PNN - next door neighbour Meteoric being taken over by $14BN Lynas

BREAKING NEWS this morning:

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$14BN Lynas Rare Earths just announced a takeover of Meteoric Resources at a ~$968M valuation.

Right next door to our Investment Power Minerals (ASX: PNN):

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We think the news is positive for both of our Brazilian rare earth Investments (SGQ as well as PNN).

But being next door to PNN we think the market could start to look around for the most obvious regional beneficiaries in the area.

Especially as PNN goes from exploration stage into a maiden JORC resource (expected in Q4-2026/Q1-2027).

And because PNN has in the past mentioned its project could also contain ionic clay hosted mineralisation (similar to Meteoric):

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Meteoric (the company being acquired) is a lot more advanced relative to PNN - and has a different deposit type with the biggest ionic clay rare earth resource outside of China.

BUT we think IF PNN can define a resource within its defined exploration target of 9.2 to 10.7Mt at 7.8% to 9.2% TREO.

It could start to attract some interest from the crowd looking for the “next Meteoric”.

Especially when there is already a live peer comparison on the ASX - Brazilian Rare Earths with a similar resource capped at $1BN.

Brazilian Rare Earths has a high grade resource resource, similar in size to that of the exploration target announced prior by PNN.

It also has a Scoping Study with a Net Present Value of ~US$6BN:

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PNN’s upper end is 5Mt at 9.2% TREO, Brazilian Rare Earths resource is 3.4Mt at 11.26% TREO: 

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Why we like Brazil for rare earths

1. It has the geology for high grade rare earths, including higher proportions of the specific rare earths most in demand
2. It is open to business with the West (non-China supply)
3. It sits near the USA, which is building processing hubs and needs non-China rare earths

Brazil has also made it clear it wants to see its mining industry expand also with processing and refining done in-country.

Forcing processing in country isn't always a good thing on its own for investors, but Brazil appears committed to this and is offering incentives, and Lynas said today it will study downstream processing in Brazil.

We have hinted before that Brazil could attract takeover interest from the Western producers (Lynas and MP Materials), and today that began to play out.

$12BN MP is the other big non-Western player, it has received various government funding and support.

Plus we have continue seen the US acting friendlier to Brazil, for critical minerals including rare earths, including in the past couple of days:

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Also earlier in the year, currently $7.6BN capped USA Rare Earth took over Serra Verde in Brazil for US$2.8BN:

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There is of course no guarantee either of our Investments attracts a deal like this, but we are now seeing continued interest from Western countries into Brazil, specifically for rare earths.

So IF SGQ and PNN keep ticking boxes towards development and production, we think they could end up where Meteoric is today, and close the valuation gap.

What is PNN up to right now?

PNN is currently drilling its project and so far has hit rare earths from surface in all four of its initial holes.

With some pretty ridiculously high grade results like 53m at 10% TREO and 1.7% MREO:

(source: PNN announcement)

See our most recent coverage of the drilling here.

Those MREO (Magnetic Rare Earth Oxides) grades are especially interesting because they are the high value rare earths that go into robotics, EVs, military hardware and more, like in these:

Recently PNN defined a maiden Exploration Target of 9.2 to 10.7Mt at 7.8% to 9.2% TREO, which we covered here

And now PNN is expecting to have a JORC resource out for its project either before the end of this year or early next year.

We think that PNN’s maiden JORC resource will be an inflection point for the company because it will give the market something to compare to other ASX rare earths companies.

What we want to see next from PNN

🔄 Results from current drill program

Here are the milestones we are tracking:

1. 🔄 More drilling (two rigs currently drilling through to December)
2. 🔄 Assay results
3. 🔲 Metallurgical test work drilling

🔲 Maiden JORC resource estimate

Expected before the end of the year - this is the big one for us.

🔲 Ionic clay potential tested at Morro do Ferro (MDF)

The "free shot" at the style of deposit that made PNN's neighbours worth a combined ~$1BN.

This one is especially relevant now after today’s news.