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Dhaka Tribune

Ionic Rare Earths (ASX: IXR) up 30% on Uganda pilot - how common is ionic clay?

That the company is leading the pack is true but the long term price and value is going to depend on how big the following pack is

Update : 10 Nov 2023, 04:16 PM

Ionic Rare Earths (ASX: IXR) shares are up 30% today on the announcement that they’re to start pilot production of rare earth concentrates from their operation in Uganda. Which is great, it’s an advance, it’s worth a boost to the IXR share price. But those operations at Makuutu, they’re not, in fact, exploiting a rare geology. We used to think that these ionic clays were rare, yes. In fact, we used to think they were confined to Southern China and the Burma border areas. We now know that this isn’t true, they’re in fact common enough worldwide. That means the scarcity value of any one of them is pretty low. This obviously means that the capital value of such a deposit is not high, even as market position might produce said value.

The announcement: “ Ionic Rare Earths Limited (“IonicRE” or “the Company”) (ASX: IXR) is pleased to advise that excellent progress continues to be made in the construction of the technical facility and Demonstration Plant at the Makuutu Rare Earths Project (“Makuutu”) in Uganda, through our local Ugandan operating entity Rwenzori Rare Metals Limited (“RRM”). The Company expects that it will produce its first mixed rare earth carbonate (MREC) from the Makuutu Demonstration Plant early in Q1 2024, which will be a major milestone in the development of the Project. This product will be able to be sent to potential customers and off takers who have showed interest in partnering with the Company to secure magnet and heavy rare earth product from the Project once it becomes an operational mine.“

It has to be said that production of a rare earth concentrate is not the difficult part of the process - producing the individual rare earths is. However, concentrates from ionic clays are high in the valuable magnet metals (especially Dy and Tb) and so have a specific price range different from the more normally sourced concentrates.

Ionic Rare Earths share price from Google Finance

The problem as we see it. As above we used to think such deposits were rare, very limited in fact. We now know that they’re actually common - a product of granites weathering in subtropical conditions. So much so that there’s a whole parcel full of companies claiming to have such deposits. A non-exhaustive list would include: Alvo Minerals, Australian Rare Earths, Cobra Resources, Viridis Mining, Thor Energy, Heavy Rare Earths and Desert Metals. That’s not even all the ones we’ve covered, let alone all there are.

Yes, Ionic Rare Earths is closer to production than near any of these. But in the long term the output price for any mine is how many others are producing the same material? We think that magnet rare earths are going to continue to decline in price as a result of this change in what we know about ionic clay deposits of rare earths. The current price rise seems fair enough here but it’s something that definitely needs constant monitoring as a position. 

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