LSR confirms high grade HEAVY rare earths at USA project

Access to and control over HEAVY rare earths helps determine which nations can build, sustain, and upgrade next-generation:

• Artificial Intelligence (AI)
• AI-driven defence
• Autonomous war robots and drones
• Quantum computing, and
• Advanced energy technologies.

~12 months ago, the USA realised that the supply of critical minerals (especially heavy rare earths) needed to build these things is almost entirely controlled by China.

And that China could at any point withhold supply (like it started doing in 2025).

The US is now throwing capital at the sector and a few weeks ago launched a $12BN critical minerals stockpile.

Whichever country wins the race in AI, AI robotics and military robotics will likely be the next global superpower…

(a reason to spend trillions, not billions?)

To illustrate the point, here is a conceptual video that was doing the rounds on social media last week (AI generated):

(The video is not real and generated by AI, but you get the point of what the future might hold - you can watch it here)

The mineral group that sits at the very centre of the "who wins the superpower race" question is rare earths.

Rare earths are used to make the permanent magnets that go inside electric motors, guided missiles, fighter jets, drones and autonomous robots.

Our Investment Lodestar Minerals (ASX: LSR) just sampled grades well above previous results from its heavy rare earths project in Arizona, USA.

(source)

LSR assayed rock chip samples up to 3.73% total rare earth oxides (TREO), with heavy TREO’s making up to 64% of the mineralisation.

That’s almost 4x the grades from the previous rounds of sampling.

For context - previous channel sampling on the project returned grades between 0.53% and 1.26% total rare earth oxides (TREO) - made up ~57% of heavy rare earths. (source)

More importantly, though, we now know the mineralisation runs across ~225m of outcrop and an interpreted ~5km structural trend:

(source)

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)

(Source)

(Source)

The market seems to have liked the news from LSR, too - LSR is up ~40% at the time of us writing this.

We think the market interest could be because LSR is now starting to show signs its project could have scale (the ~225m of outcrop and the ~5km interpreted trend).

That scale is important when US domestic needs come into play.

At the moment, MP Materials is building a rare earth processing facility in California - funded mostly by that deal done with the Department Of War and Apple (US$400M and US$500M respectively).

As mentioned in our LSR initiation note - MP Materials is building its 10X plant capable of processing heavy rare earths… (source)

That plant is being funded mostly by the deals done with the Department of War and Apple (US$400M and US$500M respectively) in early 2025.

BUT MP Material’s mine produces mostly light rare earths.

Meaning MP may need to look elsewhere for heavy rare earths supply.

Here is what the Wall Street Journal had reported after those funding deals:

(Source)

We even listened in on a Q3 MP Materials earnings call 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

Here is where LSR’s project sits relative to where that MP Material’s processing facility will go:

Next we wait to see what comes from the mineralogical study results (expected in March) - that study be when LSR can start to think about how the potential ore supply from the project could be processed.

Then a follow up program to test that broader ~5km interpreted trend.

(source)

Why we are Invested in LSR

We are mainly Invested in LSR for the heavy rare earths US based project it acquired late last year.

See our full Investment Thesis on LSR from our initiation note here: Our New Investment: Lodestar Minerals ASX: LSR

In that note you will also find:

1. How the USA got itself into a position of needing domestic rare earths supply.
2. Why LSR is in the right macro theme and could attract capital.
3. Why we like US critical minerals as a macro thematic.
4. The 8 reasons why we Invested in LSR and our full LSR Investment Memo.

The 8 Reasons We Invested in Lodestar Minerals

1. LSR has a US critical minerals project prospective for heavy rare earths
2. Heavy rare earths are more scarce and critical for “global dominance”
3. We think the US will need domestic heavy rare earths supply in 2-3 years
4. Capital is flowing into US critical metals macro thematic
5. IF LSR attracts capital and re-rates to a valuation high enough it could acquire more advanced assets
6. We are Investing alongside Tribeca Investment Partners
7. We think it's the right time in the bull market cycle to get some exposure to exploration stocks
8. Free kick on a WA gold and Chilean gold-copper project

What’s next for LSR?

🔄 Target Generation on US rare earths project

We want to see LSR sample, map and run geophysics on its US asset to identify priority drill targets.

We also want to see LSR run metallurgical testwork on the geology to start thinking about how to separate the heavy rare earths.

First though, LSR will need to complete the acquisition of its project in Arizona.

Here are the milestones we are tracking:

✅ Acquisition completed

✅ Mapping and sampling (soil and rock chips) - (today)

🔲 Geophysics

🔄 Metalurgical testwork (Mineralogical studies ongoing - results expected in March)

🔲 Drill targets confirmed