Rare Earths neighbourhood heating up - enter Andrew Forrest

With our rare earths exploration Investment Lanthanein Resources (ASX:LNR) just weeks away from its maiden rare earths drill campaign in the Gascoyne region (due to start in early September) we couldn't help but notice the moves that LNR’s much bigger neighbour is making.

LNR’s rare earths neighbour Hastings Technology Metals is set to acquire a 22.1% shareholding in Canadian listed Neo Performance Materials Inc for C$135 million ($150M).

Neo is a global leader in the downstream processing of rare earth elements, and the production of advanced materials, including permanent magnets. In fact it owns the only operating commercial rare earth separation and rare metals facility in Europe.

This acquisition puts Hastings on track to eventually become a more vertically integrated company, rather than just a rare earth miner.

The move has been backed by Andrew Forrest’s private company Wyloo Metals, to the tune of $150M.

Wyloo’s entry into Hastings is via a loan of $150M, in the form of convertible notes. The three year notes can be converted into Hastings shares at a fixed rate of $5.50 per share.

Here’s what we think this means for LNR:

• There’s a lot of capital available in the market for rare earths projects, as demonstrated by the appetite of the parties in this proposed transaction to fund such a big deal
• Interest in Gascoyne rare earths projects is heating up - there could be more deals to come
• Because Hastings’ tenements are immediately adjacent to LNR’s project and the closest Hastings’ deposit is ~2.5kms to LNR’s Lyons prospect, we think it’s reasonable to conclude that should LNR prove it has commercial levels of rare earths in its upcoming drill campaign - it could become more appealing to institutional investors.