Ionic Rare Earths (IXR) - Significant Increase In Resource

Ionic Rare Earths Limited is developing the Makuutu Rare Earths Project (Makuutu) to become a globally significant producer of both Heavy and Rare Earths Oxides (HREO), and Critical Rare Earth Oxides (CREO), providing a viable large-scale, low-cost alternative supply chain outside of China. Rare earths will play a critical role in the future of cleaner energy. Rare earths are a key ingredient in the permanent magnets found in wind turbines and electric vehicles. 

Matt Gordon caught up with Tim Harrison, CEO, Managing Director, Ionic Rare Earths. Mr. Harrison initially joined the company in the role of Project Manager of the Makuutu Rare Earths Project at the start of 2020. Since then, he has been driving development and value creation and was appointed CEO in June 2020 and Managing Director in December 2020.

Harrison holds a Bachelor of Chemical Engineering degree and has over 20 years of experience and an extensive and successful track record in the fields of both mineral processing and hydrometallurgy across multiple commodities. Mr. Harrison has been involved in project development, process and flowsheet development, studies, test work planning and supervision, engineering, construction, commissioning, operations, and project management. 

Company Overview

Ionic Rare Earths Limited is focused on developing its flagship Makuutu Rare Earths Project in Uganda into a significant long-life, low-cost supplier of high-value critical and heavy rare earths. Makuutu is an advanced-stage, ionic adsorption clay-hosted project highlighted by near-surface mineralization, significant exploration upside, excellent metallurgical characteristics, and access to tier-one infrastructure. The project is well-supported by access to major highways, roads, power, water, and a professional workforce. The company was founded in 1998 and is headquartered in Australia. It is listed on the Australian Stock Exchange (ASX: IXR). 

Ionic Rare Earths is developing a magnet and heavy rare earths supply chain from its Makuutu Rare Earth Project in Uganda. The company has a large investor base that enabled the company to set itself for production at Makuutu over the next 18 months.

Cash Position

Ionic Rare Earths recently raised $30M, where Canaccord Genuity acted as Global Bookrunner and Lead Manager to the placement, while Sprott Capital Partners LP acted as Co-Manager. A number of institutions and EV funds have come on board through this capital raise. 

Notably, the company is transitioning from retail to institutional investors. The investors are seeing the opportunity for substantial appreciation in the company’s value as it moves forward with the supply chain. The company is in an ideal position to be a supplier of rare earth magnets for the EV (Electric Vehicle) industry. 

Ionic Rare Earths has plans to utilise the capital to work through and finalise a Feasibility Study at Makuutu and prepare the project for an FID (Final Investment Decision). The company is also looking to develop a demonstration plant that would provide feed material for refinery piloting and downstream validation work. This would also generate capital that can be used to advance the magnet recycling initiative in the UK with Seren Technologies. 

Building A Supply Chain

Ionic Rare Earths is looking to build a revenue-generating supply chain by bringing in partners. It is in a very strong position to pull the trigger on the Makuutu project. The company is looking to enter additional partnerships for the supply chain. 

The company is looking to produce about 4,000t of rare earth oxides that would produce enough magnet rare earth elements to enable about 2 million EVs per year, which is a fraction of the actual market. The company forecasts that in the coming years, about 30 million EVs will be produced on an annual basis. Due to a steep rise in EV production, recycling would be an important component. 

Recycling Opportunities

Ionic Rare Earths is working on developing an integrated supply chain. The recycling component of EVs adds significant value to the lifecycle ownership of rare earths. The rare earth elements and oxides are processed into metals, powders, and magnets. The offcuts and waste material during the manufacturing process can be recycled, making it a highly efficient operation. 

The company is still looking at different recycling possibilities. The current technology can be used to develop more than one recycling plant. Since the plant is modular and low-capital, the company has plans to deploy them across the US and Europe by way of partnerships. The magnet recycling industry is expected to grow substantially over the next decade. 

Notably, between 20%-25% of the magnet rare earths that are produced in China are sourced from recycled materials from around the world. Ionic Rare Earths is looking for ways to provide an option for governments and partners globally, enabling the production of magnet rare earths from recycled materials in the respective jurisdictions. 

Working in partnerships with magnet sourcing companies and end-users on lifecycle ownership of products can help create a supply chain. For instance, the large magnets used in wind farms have a limited lifecycle. Once the wind farm is decommissioned, the material needs to be reprocessed and turned back into new turbines, generators, and magnets, which can then be made into new wind turbines. 

In the automotive industry, magnets are much smaller in size. As a result, a lot more material handling is required to extract the magnets. The magnet recycling industry is expected to grow dramatically over the course of this decade. 

Ionic Rare Earths has been approached by a number of institutions for the recycling component. Certain jurisdictions like Europe have the recyclable material stockpiled. Institutions understand that the material will increase over time, providing an ESG (Environmental Social and Governance) opportunity with regards to recycling the material back into new products. As per the company, it is important to source material from spent magnets and waste products. 

The Rare Earths Market Landscape

The ongoing Russia-Ukraine situation has adversely affected the supply chains. Ionic Rare Earths is looking to provide a new source of magnets and heavy rare earths to the US and European markets. These 2 markets will have increasing challenges in sourcing rare earths by the end of this decade. 

The company has seen tremendous interest from North America, and a good response from Europe. Makuutu is a very large asset that has the potential to supply both the European and the US markets. The project offers scalability, which enables the company to increase production as per the market requirements. It has a lot of flexibility and optionality in developing the Makuutu project. The company is looking to commence production at Makuutu by 2024. 

China currently dominates the heavy rare earth refining capacity on a global scale.  As a result, Ionic Rare Earths is looking to target other markets. It is seeking a value-add in going downstream, in refining, separating the mixed rare earth carbonate, and marketing the production in North America and Europe. The company is looking for an option for downstream processing, which is currently non-existent. 

Ionic Rare Earths has several options when it comes to developing Makuutu. There is potential to stockpile products as well. The company’s strategy is to start with the placement of the end-product and work its way backward. 

The NdPr (Neodymium and Praseodymium) accounts for 50% of the potential revenue, while the Pr rare earths account for the other 50%. In the case of magnet rare earths, NdPr and DYTV account for 90% of the company’s revenue. As a result, the company is seeing a lot of traction from EV manufacturers that are looking to gain access to the full blend of magnet rare earth elements in order to make magnets. The EV manufacturers have committed billions of dollars to infrastructure in order to move their EV fleet, moving the product suites away from internal manufacturing. Interestingly, EV manufacturers have done a lot of work on batteries, but the motors and magnets have been largely overlooked. 

Targets 2022 and Beyond

Ionic Rare Earths completed a PEA (Preliminary Economic Assessment) on the Makuutu project in April 2021. It is looking to complete a Feasibility Study by October 2022, which will be followed by a mining license application. Under the Ugandan Mining Act, the deliberation period on the mining license is 60 days. In case the company is able to get the application earlier, it would have a mining license by 2022-end. Once the license is in place, the company will work through the FID and bring the Makuutu project into production by 2024. 

The company’s experience with the Makuutu project in Uganda has been highly positive. The initial 20% interest in the project was acquired in August 2019. Since then, the company has drilled out a massive resource and has completed a Scoping Study. 

Ionic Rare Earths has a strong engagement in Uganda. The company has already submitted an ESIA (Environmental and Social Impact Assessment) and is looking to get full feedback on the same within the next 2 months. The company is also working on a resettlement action plan. It has had a really good engagement from different departments within the Ugandan government. The company is looking to go from an explorer to a developer and eventually an operator within 5 years of taking interest in the Makuutu project. 

ESG is a major consideration for the company. It’s part of the social license that is required in order to operate. The company believes that being a good corporate citizen requires operating in an environmentally conscious manner. The company is aiming to produce a rare earth blend that is going to help the world move towards a fraction of the net carbon zero targets. It has a long-life asset in Uganda, where the potential to extract full value can only be done in a sustainable manner. 

To find out more, go to the Ionic Rare Earths website