I wanted to obtain some feedback from the community on an idea I recently stumbled upon.
Ticker for this idea is:
$ARR on the Australian exchange
$AMRRY (in the American OTC)
Company name is: American Rare Earths
My father was randomly doing a google search on rare earth mineral mines trying to develop ideas and do some reading on his own and texts me this.
My deep dive started when my father sent me the usual motley fool ad below:
At first I thought it was a bit over the top, but I said to myself, let me try a little mini deep dive and see if I can find this mine and read up on it.
As it turns out the mine is real and is located in Wyoming. It is the Halleck Creek mine in Wyoming, adjacent to the Laramie Mountains and Wheatland.
The company is owned by an Australian party listed in the Australian exchange (I do wonder if there are certain tax benefits to being based in Australia? I do believe Australian software companies do have a significant tax advantage when they based their companies in Australia…not sure if this is the case for mining companies? feel free to chime in if you know.)
As was stated in that little marketing newsletter, the project does indeed possess 2.34 billion tonnes of Total Rare Earth Oxides (TREO). My particular interest resides in the Magnetic Rare Earth Oxides (MREO), and my questions started from there. How much MREOs could this mine have, and would it be feasible to mine? MREO of interest namely is the NdPr oxide.
And further, I was hoping to compare this to current publicly traded companies such as $MP (a magnetic rare earth oxide mine located in Mountain Pass–valued at a mcap of $3.4 billion). The other company that I think warrants a comparison is Lynas Rare Earths ($LYC), also listed in Australia.
The Halleck mine possesses 2.34 billion tonnes of TREO at 3196 ppm. (American Rare Earths Resource Estimate for Halleck Creek Rare Earths Project Increased by 64% - Junior Mining Network)
A recent newsletter detected slightly higher grade zones up to 5313 ppm TREO; and a recent newsletter from American Rare earth suggested higher grade zones of up to 11,040 ppm.
As I started this journey with the assumption of a lower grade of 3196 ppm, let’s stick with that number, and take the remainder of the provided data with a grain of salt. That is, let us assume that there is a ppm TREO one order of magnitude less than competitor $MP.
Of the total resources at this mine, it has been estimated that 27% of the total resource is of an average grade of 774 ppm MREO, with a contained metal estimate of 1.8 million tons.
Therefore, (and please confirm my math), $ARR has .003295 x 2.34 billion tons = 7.7 million tons of TREO,
27% of which is MREO = ~2 million tons of MREO (as stated in the article, a contained MREO metal estimate of 1.8 million tons). So, 1.8 million tons of MREO at Halleck Mine.
I’d like to compare this to $MP with as much raw data as possible, but it is difficult to sort of assess the actual value, though I will try to get as close as possible.
According $MP 10-q, page 27, (https://d18rn0p25nwr6d.cloudfront.net/CIK-0001801368/42e7408d-57fd-4573-a1a2-b1bdcca52e80.pdf) , “Our ore body has proven over more than 60 years of operations to be one of the world’s largest and highest-grade rare earth resources. As of December 31,2023, SRK Consulting (U.S.), Inc., an independent consulting firm that we retained to assess our reserves, estimated total proven and probable reserves of 1.86 million short tons of REO contained in 28.46 million short tons of ore at Mountain Pass, with an average ore grade of 6.20%. These estimates use an estimated economical cut-off grade of 2.43% total rare earth oxide. Based on these estimated reserves and our expected annual production rate of REO upon production ramp-up of Stage II, our expected mine life was approximately 33 years as of December 31, 2023.”
So, $MP states that they have 1.86 million tons of REO. Now, I shall attempt to extract the MREO content by looking at their revenue streams and other reporting figures in their statement 10 Q.
Based off their financial operations tagged here on page 16, their MREO (NdPr line) revenue is between 24-30% of the entire revenue stream, but that does not get me to the absolute value of MREO in tons (prices are different for different metal moieties.)
Another chart reveals more in terms of weight(page 30):
*In this chart, they delineate that they produce 13724 MT of REO, and 478 MT of MREO (NdPr). To me, this suggests that the ore processed in this mine, at best, carries about a 3.67% MREO composition.
Therefore, I presume, that it stands to follow that $MP, in total, has 1.86 million tons of REO x .0367 %= .06826 million tons of MREO.
Therefore, it appears that the Halleck Mine ($ARR) possesses (1.8 million tons of MREO @ Halleck Mine/ .06826 million tons of MREO @ Mountain Pass) = 26.4 x more MREO than the known competitor of $MP.
To re-state, if my math is correct, Halleck mine has 26x times more MREO than Mountain Pass.
A main revenue source of such mines, in our current robotics/AI epoch (shall we call it), is from Magnetic Rare Earth Oxides. If $MP is currently at a mcap of $3.4 billion, can one argue that $ARR has the potential for a mcap $88.4 billion? As $ARR is currently a mcap of $141 million, is there an argument for a 626x bagger?
There are pros and cons. As discussed above, the initial setback was the consideration that Halleck mine has a less concentrated ore grade, by an order of magnitude, that is, 10x less MREO per unit ore. However, according to investor presentations and filings and a recent newsletter, this concern is addressed by the fact that $ARR has collaborations with DARPA (Defense Advanced Research Project Agency), and they claim to have engineered a cost effective way to remedy this. They have a R&D partnership for phase II secured with DARPA. https://app.sharelinktechnologies.com/announcement/asx/8d5b8f0317510516a2ed9a9275c9e0e0
page 10
So they have a partnership with DARPA, ARPA-E, and the department of energy critical materials institute, the Ames Laboratory, and the Lawrence Livermore National Laboratory. page 12
https://app.sharelinktechnologies.com/announcement/asx/e7a2700c2db861e5925eb5a48148448d
Basically, my general point is, without personal subject matter expertise, that it appears according to content provided by the company, that they have managed to increase to a greater a concentration of ore by 12:1, while reducing expenses by 70% .
page 10
https://app.sharelinktechnologies.com/announcement/asx/99e2b33b2d8382c24ed859bbd35d1dbf
But all in all, without underlying geological subject matter expertise in this field, all I’m saying here is…DARPA cool. I’ve heard of DARPA, and they have done things in the past in the field of technology, and it appears, perhaps, at least, peripherally they are involved.
But like, you gotta read about what they are doing, and THIS is interesting: they are using BACTERIA to further purify the ore.
This is where, I was like, wow, things got real. These people are using the metal binding proteins on the surface of extremophile methanotrophs to harvest Magnetic Rare Earth Oxides.
I kid you not: "Using a bioengineered protein-based technology, Lawrence Livermore National Laboratory (LLNL) scientists and collaborators will develop a new separation technique that ultimately will increase the concentration of rare-earth elements (REE) so they are more readily available to the defense sector.
Under the Defense Advanced Research Projects Agency (DARPA) Environmental Microbes as a BioEngineering Resource (EMBER) program, the team was awarded an additional $4.6 million in R&D funding for phase 2. The team will use bioengineered proteins to explicitly enhance the biomining workflow and to produce high-value reagents needed for REE processing."
…and there’s a supercomputer involved in amending the design of the surface protein…like the story just gets insane: “LLNL will use its centralized, high-performance supercomputer facility maintained by Livermore Computing (LC). For the project, the LC facility will be critical for performing machine learning to iteratively design and improve proteins with enhanced REE specificity and affinity. In addition to the LC facility, the LLNL provides research staff experienced at conducting similar protein refinement studies for the design of vaccine antigens and therapeutic antibody design.”
To further argue the relatively less concentrated MREO question, a newsletter published yesterday states: "The project employs straightforward early-stage upgrading using dense media separation and wet high intensity magnetic separation, achieving an impressive tenfold increase in ore grade. "
The question posed again: is there a potential 626x opportunity here?
I guess one other positive facet to the mine, is that it possesses significantly less levels of Uranium concentration, requiring less detoxification than other mines, which means less cost in extracting the MREO. The low level of radioactive contaminants is deemed to be a major plus.
I don’t know the exact numerical details on the amount of Uranium with $MP;
At $ARR they are “well below regulatory standards.” : "It is worth noting that the average Thorium grade reported in the resource was 58ppm, while the average U grade was an infinitesimal 7ppm. "
Only other thing I would add is that there is apparently a “nonbinding letter of engagement” to fund this project in whole on the order of $456 million by the EXIM (“The company has in hand an EXIM Bank Letter of Interest for up to US$456mn (i.e. the fullCapEx of the project)”)
Export-Import Bank of the United States (“EXIM”)
And further, I would add that it did reject a SPAC offer as it claimed to want to maximize shareholder interest: American Rare Earths rejects $400 million SPAC takeover offer - MINING.COM
As you recall, $MP was a Chamath backed SPAC.
There are unknowns.
I’d like to know more about the management team selected. I don’t want them burning through cash on this loan opportunity.
I’d like to know the exact levels of Uranium contamination at $MP and $LYC mines, and other mines globally.
And I do emphasize, this is not the usual Motley Fool Rec, as it is in such a beginner start up phase, and it carries with it no revenue stream, no established pattern of excellence, no history of financial discipline; and I emphasize that this is likely speculative.
I’d need to know more about capex and cost of machinery, and how much attrition there would be.
so fools, what do you think?
Thanks for reading this.
all the best,
sfoolish
