As the US government steps in with an unprecedented rare earths price floor and prolific direct funding, while global interest in niobium and its high-tech uses has exploded, Power Minerals (ASX: PNN) has recently released widespread, spectacularly high-grade assays up to 43,385ppm TREO and 14,711ppm Nb across its flagship Santa Anna carbonatite complex in Brazil. PNN just executed its acquisition option and completed a strongly supported $2.6 million capital raise led by Oakley Capital Partners (who recently raised for top resources performers RML, LSR and PIM), which will fund the imminent maiden resource definition drilling program.
PNN is about to embark on the most critical value-adding exploration phase in the project’s history, in the same mining-friendly region of Brazil as CMOC’s niobium mine that operates at 4,300ppm, and with major mining company EDEM as a strategic partner capable of fast tracking permitting and production. You can read our initial take on Power here.
Our initial coverage of PNN in July was when the company was at an $8 million market cap, with its benchmark peer comparison St George Mining (ASX: SGQ)’s market cap sitting at $85 million. PNN has since risen to $14.2 million, including a $2.6 million capital raise, while SQG has pushed out to $216 million, including a $5 million capital raise.
SGQ’s journey from a $25 million market cap to $85 million involved acquiring its project, raising $21 million just to pay for it, and defining a resource from a 3,674m, 67 diamond drill hole historical dataset. PNN now has 221 holes for 7,649m, plus another 54 auger assays to come, is fully funded to reach a maiden JORC resource (and with no milestone payments due for 24 months) – which could act as a major catalyst for revaluation.
Most of SGQ’s push from $85 million to $215 million came from targeting high-grade pockets of mineralisation – and PNN is formulating its upcoming exploration plan to do the exact same thing.
PNN’s 2,272m, 29 RC hole due diligence program, which drilled down to an average depth of 78m and maximum depth of 129m, achieved its exact intended objectives – to Intersect broad zones of niobium and high-grade REE, as well as confirm that mineralisation occurs at surface in the weathered zone, and at depth in fresh rock.
A couple standout Nb assays are 87m at 2,124ppm Nb from 24m, including 1m at 5,745ppm Nb from 107m and 3m at 10,117ppm Nb from 24m, as well as 76m at 3,424ppm Nb from 24m, including 26m at 5,317ppm Nb from 24m, which included 5m at 825ppm Nb from 29m and 5m at 6,802ppm Nb from 41m – highlighting areas of increasing grades at depth. Notable REE assays were recorded too, such as 114m at 3,012ppm TREO from surface, including 16m at 5,300ppm TREO from 97m, as well as 60m at 9,202ppm TREO from surface, including 14m at 18,768ppm TREO from 30m.
The follow up 1,000m auger drilling campaign was designed to extend the mineralised footprint to the east and south-east of the RC program, and it achieved fantastic grades of both niobium and total rare earth oxides (TREO), but importantly – an exceptional percentage of magnet rare earth oxides (MREO), the high value NdPr that everyone is seeking.
Standout assays from this program included 15m at 13,212ppm TREO from surface containing 24.2% MREO, including 4m at 28,827ppm TREO from 9m containing 26.5% MREO, including 1m at 43,385ppm TREO from 11m containing 26% MREO. This same hole also produced fantastic niobium assays with 15m at 4,319ppm Nb from surface, including 3m at 7,522ppm Nb from 11m and 1m at 7,748ppm Nb from 12m. 23 samples averaging 7,523ppm TREO are now being leach-tested to assess recovery rates and processing pathways.
The US Government is no longer willing to face the risk of any uncertainty around rare earths supply from China, and in a groundbreakingly interventionist move – the Department of Defense is guaranteeing a floor price for NdPr of US$110/kg for American rare earths producer MP Materials (NYSE: MP), well above the US$60/kg NdPr spot price at the time of announcement and the US$78/kg it has risen to since – and in line with the feasibility price forecasts from Brazilian developers such as Meteoric Resources (ASX: MEI), which are set at US$111/kg.
MP’s market cap has surged to US$11.25 billion – up from US$3.1 billion in April before the China rare earths export ban – and the DoD is plowing a US$400 million equity investment into MP itself, while Apple is investing US$500 million in infrastructure with MP to secure domestic supply. The company also received a US$1 billion financing offer from JP Morgan and Goldman Sachs to construct a domestic 10ktpa rare earth magnet manufacturing facility – which the DoD has again stepped in and committed to buying the entire facility’s capacity for 10 years.
All of this processing infrastructure will require immense amounts of feedstock from many projects around the world, in favourable jurisdictions – and PNN’s Santa Anna is about to have a near-surface JORC resource with impressive TREO grades and an excellent percentage of magnetic rare earths.
While more than 90% of niobium’s current consumption is still attributable creating alloys in the steel industry, numerous high-tech uses for the critical metal are breaking out of research and entering industry, leading to Fastmarkets increasing its reporting of European prices from once to twice a week – which are up 12% YTD. Incredible innovations with critical minerals can rapidly change an industry’s supply and demand dynamics, as was seen in the 2021 publication of research on antimony’s added efficiencies to photovoltaic solar panels – which then took just two years to become the largest use of antimony.
Toshiba just started shipping the world’s first rechargeable lithium-ion battery with a niobium titanium oxide anode, which was developed with CBMM and is currently being used on an electric bus at its Brazilian mine site. CBMM is a major funder of Nb research, and recently awarded grants to South Korean researchers who demonstrated that adding niobium to lithium-manganese rich cathode material greatly improved its stability and electrochemical performance, and UK researchers who discovered that niobium-containing perovskite can convert carbon dioxide into carbon monoxide with 100% selectivity – creating a closed loop recycling system that cuts steel plant carbon emissions by up to 90%.
PNN’s open-pittable and near surface resource, which is weathered and likely amenable to simple processing methods, is recording repeated grades similar to neighbouring CMOC, which has a resource of 602.9Mt at 4,300ppm Nb and was purchased from Anglo American as a part of a US$1.5 billion deal in 2016. The grades at Santa Anna are also similar to Canada’s niobium mine, which runs a head grade of 4,200ppm with high-cost underground mining, and was sold for US$530 million in 2015.
The TREO assays from PNN’s RC holes can be seen below, with widespread mineralisation everywhere that has now been proven to extend at depth:
Source: PNN
The Nb assays from PNN’s RC holes can be seen below, in conjunction with high-grade historical hits that PNN’s strategic partner EDEM drilled when the major miner discovered the project in 2021:
Source: PNN
As far as carbonatite-hosted deposit areas go, PNN’s 5.8km2 alkaline complex within a 17.05km2 project at Santa Anna is huge, especially compared to the 2.26km2 held by SGQ over part of the Araxa Complex.
Santa Anna’s grades are showing strong potential for a bulk tonnage operation, but the sheer size of it and with over 80% of the surface area yet to be drilled – there are plenty of opportunities for PNN to discover high grade pockets of mineralisation that would drastically improve project economics.
The first assays from PNN’s recent auger drilling campaign, which hit brilliant grades near surface, can be seen below. There are still assays from 54 holes imminently due:
Source: PNN
US Builds Its Own Rare Earths Industry and Niobium’s Stardom Approaches
The prices of rare earths have always been determined by the flows of supply coming out of China – and for the first time in history this will no longer be the case. The US Department of Defence’s unprecedented mechanism of a price floor should do exactly what it is supposed to – directly incite projects in favourable jurisdictions to move projects into production, even if the economics are not as attractive as Chinese sources.
China’s foothold on the entire rare earths supply chain is a political weapon wielded at extremely precarious stages of international negotiations. With America’s biggest corporations pledging trillions of dollars in AI-driven capital expenditure, and revolutionary levels of electrification occurring in basically all industries – the amounts of capital required to subsidise the rare earths industry pale in comparison to what is at stake if the US’ ambitions to continue to be the world’s technology leader are jeopardised.
While the US is bailing themselves out of this pain point (albeit still with 2-3 years until the country can actually produce a meaningful quantity of magnets), and its infrastructure will source feedstock from around the world – everything produced will likely also be consumed domestically. This leaves other major economies in deep trouble, and China is moving to secure ground that can hold this position – most of which is in Myanmar.
China and India are on the verge of fighting a proxy war in Myanmar, where most of the feedstock that is processed through Chinese refinement and separation facilities is sourced from. Over the past three months, Chinese backed militias have been forcibly seizing mines and operating them for its own processing facilities, while India has been working with the Kachin Independence Army (KIA) – a powerful rebel group in Myanmar – to procure rare earths from various regions in the country outside of China’s control.
As seen below, rare earths prices have been historically volatile, but many of these price shocks have actually been triggered by disruptions of the flow of oxides from Myanmar:
Source: LYC
Fastmarkets recently announced it will increase the publishing frequency of its European ferro-niobium price assessment in response to greater market activity, in order to better capture spot dynamics amid rising liquidity in the niobium market. Traders are getting more actively involved, companies with industry changing inventions are seeking offtakes – and market interest in the commodity is rapidly rising.
Battery technology that has serious potential to improve the operating metrics of major industries that are undergoing electrification should not be underestimated. Developed in collaboration with the world’s biggest Nb miner CBMM, and Japan’s Sojitz Corporation (who is also a major CBMM shareholder), Toshiba has started shipping the world’s first rechargeable lithium-ion battery with a niobium titanium oxide anode – which is able to achieve an 80% charge in 10 minutes and hit 15,000 charging cycles.
The Export-Import Bank of the United States (EXIM) recently labelled its US$22.8 million financing of Amaero International (ASX: 3DA)’s advanced alloy production facility in Tennessee as EXIM’s deal of the year, after 3DA proved that niobium dramatically improves the strength and heat-resistance of alloys in jet engines, missiles, and energy systems.
The Most Exciting Time for Power is Now
There are a litany of strong driving factors that make PNN’s target commodities worth investing in, and Brazil’s excellent mining jurisdiction is the perfect location to be exploring for them. The strategic partnership that PNN has formed with Brazilian miner and developer EDEM gives the company top tier access to expert technical staff, and accelerated drilling and assaying at significantly reduced rates, as well as unrivalled permitting support.
At just a $14 million market cap and on the cusp of delineating a resource, in a country where other decent projects are now trading for hundreds of millions of dollars, and with a raft of news that will consistently flow through over the next few months – there is still a massive amount of value that PNN could capture.
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Disclaimer: This article is for informational and marketing purposes only, and does not constitute financial advice or a recommendation to invest. All opinions expressed are our own. We may receive fees or other forms of compensation in connection with the publication of this content, and may own shares in any of the mentioned companies. Please do your own research and seek professional advice before making any investment decisions.