Australian Rare Earths (ASX: AR3) is up 56% on the day prompting the ASX itself to suspend trading. The usual questions, is there anything that has not been disclosed? The real question being is there some inside information around that should be released more generally? The AR3 answer is here. The short answer being there's nothing we've not released, people are simply waking up to what we have said. Newspapers have told a wider group of people what we've found and how exciting it is.
What Australian Rare Earths has is indeed exciting. It's an ionic clay deposit of rare earths. This is similar to what OD6 has found and so too a number of other people around the world. This is one of those detailed technical things that can make such a difference in the mining world. For what is really happening here is that we used to think that the particular geology of South China gave a distinct advantage in the mining of two of the heavy magnet rare earths, terbium and dysprosium. We're now finding out that this isn't really true. What we thought was specific to that area - weathered granites - is in fact common enough in subtropical areas globally. Thus a number of companies globally announcing that they have such ionic clay rare earth deposits.
Australian Rare Earths share price from ASX
The importance here, as we discussed with Pensana. The real cost in rare earths is not mining to a concentrate. It's separating that concentrate. But the light rare earths, cerium and lanthanum, lose the processor money. A lot in fact. That is then made up by the profits from the heavy magnet rare earths. OK. But the concentrate which is produced from an ionic clay deposit has very much fewer of the light rare earths, much more of those magnet heavies in it. So, the losses are lower, profits higher, on processing an ionic clay derived concentrate than from more traditional sources.
That's the big thing that AR3 has. Not a rare earths deposit, but a particular kind of it, the ionic clay kind.
Now, of course, there are still all the usual problems. Can they finance, will they get to actually mining, are the management any good and so on. There's also the usual price risk of the rare earths themselves. So whether the excitement of Australian Rare Earts will be maintained is another thing. But their deposit is still more than just a rare earths find, it's the right kind of rare earths find.
