Rare Earth Exchanges

Equinox Resources uncovers high-grade rare earths, gallium and bauxite at Rio Negro prospect

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Highlights

  • Drilling at Rio Negro prospect reveals high-grade rare earth oxides up to 7,890 ppm and significant gallium concentrations.
  • Prospect demonstrates exceptional multi-commodity potential, representing just 1% of Equinox Resources’ 1,800 km² Campo Grande landholding.
  • Company shows promising exploration results despite current financial challenges and minimal revenue generation.

Drilling at the Rio Negro prospect, part of the progressive ASX-listed company Equinox Resources’ (opens in a new tab) larger Campo Grande project in Brazil, has revealed exceptional rare earth grades and reinforced the site’s multi-commodity potential.

The company, founded in 2021, recently wrapped up 14 reverse circulation (RC) drill holes at the prospect, building on the success of an earlier scout drilling campaign. Remarkably, total rare earth oxide concentrations reached as high as 80 percent.

The latest results showcased an impressive grade of 7,890 ppm Total Rare Earth Oxides (TREO) identified at a depth of 36 to 38 meters (CG_RC24_005). Elevated phosphorus pentoxide levels, reaching 3.09 percent, further highlighted this, indicating that monazite is likely the primary mineral hosting rare earth elements.

Drilling also yielded the following results:

  • 5m at 6585ppm TREO (22 percent MREO) from 33 m (CG_RC24_005), including 2m at 7890ppm TREO from 36m
  • 6m at 2067ppm TREO (22 percent MREO) from 33m (CG_RC24_007)
  • 7m at 1691ppm TREO (21 percent MREO) from 8m (CG_RC24_008)
  • 10m at 1529ppm TREO (24 percent MREO) from 9m (CG_RC24_014); and
  • 17m at 1522ppm TREO (22 percent MREO) from 5m (CG_RC24_015).

Equinox Resources’ Managing Director, Zac Komur, (opens in a new tab) highlighted the significant potential of the Rio Negro area, despite it representing just a small section of the broader Campo Grande project. He also pointed to the discovery of high-grade deposits of gallium and bauxite, both of which are in high demand due to supply constraints.

Komur stated, “The Rio Negro Prospect is proving to be an exciting and important part of our Campo Grande Rare Earth Project. The standout TREO grades, including 7890ppm supported by monazite as the primary REE-hosting mineral, showcase the unique geological opportunity here.”

“What’s just as exciting is the high-grade gallium and bauxite we’ve intersected in the southeast, with gallium grades exceeding global averages, a significant win for the project.”

“And let’s not forget, Rio Negro represents only 1 percent of our broader 1800km2 landholding at Campo Grande. There is untapped potential yet to be uncovered.”

The central-eastern section of the prospect is rich in high-grade rare earth elements (REEs), while the southeastern corner has yielded impressive concentrations of high-grade gallium and bauxite. Gallium levels surpass global averages, and peak bauxite concentrations were recorded at 42.1 percent, with a 20-meter interval showing 34.1 percent Al₂O₃ (CG_AD24_074).

The following are the key gallium intercepts:

  • 17m at 90.2g/t Ga₂O₃ (CG_AD24_011) from surface, including 1.0m at 102.2g/t from 3m
  • 20m at 73.8g/t Ga₂O₃ (CG_AD24_006) from surface, including 1.0m at 106.5g/t from 3m
  • 20m at 70.4g/t Ga₂O₃ (CG_AD24_057) from surface, including 1.0m at 87.1g/t from 18m
  • 20m at 70.4 g/t Ga₂O₃ (CG_AD24_026A) from surface, including 1.0m at 82.8g/t from 15m; and
  • 17.5m at 69.3 g/t Ga₂O₃ (CG_AD24_085B) from the surface, including 2.0m at 91.5g/t from 6m.

What is gallium used for?

Gallium has many uses, including thermometers, semiconductors for electronics, and light-emitting diodes. It is also widely used in the manufacture of optical materials, aerospace fields, and solar cell materials and is the backbone of the electronics industry. However, due to the rapid development of the electronics industry and related industries, the gallium market has been in short supply.

The Company

Equinox Resources Limited (EQN.AX) shows several financial and operational challenges common to early-stage or exploration-focused companies in the rare earths and mining sector. Rare Earth Exchanges reviewed the company’s data via Yahoo Finance (opens in a new tab).

With a market capitalization of AUD 13 million and an enterprise value of AUD 7.82 million, the company is small and still in its developmental stages. Its revenue over the trailing twelve months (TTM) is just AUD 18.71k, reflecting minimal operational output or sales, typical of pre-production companies. However, this also results in a high Price/Sales ratio of 568.39, which highlights a lack of revenue generation to justify its current valuation.

The company’s profitability metrics are deeply negative, with an operating margin of -4,329.97% and a net income loss of AUD 1.75 million. This indicates heavy expenditure relative to its revenue, likely due to ongoing exploration and development costs. Its Return on Assets (ROA) of -5.77% and Return on Equity (ROE) of -10.19% suggest ineffective use of resources to generate returns.

On the balance sheet, the company has a total cash of AUD 5.26 million, providing some liquidity and a strong current ratio of 12.10, suggesting it can meet short-term obligations comfortably. However, its total debt of AUD 73.13k and a low Debt/Equity ratio of 0.39% indicate limited leverage, which may be positive or negative depending on its ability to secure additional funding for operations.

Equinox’s share performance has been volatile, with a 52-week decline of 65% and a stock price near its low of AUD 0.095. Insider ownership at 64.24% suggests strong internal commitment, but the lack of institutional investment (0.40%) reflects limited external confidence.

Compared to other rare earth exploration companies, Equinox’s financial health appears weak, with minimal revenues and significant operational losses. Its low valuation may make it attractive for speculative investors, but it faces substantial risks tied to cash burn, market conditions, and its ability to transition into production. The company will need to secure further funding or strategic partnerships and demonstrate progress toward commercialization to strengthen its financial and business health. About 64% of the company is held by insiders.

Note parts of this article were derived from the Equinox Resources website (opens in a new tab) as well as the Australian Business Review (opens in a new tab) and Yahoo Finance.

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