Rare Earths Sector Heats Up Globally

Published 22-APR-2025 14:25 P.M.

10 minute read

China bans rare earths exports critical to western defence supply chains. Rare earths stocks rip. The US launches investigation into critical metal supply chain risks.

Gold hits new all time high AGAIN.

Read our Saturday Weekender note here.

Our ‘Quick Takes’ on news from our Investments

TTM keeps hitting shallow gold at its Ecuadorian project. Good timing from TTM with gold hitting all time highs again and a pro-business government voted in this week.

IVZ is back from a bit of a quiet period, aiming to drill its next well later this year. Hopefully “Musuma-1” the highly anticipated sequel to “Mukuyu-2” the market has been waiting for. South Africa’s energy problems are still quite the saga...

EMD said it has just opened a new clinic in the Perth Clinic, a licensed day hospital. EMD signaled the 50% capacity scale up is ahead of a potential payer deal. We think if EMD can secure a deal, perhaps a bit of market euphoria could be on the cards. Australia is leading the charge on psychedelics for mental health.

EXR just announced a change to its management team, that current Managing Director Neil Young would be retiring from the role, being replaced by Stuart Nichols, ex-Strike Energy CEO. Neil’s extensive vocabulary and heart of gold will be missed but for what it’s worth, we think Stuart Nichols has what it takes to deliver given his history with Shell. Australia needs the gas too...

GAL just put out a batch of assay results from its Norseman project in WA. GAL is chasing a new discovery here to go with the Calisto nickel-PGE discovery defined through 2022 - 2023. Platinum, Palladium and Rhodium are all on the US critical metals list.

Gabon's recent presidential election marks a significant milestone for the country's political stability, and we hope paves the way for our green iron ore Investment GEN to thrive in a more stable political environment.

GEN also signed an MoU for an engineering, procurement, and construction (EPC) contract with Sinohydro Corporation Limited, a subsidiary of PowerChina. PowerChina is a big, big company - ranked #108 on the Fortune Global 500. The kicker? Sinohydro will be helping GEN secure the all important financing for GEN’s CAPEX.

AL3 released what we think is a very promising update on its market expansion into the UK defense sector, as they’ve secured a $0.83M contract with BAE Systems. The UK and Europe are stepping up defence spending, so we think this is good timing for AL3 to crack a new market.

Also, AL3 installed the largest custom system for $2BN Austal in the USA on Wednesday. Trump wants to “Make Shipbuilding Great Again” and signed an executive order to achieve that last week. AL3 is well placed having completed a trip to Washington DC last week.

EIQ has been approved to trade on the OTCQB Venture Market in the United States under the ticker ECHQF, meaning they’ll have greater access to US markets. We think it will be a boon to EIQ as its primary target market is the expansive US healthcare system.

PUR signed a deal to sell two of its non-core WA assets for $300k cash. (Pretty good in this market where cap raises are hard for lithium stocks).

DXB presented at the ASX CEO Connect conference on Tuesday. An event hosted by the market operator (ASX) itself. We tuned into the presentation live, but you can check out the replay here.

WHK said that it would be listing the options that were issued as part of the last capital raise... Interestingly, there was also an operations update attached which detailed four recent contract wins/renewals.

LCL signed an option deal to sell its Colombian gold assets for $10M cash. (If the deal goes through, $9.5M capped LCL will receive $7.5M cash over 12 months and $2.5M once the project goes into production). We followed the development of that asset very closely from 2020 through to 2022, and it's good to see that LCL is extracting some decent value out of that work.

A few of our Portfolio stocks put out their March quarterly reports early ahead of the March 31st reporting deadline... no surprises they are the ones with a solid amount of cash in the bank (relative to their market caps), otherwise why would you confess your cash balance early?:
- 88E had $10.6M cash at 31 March 2025
- SLA had $4.1M cash at 31 March 2025
- CAY had $8.6M cash at 31 March 2025
- ALA had $23.5M cash at 31 March 2025 (ALA has a quarterly webinar scheduled for the 29th of April which you can register for here)

Deep dive notes we wrote this week

Microcap GGE secures option on 1BN-barrel oil prospect

Offshore Namibia is one of the hottest parts of the world for offshore oil & gas exploration right now.

Over 11 billion barrels of oil have been discovered in the last three years.

Global super majors active in the region include Shell, Chevron, TotalEnergies, and GALP.

After the slew of recent discoveries, a further seven offshore wells are scheduled for drilling in 2025.

And now our Investment, the tiny, micro cap stock Grand Gulf Energy (ASX:GGE) has entered the fray...

GGE announced on Monday it has acquired an option on a 70% working interest of an offshore block in Namibia.

The block already comes with a mean prospective resource of 1.1 billion barrels of oil.

GGE has hired proven African oil finders, Havoc Services, led by Dr Alan Stein as Technical Advisors.

Havoc’s track record includes discovering 2 billion barrels of oil and raising more than US$1BN in capital.

They’ve even sold an asset offshore Namibia before - Havoc’s subsidiary, Harmattan Energy previously operated a block that was sold to Chevon in 2022.

Excellent guys to have advising GGE on high potential African oil and gas exploration...

GGE is capped at $8.4M (at 0.3c per share, Thursday’s closing price).

The news earlier in the week came with a $700,000 cap raise that was completed at 0.2c per share.

We Increased our Investment in GGE at 0.2c.

China bans rare earth exports. SGQ has one of the largest and highest grade hard rock, rare earths resources in the world

China dominates the rare earths market.

It controls 87% of the global refined rare earths supply.

Earlier this week, China announced it is restricting the export of a range of rare earths elements, sending shockwaves through global supply chains.

The USA’s largest rare earth's producer’s share price promptly surged up 21% overnight in response.

Our Investment St George Mining (ASX:SGQ) already has one of the largest and highest grade hard-rock rare earths deposits in the world.

Following the release of its JORC resource a few weeks ago, SGQ’s project development studies are already underway.

Plus drilling is scheduled to “commence in the coming weeks” to improve the resource, which is good timing.

Rare earths are used in the permanent magnets that are critical in the aerospace and defence industries.

You cannot build weapons, drones, radars, cars, smartphones, laptops, MRI machines, CT scans, etc, without rare earth minerals.

(Source)

A rare earths export ban is China’s latest salvo in the tit for tat trade war with the USA.

Critical industries in the US rely on imports from China for rare earths and all of their downstream applications, including permanent magnets.

Our take is that rare earths, and in particular later-stage rare earth projects that have a viable pathway to production and could be alternative sources of supply - like SGQ’s - could become more valuable given the focus on rare earths in this trade war.

Read the note below to see how sub $70M capped SGQ’s rare earths resource stacks up against ~US$4.5BN MP Materials ~$7.6BN Lynas and ~$420M Arafura.

Macro News - What we are reading & listening to 📰

Gold

JBY, KAU, MTH, HAR, BPM, TTM

Direct from our analysts:

Started reading The Gold Rush by David Hill - buy on Amazon here.

Our small cap Investment Haranga Resources (ASX: HAR), is in the process of acquiring a major and historically famous gold producing project in the US state of California.

California, particularly Northern California is where Stockton is located and this is close to the epicentre of one of the largest gold rushes in history.

We like to read about history especially if there are some interesting ties to our Investments.

Meanwhile, one of our analysts has been digging into alternative narratives around the US-China trade war, see below:

A self-professed nerd, this analyst may be making some good points about how the trade war could impact the economic and financial system in China.

Below are the two articles the analyst is referring to:

China Shadow Bank’s Collapse Shows Wealth Wipeout Is Deepening (Bloomberg)

China Open to Talks If US Shows Respect, Names Point Person (Bloomberg)

Point is, the biggest headlines aren’t always the full story when it comes to geopolitics.

Speaking of geopolitics...

Geopolitics

Gabon military leader Brice Oligui Nguema wins presidential election (Al Jazeera)

What does this mean for GEN? This is very good news for our late-stage iron ore Investment GEN. GEN recently signed a mining convention with the party that now leads Gabon. This peaceful election result "ratifies" that convention and adds confidence to potential financiers of the project. (Full QT)
Daniel Noboa: Centre-right leader wins re-election in Ecuador (BBC)

What does this mean for TTM? This election result is good news for our Ecuadorian based gold-silver-copper Investment TTM. Daniel Noboa (the pro-business party) won in a run-off with 56% of the vote beating out the anti-mining party and securing a further four years.
Trump Plans Order to Enable Critical Metals Stockpiling (Bloomberg)
They're Gonna Choose To Run It Hot... (Praetorian Capital)
Donald Trump tariffs: BHP’s man in US, former NSW premier Dominic Perrottet, says don’t get distracted by the drama (AFR)
Trump Signs Order to Revive US Shipbuilding, DOGE Review of Navy (Bloomberg)
China Stares Down Boeing Parts Shortage as Comac Stockpiles (Bloomberg)
Ensuring National Security and Economic Resilience Through Section 232 Actions on Processed Critical Minerals and Derivative Products (The White House)
US China Trade War Clears Path for Sodium-Ion Batteries (Bloomberg)
Trump Launches Critical Minerals Probe to Weigh New Tariffs (Bloomberg)

Geopolitics tweet of the week:

(Source)

Biotech

IIQ, NTI, EMD, ALA, DXB

HESTA, Hostplus-backed heart device maker EBR Systems wins FDA approval (AFR)

What does this mean for EIQ? ~$525M capped EBR Systems does cardiology devices and has US FDA approval. EBR’s ability to attract investment from major superannuation funds shows how ASX-listed tech companies targeting the large US cardiology market can attract long term institutional support. EIQ has FDA clearance for its Aortic Stenosis product and we hope the company can attract further institutional buying as it looks to crack the $200M market cap on US commercialisation updates.

Energy

CND, IVZ, 88E, EXR, GGE, (Uranium: GUE, GTR)

How oil major TotalEnergies avoided a green energy U-turn (FT)
Uranium 2024: Resources, Production and Demand (Nuclear Energy Agency) careful this is a long one, 608 pages... but this chart caught our eye:

Our Quick Take: The US needs a lot of uranium, but isn’t producing a lot of uranium. Under the new Trump administration we expect US-based uranium projects to become more and more valuable as the US looks to secure a domestic supply of uranium and enriched uranium.