Rare Earth Exchanges

Australia’s Heavy Rare Earths (ASX:HRE) to Acuire Uranium Deposits from Havilah Resources but not Rare Earth Elements

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Highlights

  • Heavy Rare Earths to purchase 80% stake in three uranium projects from Havilah Resources for A$3 million over three years.
  • Global uranium demand expected to increase significantly, with projections of 28% growth from 2023 to 2030 and 51% from 2031 to 2040.
  • The acquired projects are located in the uranium-rich Curnamona province, near two operating in-situ leach mines.

The Australian company Heavy Rare Earths (opens in a new tab) (ASX: HRE) announced its intention to buy  Havilah Resources’ (opens in a new tab) (ASX: HAV) Radium Hill, Lake Namba-Billeroo, and Prospect Hill uranium projects in northeastern South Australia.  The rare earths company has agreed to purchase an 80% interest in these three projects via a A$3 million ($2m) over three years according to the company’s press release (opens in a new tab).   The deal includes an investment minimum of A$1 million in the first year for exploration and development activities.

What’s a key business driver?

Demand for uranium has spiked as over 20 nations committed to tripling nuclear capacity by 2050 at the COP28 Climate Summit in Dubai late last year. The demand for uranium has grown and is expected to continue to grow. In 2023, the United States purchased 27% more uranium concentrate than in 2022. The average price per pound was $43.80, which was a 12% increase from 2022.  The World Nuclear Association's 2023 Nuclear Fuel Report projects a 28% increase in uranium demand over the period of 2023 to 2030.  And from 2031 to 2040 the World Nuclear Association's 2023 Nuclear Fuel Report projects a 51% increase in uranium demand over this period.

Where are the assets located?

The three assets, located in the uranium-rich Curnamona province (opens in a new tab), are situated near two operating in-situ leach (ISL) mines at Honeymoon, owned by Boss Energy (opens in a new tab) (ASX: BOE), and Four Mile, owned by the private company Heathgate Resources (opens in a new tab), the latter owned by US-based nuclear company, General Atomics.

According to technical director, Chris Giles (opens in a new tab). “These agreements with HRE provide a way for Havilah to monetize a portion of its remaining uranium assets, for which it is currently receiving neither market recognition nor value.”

What are the key terms?

Havilah after the purchase will have 100% ownership of its exploration licenses and mineral rights, however not including rare earth elements and scandium at the Radium Hill extensions. Heavy Rare Earths (opens in a new tab) will assume responsibility for further exploration expenditures and fieldwork.

Canada, Australia, and the United States have led the sector’s revival (opens in a new tab) this year, with companies announcing production increases and the restart of previously halted projects.

Heavy Rare Earths

Heavy Rare Earths (ASX: HRE) s an Australian rare earth exploration and development company. Rare earth materials are used in manufacturing rare earth permanent magnets which are essential in a wide array of technology and future facing applications, including smart phones, wind energy, and hybrid and electric vehicles.

HRE’s key exploration project is Cowalinya (opens in a new tab), near Esperance in Western Australia. This is a clay-hosted rare earth project with a JORC Inferred Resource of 159 Mt @ 870 ppm TREO and a desirable rare earth composition where 28% are the valuable magnet rare earths and 23% the strategic heavy rare earths.

The company has a pipeline of grassroots rare earth exploration projects in Australia at Duke (opens in a new tab), near Tennant Creek in the Northern Territory, and Merino (opens in a new tab), near Geraldton in Western Australia.

Heavy Rare Earths Limited (ASX: HRE) has been struggling with its stock price, which is currently quite low due to a confluence of factors from financial losses and revenue challenges.  The reality with this stock now priced at 0.0400 that the combination of financial instability, shrinking market cap, and low investor confidence explains why a dangerously low stock price.

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