Appia Makes Major Rare Earth Discovery in Brazil, Sending Shares Higher

• Appia discovered exceptional high-grade rare earth mineralization in Brazil.
• One drill hole averaged 2.72% TREO over 24 metres from surface.
• Includes 0.63% magnet REO and 0.14% heavy REO - very high grades.
• Mineralization remains open at depth suggesting potential for further significant mineralization.
• Assay results are the highest grades detected at the project to date.

the Shares of Appia Rare Earths & Uranium Corp. surged over 50% after the company reported extraordinary high-grade rare earth drill results from its PCH project in Brazil.

One reverse circulation drill hole averaged an exceptional 2.72% TREO (total rare earth oxides) over 24 metres from the surface. This includes 0.63% magnet REOs and 0.14% heavy REOs. For context, these grades are over 10 times higher than typical Chinese ionic clay deposits which average around 0.2% TREO.

The mineralization remains open at depth, with the potential for the deposit to continue. Follow-up drilling is planned.

The Big Picture: Demand Boom, Supply Crunch

Rare earth elements are essential to the world's transition to clean energy and e-mobility. They are indispensable in applications like electric vehicle motors, battery alloys, wind turbines, energy-efficient lighting and electronics.

Global demand is forecast to grow at a 9% CAGR to over 400 kilotonnes by 2030, led by strong uptake in magnets, batteries and polishing powders. Yet supply remains constrained, with China controlling over 80% of production.

Prices have already risen multi-fold over the past two years due to export restrictions and booming demand. Leading producer MP Materials recently noted that magnet rare earth prices are up 148% over the past 12 months. With demand growth outpacing new supply, deficits across all key magnet rare earths are forecast through this decade. Consultancy Roskill sees a 15 kilotonne deficit in Neodymium and Praseodymium by 2025, widening to 45 kilotonnes by 2030.

This supply-demand imbalance creates a compelling opportunity for new production to enter the market and capitalize on forecast growth and acute shortages.

A World-Class Deposit in the Making

Appia's exceptional drill results provide an early glimpse of a potential world-class deposit emerging in Brazil. While additional drilling is needed to delineate the overall resource size and scale, the grades, thickness and consistency of mineralization are highly encouraging.

The 24m intersection grading 2.72% TREO is impressive both in terms of thickness and high average grade. Remarkably, it comes to the surface which should aid extraction. The grades also appear to be increasing at depth - the final 1m sample averaged 2.69% TREO indicating significant additional potential below. The assay results are also notable for the high magnet and heavy rare earth components, at 0.63% and 0.14% respectively. The mineralization includes key elements like dysprosium, terbium, neodymium and praseodymium which attract significant price premiums due to rising demand and restricted supply.

While additional drilling will be required to delineate the overall scale, this initial intercept far exceeds typical grades seen in Chinese ionic clay deposits and points to a significant deposit in the making. The project also covers a large 17,551 hectare area providing substantial upside for further discoveries across multiple targets.

Low-Cost Extraction Adds Compelling Economics

Unlike complex hard rock deposits, extraction from ionic clays is relatively simple and low-cost. This provides a significant advantage in terms of potential economics.

The clay deposits are close to the surface allowing for straightforward open-pit mining. Processing then involves cheap acid leaching or ion-exchange methods with estimated opex under $10/kg TREO. Capex requirements are also low with simple processing setups.

By contrast, hard rock projects can require billions in upfront capex and have opex of $15-25/kg. So Appia's project benefits from significantly lower costs, translating to higher margins and faster paybacks. The project also enjoys supportive infrastructure being located near major highways, rail, power and industrial facilities. A skilled workforce is available locally and regionally. The area is recognized for niobium production, so has an established mining culture.

First Mover in Exciting Emerging District

By recognizing the potential early, Appia has gained a first-mover advantage in the area. Its regional exploration has validated the prospectivity across its large 17,551-hectare holding covering multiple target areas.

This provides enviable leverage as the company now looks to rapidly advance exploration after this exceptional discovery. With a modest $60m market cap, Appia offers compelling risk-reward upside for investors as it works to delineate the scale of the deposit and potential district opportunity. The company has timed its entry well, with the demand backdrop creating a compelling incentive for bringing on new rare earth supply to ease forecast shortages. The huge global growth forecast in EVs, wind power and electronics bodes very well for rare earth demand and prices.

Appia is now positioned at the forefront of this exciting new rare earth district emerging in mining-friendly Brazil. While early stage, the exceptional grades encountered have proven the potential. Further success could propel Appia onto the global stage as an emerging major supplier of magnet feedstock to meet surging demand.

With a tight capital structure and an experienced board and technical team, the company appears primed to fully capitalize on this opportunity. The recent discovery hole may one day be viewed as a pivotal moment in the emergence of this new supply region.

Investment Thesis for Appia Rare Earths

Appia's remarkable high-grade rare earth discovery has transformed it from an early mover with potential into one now validated by a significant drill intercept. With such exceptional grades near the surface in its first hole, the company appears to be onto something special as it looks to delineate a major new deposit.

The mineralization ticks all the boxes - high grades, magnet and heavy rare earth enrichment, consistency and thickness. That positions Appia well to potentially develop a low-cost producer amid tightening global supply-demand dynamics. While early stage and further drilling is required, the initial results exceeded expectations and provided compelling upside for investors at a modest market valuation. Appia now offers attractive leverage as it works to potentially turn this into a world-scale producing asset.

With a strategic foothold in an exciting emerging mineral district, Appia has the potential to emerge as a major new supplier of technology metals essential to the global energy transition. Investors interested in positioning early for the next major rare earth producer would be well advised to take a close look at Appia after these remarkable initial drill results.

Here are the key details for investors on this major discovery:

• The 24-metre intersection from the surface is highly unusual in terms of grade and thickness for an ionic clay rare earth deposit. The consistency and purity of the mineralization point to a world-class deposit in the making.
• The high proportion of magnet and heavy rare earths is significant, as these command premium prices due to high demand and restricted supply. The mineralization includes essential elements like dysprosium, terbium, neodymium and praseodymium.
• This is the highest grade intercept at the PCH project to date, highlighting the potential for further high-grade discoveries across the 17,551-hectare land package which remains largely underexplored.
• The project benefits from excellent infrastructure in a mining-friendly jurisdiction in Brazil. Unlike complex hard rock deposits, ionic clay projects involve simple low-cost extraction with estimated opex under $10/kg TREO.
• Global rare earth demand is forecast to grow rapidly driven by clean energy applications like electric vehicles, wind turbines and electronics. Prices have already risen multi-fold in recent years with tightening supply. This creates an ideal backdrop for new production to enter the market.
• Appia is capitalizing on its first-mover advantage, having recognized the potential of the area early. It has now validated this with a world-class discovery, positioning it to take advantage of forecast market deficits as new supply is urgently needed.
• With a market cap of around C$60m, Appia offers compelling leverage to further exploration success. The company is well funded following recent raises and has an experienced management team leading exploration and development.