Brazilian Rare Earths (ASX:BRE) has announced an intention to demerge its wholly owned Amargosa Bauxite-Gallium Project into a new ASX-listed company, Alurion Resources.
The demerger will allow Brazilian Rare Earths to advance its portfolio of critical minerals and rare earths, while Alurion can be wholly focused on developing bauxite and pursuing critical mineral development projects.
Alurion will have its own board, management team, and capital structure, and is proposed to sit under the stock code ASX:ALU.
Brazilian Rare Earths says that the demerger represents a “disciplined portfolio strategy that separates two large-scale, strategically important mineral platforms with different development pathways”.
It noted key benefits such as differentiated capital pools, a streamlined focus on project execution on both ends, upside for Brazilian Rare Earths shareholders, and more.
Brazilian Rare Earths says that the global supply of bauxite has become increasingly concentrated, with 70% of supply coming from Guinea into China’s supply chains. The company stresses the need for a new, secure, and high-quality supply to come online.
Amargosa has more than a decade of exploration work, having been run by Rio Tinto (ASX:RIO) previously before coming into Brazilian Rare Earths’ portfolio. It has a 568 million tonne (Mt) JORC-compliant mineral resource estimate, with 98Mt of direct-ship bauxite @ 41.9% total available alumina and 2.5% reactive silica, which is competitive with the benchmark set by Guinea.
The project has a simple first-stage Scoping Study development plan that does not require a beneficiation plant, tailings facility, or any major fixed infrastructure, meaning little upfront capital is needed.
The demerger under consideration is prioritising eligible Brazilian Rare Earths shareholders, with Alurion shares to be distributed on a pro-rata basis of 0.5607 Alurion shares for each BRE share held.
Alurion will also undertake an initial public offering (IPO) with the intention of raising between $30 and $50 million.
Managing Director and CEO Bernardo da Veiga says that the proposed demerger is “a disciplined value-unlocking transaction for BRE shareholders and the right structure” to lead the Amargosa Project further.
“Establishing Alurion as a dedicated company gives Amargosa the capital focus, specialist leadership, and strategic mandate to advance its development pathway.
“For BRE, the demerger also sharpens our corporate focus. It allows Alurion to advance Amargosa as a leading bauxite and critical minerals development company, while BRE concentrates its development and execution capabilities on advancing one of the world’s most important rare earth and critical mineral provinces.”
Brazilian Rare Earths is focused on rare earth projects in Northeast Brazil.
Write to Amy Rotman at Mining.com.au
Images: Brazilian Rare Earths
