Peak Rare Earths Secures $6m Including Investment from Chinese Shenghe Resources

Highlights

• Strategic Investment and Shareholder Growth: Peak Rare Earths (ASX) secured a $6 million investment from major shareholder Shenghe Resources, who will increase its stake slightly, reinforcing their shared commitment to the Ngualla Project in Tanzania.
• Ngualla Rare Earth Project in Tanzania: With estimated resources of 214.4 million tons of rare earth oxides, Ngualla is projected to support high-tech and renewable energy industries for the next 20 years, aligning with global decarbonization goals.
• Global Reach and Impact of Shenghe Resources: As a leading rare earth producer, Shenghe Resources operates internationally, supplying essential rare earth materials for green energy and technology, bolstering its partnership with Peak Rare Earths to expand rare earth supply chains worldwide.

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Peak Rare Earths (opens in a new tab) (ASX:PEK) develops operates what the firm positions as world-class and sustainable rare earth and critical minerals projects that support global decarbonization, local communities, and shareholder value creation.  According to investor disclosure (opens in a new tab) the company has secured investment commitments for a $6 million placement involving a major investor, Shenghe Resources (opens in a new tab) of Singapore.  With two tranches, the investment will comprise the issue of 60 million shares at $0.10 each, representing a 47% discount to the last closing price of $0.19 on 31 October 2024.  Again, Peak’s largest investor, Shenghe (also a major importer of rare earth concentrate involving China) gets involved with tranche two, now subject to shareholder approval.  The firms state would go from 19.85% to 19.9%. See their annual report (opens in a new tab).  Their current stock price is 0.1900 and a market capitalization of $50.62 million. They are expected to lose $18 million this year.

The Company 

Founded in 2005, the Australian mineral exploration and development company based in Perth primarily focuses on rare earth elements and operates the Ngualla Rare Earth Project in Tanzania (opens in a new tab), which is known for its significant reserves of rare earth oxides, including neodymium and praseodymium, both essential for high-tech and renewable energy applications. As of 2022, Ngualla’s estimated resources were around 214.4 million tons, containing a total of 4.6 million tons of rare earth oxides, giving the project an expected lifespan of 20 years.

The company, listed under the ticker “PEK” on the Australian Securities Exchange, has partnerships with Shenghe Resources and the Tanzanian government to further develop and commercialize the Ngualla project. Bardin Davis serves as Peak Rare Earths’ CEO, and the company has been actively working to expand its rare earth mining capabilities, crucial given the rising global demand for these elements in various industries such as electric vehicles and wind energy.

What about the investor Shenghe Resources?

A Chinese venture called Shenghe Resources Holding Co., Ltd (600392), the firm built its core business in rare earths (RE), while also takes serious account to other “Precious, Rare, and Scatted” resources.  Their main products include RE concentrate, RE oxidants, RE compounds, RE metals, RE metallurgical materials, RE catalysts, zircon sands, titanium concentrate, rutile, etc. On their website the company declares that their products are widely applied in green energy, new materials, energy conservation & environmental protection, aerospace, military industry, and electronics, etc.

Shenghe grew in China but holds its vision global. The firm emphasizes the importance of resources and markets both domestic and global. They claim to have successfully mapped out the Chinese firm’s business to Asia, America, Europe, Australia, and Africa. 

Like many companies in mining could there be a delta between their claims and actual environmental record. Some of our representative international cooperation projects are California Mountain Pass rare earths mine, Greenland Kvanefjeld polymetallic deposit, and Vietnam RE metallurgical & separating plant, etc.