LSR confirms heavy rare earths in USA, amenable to conventional processing

Our Investment Lodestar Minerals (ASX: LSR) has just released positive mineralogy results from its heavy rare earths project in Arizona.

The main takeaway for us was that “Xenotime” was classified the dominant REE-bearing mineral, which is important because:

1. Xenotime, unlike many rare earth minerals that struggle with complex processing - is one of the host minerals for heavy rare earths with a proven commercial processing pathway, AND
2. Xenotime has a high proportion of dysprosium, terbium and lutetium - the three high value, scarce heavy rare earths that the US needs… (Dysprosium, Terbium, and Lutetium are essential for US defense systems)

For context - $248M Northern Minerals' (ASX: NTU) Browns Range project is using a proven flowsheet for a xenotime centered heavy rare earths resource.

(NTU has received a $5.9M government grant through the Critical Minerals Development Program in 2023 and also letters of support which included up to US$230M from EXIM last year, source)

And it’s nice to see the market like today’s news - at the time of writing this LSR’s share price is up 46% on some pretty strong volumes:

We Invested in LSR because we think heavy rare earths assets inside the US will be one of the big winners from the attention and capital pouring into the sector inside US borders.

(Again, heavy rare earths are the critical inputs into AI, quantum computing and autonomous warfare... China currently controls supply)

And in the last 12 months, China has put export controls on rare earths, with LSR’s project having prior sampled for all 12 out of 12 heavy rare earths. (source: LSR announcement table 1)

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China is currently restricting exports of these high-value HREEs, making a domestic US source of xenotime-hosted HREEs potentially highly strategic for funding and partnership opportunities.

On top of funding opportunities, LSR’s heavy rare earth project sits around a 225km drive of mostly highway from MP Materials' Mountain Pass Mine which is constructing a rare earth facility:

(source)

A key point to this is although the MP Materials mine has a relatively high grade of rare earths, they contain very few of the more important and valuable heavy rare earths which LSR has sampled.

So should LSR confirm that mineralisation was to be expansive, we know that MP is on the lookout for ore containing these types of rare earths.

We even listened in on a Q3 MP Materials earnings call in November where they specifically made it clear that they’ll be on the lookout for feedstock that contains a higher proportion of heavy rare earths.

Here is what management said during the Q&A section of the call:

1. MP is stockpiling heavy rare earths concentrates right now - the plan is to be able to tap stockpiles in the first few years of magnet production so they aren't limited by their mines' low levels of heavy rare earths.
2. MP is actively looking for third party supply - management were clear in confirming third party feedstock processing deals as a way of filling its advanced magnet production plant…

Management even stated that MP is “actively engaging new suppliers, planning to integrate several over time”...

We covered that here: MP Materials, confirms they need new supply of heavy rare earths in Q3 earnings call Q&A

LSR has a ~5km long structure to explore…

Today’s results came from samples that sit across a ~5km long mineralised shear zone:

(source)

These samples were taken 225 meters apart (Hummingbird East and West) and showed consistent mineralogy, this suggests the system remains stable across the zone and could extend far beyond.

On the back of this, LSR is expecting to begin its next US field campaign in early April (next month).

This will be aiming to identify further outcropping mineralisation along the 5km shear zone and determine how far the system extends under alluvial cover (dirt/sand/clay/loose rocks etc like a backyard).

These works will help to set the scene for an initial drill program on the project and other exploration activities that could follow.

LSR included a look at what xenotime looks like from a scanning electron microscope, with the scale shown just 30 micrometres (0.0030cm):

(source)

What's next for LSR?

🔄 RC drilling at Ned's Creek Gold Project (10,000m)

LSR has executed the drilling contract with Westdrill for ~10,000m of RC at Ned's Creek.

Drilling is expected to commence late March and will target the three main prospects - Gidgee Flat, Contessa and Central Park.

The results from this will feed into a maiden Mineral Resource Estimate targeted for completion in CY2026.

🔲 Drilling commenced

🔲 First assay results received

🔲 All results received and MRE underway

🔄 Copper drilling in Chile (Three Saints and Los Loros)

LSR confirmed that drilling at Ned's Creek will be running simultaneously with copper focused drilling in Chile.

We are also looking forward to seeing results from this program, which we covered here.

Here is the latest video of LSR technical advisor on site with the drill rig in the background.

🔄 US rare earths project - follow up exploration

The main reason we Invested in LSR is for the heavy rare earths project in Arizona.

LSR recently sampled grades up to 3.73% TREO with 64% being heavy rare earths - well above previous results.

With the mineralogical study results received, we await for the follow up exploration program to test the broader ~5km interpreted trend which LSR confirmed is expected in April. (source)

✅ Acquisition completed

✅ Mapping and sampling

✅ Mineralogical study results (Received today)

🔲 Geophysics/follow up exploration (Field activities expected to begin April)

🔲 Follow up drill program