Ionic Rare Earths Closing the Magnet Recycling and REE Mining Gap

• Ionic Rare Earths (IXR) is focusing on developing a supply chain for magnets and rare earths from their asset at Makutu. They are also integrating magnet recycling capabilities.
• Over the past year, IXR has increased their resources, initiated a mining lease application, approached the completion of a feasibility study, and worked on environmental and social impact assessments.
• The rare earth market dynamics suggest a persistent demand, with certain rare earths projected to be in deficit soon. There are challenges with the current supply chain, and many rare earth projects come with high capital costs.
• IXR is examining the possibility of creating alternative supply chains for Western markets, bypassing China. They are discussing with partners and considering various options to navigate the complexities of the supply chain, from oxides to metals to magnets.
• Ionic Technologies, focusing on magnet recycling, offers a potential platform for the company's future growth, with the possibility of extracting value from licensing, royalties, and other avenues.

About

Ionic Rare Earths Limited, formerly known as IonicRE, is dedicated to the development of rare earth projects in Africa. The company is focused on the development of the Makuutu Rare Earths Project in Uganda, which contains ionic clay hosted rare earth mineralization. Ionic Rare Earths is also developing capabilities in the recycling of rare earth magnets and associated technologies.

Ionic Rare Earths is an Australian-based company focused on the development of the Makuutu Rare Earths Project in Uganda. The Makuutu project contains significant quantities of high-value critical rare earths including neodymium, praseodymium, terbium and dysprosium. These rare earth elements are crucial for the manufacturing of permanent magnets used in electric vehicles, wind turbines, robotics and other advanced technologies.

In addition to its core focus on rare earth mining, Ionic Rare Earths is also developing capabilities in rare earth magnet recycling through its subsidiary Ionic Rare Earths Technologies. This move into magnet recycling provides further integration in the rare earth supply chain. The company aims to be a long term and sustainable supplier of rare earth materials to markets outside of China.

Interview with Tim Harrison, Managing Director of Ionic Rare Earths Ltd.

Progress and Value Addition Over the Past Year

According to Managing Director Tim Harrison, Ionic Rare Earths is in a much stronger position compared to 12 months ago. The company has significantly increased the Makuutu resource and the confidence in the resource. It has also commenced the mining lease application process and is close to completing a feasibility study and environmental/social impact assessment for Makuutu. Furthermore, the move into magnet recycling has added an additional capability and potential value stream.

A key development is the planned construction of a demonstration plant at the Makuutu site in 2023. This demonstration plant will enable Ionic Rare Earths to produce significant quantities of mixed rare earth carbonate product from Makuutu. It will provide product samples to potential offtake partners and customers. The demonstration plant is also expected to significantly derisk the larger scale development of Makuutu.

Beyond mining, the magnet recycling subsidiary Ionic Technologies provides a platform to start producing rare earth oxides. This can help initiate partnerships and collaborations with downstream processors. Although the recycling operations are currently small, there is significant upside potential as demand grows.

Overall, Harrison emphasized that the company is in a strong position with enough capital to continue advancing Makuutu and recycling operations over the next 6-12 months. This will involve further de-risking activities to add value for shareholders.

Demand Fundamentals and Price Outlook

According to Harrison, demand forecasts for rare earths continue to increase month-on-month. This demand is being driven by electric vehicles, offshore wind projects, robotics and other high-tech applications that require strong permanent magnets. However, supply of critical heavy rare earths like dysprosium and terbium is not keeping up with rising demand. Harrison suggests that dysprosium and terbium are already in deficit, while praseodymium and neodymium will likely be in deficit next year.

Although rare earth prices have softened since early 2022 peaks, the long term price outlook remains strong. Ionic Rare Earths estimates its basket price could double within the next 10-15 years compared to current levels. This price appreciation is underpinned by irreducible demand growth in magnet rare earths. Without new mine supply coming online, pressures on dysprosium, terbium and other critical magnet rare earths are expected to continue intensifying.

Closing the Supply Chain Gap

A key challenge in the rare earth sector is completing the mine-to-magnet supply chain outside China. Harrison explained that Ionic Rare Earths is focused on developing alternative supply chains for its products into Western markets. This involves finding the right partners to convert rare earth oxides into metals, alloys and eventually permanent magnets. The company also needs to secure offtake agreements and strategic partnerships to support project funding.

The modular development approach at Makuutu provides flexibility to start initial production then grow organically. Furthermore, the move into magnet recycling helps produce rare earth oxides to feed potential downstream partners. According to Harrison, integrating across the supply chain will enable the company to deliver the high purity oxides that customers require.

Conclusion

With strengthening demand fundamentals and high long term price outlook for magnet rare earths, Ionic Rare Earths aims to be a key player in developing diversified supply chains outside China. The Makuutu Rare Earths Project provides a major source of critical heavy rare earths like dysprosium and terbium. Additionally, the move into magnet recycling offers production of rare earth oxides to feed potential partners further downstream.

After significant progress over the past year, Ionic Rare Earths appears well positioned to continue advancing the Makuutu project towards initial production. The planned demonstration plant is a key near term catalyst to derisk the project and produce samples to test potential customer interest. As the company executes on its integrated strategy spanning mining, recycling and refining, it aims to close the key supply chain gap and generate long term value for shareholders.