With excitingly similar geology and grade to US$9 billion market cap MP Materials’ (NYSE: MP) Mountain Pass Mine, and as NdPr prices have catapulted to US$123/kg while the American government has headed to Brazil to invest US$565 million in a rare earths mine, PNN has locked in the option to execute a brilliant acquisition of the advanced and ultra high-grade rare earths project Morro do Ferro. The project has a whole litany of eye-watering assays such as 60.85m at 89,177ppm (8.92%) TREO, 70.9m at 79,997ppm (8%) TREO, 60.6m at 70,217ppm (7.02%) TREO and 100.44m at 49,910ppm (4.99%) TREO – which were all from surface and diamond drilled. There are sections of these assays with insanely high grades such as 2m at 241,301ppm (24.13%) TREO from 14m, and tremendously strong percentages of Nd, Pr, Dy and Tb with 2m at 34,835ppm (3.48%) MREO. PNN was able to rule off a heavily oversubscribed $10.25 million placement off the back of the acquisition, with most of it being taken by US institutional investors – and the company also just scored former Managing Director and CEO of $1.3 billion market cap Arafura Rare Earths (ASX: ARU) and $1.4 billion market cap Lindian Mining (ASX: LIN) as its new CEO. PNN also just landed a JV deal with Summit Nanotech for all 5 of its salars in the Salta Lithium Project, which will see Summit spend US$6 million on drilling water and pumping wells as part of a PFS to decide if it will solely fund and construct a 6,000tpa commercial plant powered by its groundbreaking DLE technology for 59% of the project, with the option to pay PNN US$50 million for all of Salta during this feasibility period.
There has been a decent amount of drilling completed at Morro do Ferro, including 50 diamond drill holes for a total of 4157.59m and 106 auger holes for a total of 846.5m. Importantly, and in addition to mineralisation being open in numerous directions, the drilling so far has been limited to only 16% of the total 3km2 tenement area – which drops to just 5.3% when applying a 50m radius and 50m depth buffer to each drill hole, leaving plenty of room to expand the existing 3.58Mt at 3.9% TREO resource.
Mountain Pass and Morro do Ferro both belong to the same carbonatite-associated, bastnäsite-bearing rare earth deposit family, while the former is a primary hard-rock style of that system and the latter appears to be a shallow, weathered lateritic-supergene version. The USGS has described these lateritic supergene REE deposits as having formed when intense weathering breaks down the original REE-bearing minerals and redistributes or concentrates the rare earths into a near-surface enriched zone above the parent rock, which is effectively the broader framework that helps explain Morro do Ferro’s style of mineralisation. This has resulted in an unusually strong concentration of mineralisation near the surface at PNN’s project, which would make an open-pit mine very accessible with little overburden, compared to the 5.8 to 1 strip ratio that MP has at Mountain Pass.
There may be a chance that the project contains ionic clays due to it being directly adjacent to $241 million market cap Viridis Mining and Metals (ASX: VMM) and $500 million market cap Meteoric Resources (ASX: MEI). While this is not the current exploration thesis of the project, PNN will be drilling a few holes at the edges of Morro do Ferro – right at the border of neighbouring VMM – to see if any ionic adsorption clay material extends into PNN’s landholding. The company is in the midst of its due diligence program as it is racing towards gaining a better understanding of the mineralisation controls and whether the same ionic clays that make VMM’s and MEI’s projects so valuable, extend into PNN’s tenements. A comprehensive due diligence program involving mapping and sampling, geophysics, as well as auger and aircore drilling is currently underway, and the PNN team is also examining how much room for optimisation there is in the 3 existing metallurgical studies.
A few more standout assays from Morro do Ferro include 60m at 53,859ppm (5.39%) TREO, 80.3m at 43,348ppm (4.33%) TREO, and 70.7m at 45,028ppm (4.5%) TREO. It’s important to note the significant level of magnetic rare earth oxides in these assays, with that headline 60.85m at 8.92% intercept containing a whopping 1.47% MREO – with around 97% being attributable to NdPr and the remainder to Dy and Tb, implying roughly US$1,900/t contained value. Assuming this same 16.5% MREO/TREO ratio, even the lower (but still exceptional) grade assays such as the 100.44m at 4.99% TREO would contain over US$1,000 of contained value per ore, which is a big buffer to have when it comes to recovery percentages. Metallurgy is very make or break with rare earth deposits, so it will be important to see what PNN’s review of the 3 metallurgical studies completed between 2012 and 2016 will produce. An interesting development recently in the region was at Axel REE’s (ASX: AXL) project, which is also near VMM, MEI and PNN, where ANSTO was able to utilise hydrochloric acid instead of sulphuric acid to increase MREO recoveries to 96% from 28% – in areas of mineralisation that are not ionic clays. While there is Thorium present at Morro do Ferro, it decreases exponentially from 5.7% at 10m from surface to 0.1% at 36m – and it’s important to note historical metallurgical work suggests that it is relatively immobile and concentrated within the weathered profile, where it should be able to be managed through residue handling – but PNN would likely need to do a further study to be confident about this. There is also no evidence of significant uranium accumulation at a mean concentration of about 35ppm. PNN’s project has been classified as Category II for low emission radioactivity by Brazil’s nuclear authority – a favourable designation – and it is also the beneficiary of having a Manifesto de Mina title, a special mining permit that gives PNN direct ownership of the land with no local third-party approvals required for exploration activities.
We first initiated coverage on PNN back in July when it was $8 million market cap, before it pushed above $75 million as it drilled out its Santa Anna niobium and rare earths carbonatite project during the height of sensationalism in the early stages of the US and China critical minerals battle, and Next Investors also initiated coverage during this time. They also cover the main peer comparison St George Mining (ASX: SGQ), which is currently at a $420 million market cap and has been as high as $687 million, but was only $85 million in July last year. PNN has just commissioned a maiden MRE to be published for Santa Anna, which the market will be eagerly awaiting. PNN currently sits at a $35 million market cap, and you can read our previous coverage on the company here. Its very exciting JV deal with Summit comes after our last article on these same lithium assets, and the price of the commodity has since continued its extreme rebound – hitting US$24,086/t LCE, up from US$8,259/t just nine months ago.
The US International Development Finance Corporation has extended a US$565 million financing package to Serra Verde, a privately held rare earths mine in Brazil. The deal was to both boost production and refinance debt under more favourable conditions, with the option to take a minority stake, and comes after DoD plowed a US$400 million equity investment into MP. The US appears to be fully intent on creating its own cabal of sorts that rivals China in terms of control over rare earths and other critical minerals supply, and its actions have spread significantly further than the already drastic US$110/kg price floor for NdPr announced in July 2025. Just two weeks ago, the US and Japan joined forces to announce official cooperation on a regime of coordinated trade policies that will guarantee supply chain resilience. The first measure to be implemented will be price flooring mechanisms for a raft of critical minerals that China still has a firm grip on, and follows the framework agreement between the two countries inked last October. China specifically banned a number of Japanese companies from importing certain rare earths earlier in this year.
What’s for certain is that Morro do Ferro is an extremely high-grade rare earth deposit, with many wide intercepts in excess of 5% TREO. PNN has set a key acquisition payment milestone of defining a resource of 20Mt at 4% TREO, which is likely what management wants to see in terms of identifying an economic deposit. A cross section of the Northern end of the project can be seen below, depicting the seriously high grades and wide zones of mineralisation that certainly have scope to define a resource with significant tonnage if they can be extended, but could also prove to have attractive economics as a relatively modest deposit due to such extreme grades:
Source: PNN
The distribution of drill holes and standout assays can be seen below, with the cross section above located on the section line:
Source: PNN
The area shown above that has received most of the drilling makes up a small section of the total tenement, which can be seen below:
Source: PNN
The pricing history of NdPr oxide in CNY over the past few years can be seen below. The near doubling of prices over the last 7-8 months has been driven by firm downstream magnet demand but also spurred on by deliberate supply management in China. At the current price, the US won’t even have to subsidise any of MP materials production, but it is certainly ready to if there is a correction in prices:
Source: Shanghai Metals Market / Eric Onstad
Heavy rare earths are also extremely crucial in the making of permanent magnets, and the extreme premiums that have arisen in outside China prices, as seen below from mid-last year, have remained even after the limited resumption of exports. Dy and Tb, which PNN’s project contains, are set to fall into a supply deficit this year:
Source: Benchmark Minerals Intelligence
The next couple of weeks will be a crucial time period for PNN, as they head towards making a decision on executing the project acquisition – and it appears as though they have managed to get their hands on a project that could become a gem of a rare earths deposit.
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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.