East Star Resources (LON: EST) shares are down 10% today on the announcement of their extraction tests for rare earths. The basic problem here is that the chemistry of rare earths is tricky. This is something that we need to keep in mind when we consider all those other companies claiming ionic clay RE deposits like OD6 and Heavy Rare Earths.
The actual announcement is: “The mineralogy and total rare earth elements (TREE) concentrations of the Talairyk samples are comparable to ion adsorption deposits globally with a kaolinite-dominated mineralogy and 815-5,185 ppm TREE. Single phase leach results from ammonium sulphate have lower recovery with peak results (pH4) demonstrating ~7.5% recovery of NdPr meaning the leachability of the tested samples is not representative of proven ion adsorption clay deposits” and then if they go on to multiple leaches in different styles then they're able to collect the vast majority of the rare earths contained.
This just rather proving that rare earths are tricky little metals. They're undoubtedly there, in that ionic clay they've got there in Kazakhstan. But can they get them out of that clay? The answer there is also yes - but can they get them out simply and economically? That's where it all gets tricky.
East Star Resources share price from London Stock Exchange
This following description is wrong in every specific but it's a good enough story for non-experts to follow. Ionic clays are the natural end state of weathered granites. Give wind and weather a chance at that mountain over there and a few tens of millions of years and a puddle of clay is what results. All the varied metals that were in the mountain are either in the clay or have been washed off downriver. Most mountains contain rare earths so some of those clays will, just depending, contain interesting quantities of rare earths.
OK, this is just an extreme form of the idea of alluvial mining, where old riverbeds often give us tin and heavy mineral sands operations.
However, here's the problem with these ionic clays. The chemistry of the rare earths within them can be different. We can know, absolutely, that there are lots of lovely lanthanides in there. But have no real way of getting them out economically. Just because they're bound to other things in there in a manner that's not cheap to reverse. Sometimes it is cheap - those are ionic clays to be mined. Sometimes it isn't - at which point until there's a new technology they're ionic clays not to be mined.
That is, it's the form of ionic clay that matters to rare earth extraction. Now, it's too early to tell here but the worry is that East Star Resources is on the wrong side of that line. It's possible to extract but given the difficulty - the multiple steps required - will it be economic?