoping Study.
Once delivered, the company will conduct bauxite washing and upgrading testwork to assess the upside in bauxite and gallium product grades. Upon completion, Brazilian Rare Earths will evaluate and execute on the project’s value creation options, including joint ventures, spin-out, and an initial public offering.
Brazilian Rare Earths CEO Bernardo da Veiga says global bauxite and gallium markets are underpinned by compelling structural trends.
“We are focused on advancing our world-class, high-grade rare earth province — and this successful restructuring of the Rio Tinto agreement enhances our strategic flexibility,” the CEO says.
The company notes that bauxite prices have risen over the past three years, driven by supply disruptions and sustained growth in seaborne demand from China. Exports from Guinea have faced pressure due to customs disputes affecting certain mines.
Since 2017, there has also been a 38% decline in China’s domestic bauxite production.
Despite constraints on new seaborne bauxite supply, major investments in alumina refineries are underway across Asia. According to CRU Group, global bauxite demand is projected to grow by 35 million tonnes over the next five-year period.
As such, bauxite demand will reach 413 million tonnes by 2029, largely driven by this new refining capacity.
Brazilian Rare Earths says its Amargosa Project offers a potential strategic and stable supply alternative for the global seaborne bauxite market.
Write to Aaliyah Rogan at Mining.com.au
Images: Brazilian Rare Earths
