High impact depth and strike extensional drilling is ongoing as the first assay from Power Minerals’ (ASX: PNN) Morro do Ferro Project has rolled in, as the company continues to test key growth prospects at one of the highest grade rare earths assets in the world. This spectacular initial hole has validated the previous drilling after hitting 116m at 4.78% TREO and 0.78% MREO from surface, including 78m at 6.85% TREO and 1.11% MREO, 58m at 8.36% TREO and 1.32% MREO, and 31m at 10.0% TREO and 1.58% MREO (of whole-rock) from 14m. Previous drilling focused on 20% of the tenement – with most of the holes concentrated on a corridor that represents around 10% of the 3km2 land area – and hit incredible assays such as 60.85m at 1.491% MREO contained within 8.92% TREO, 70.9m at 1.296% MREO within 8% TREO, and 60.6m at 1.313% MREO within 7.02% TREO – which were diamond drilled from surface. PNN is simultaneously conducting a critical mineralogy study aimed at validating previous studies that identified potential to selectively remove low value cerium and gangue material, which could increase processing efficiency by up to 50%. The US and EU are competing with each other to secure supply from Brazil, as the country with the world’s second largest reserves seeks to build on the singular but significant success of Serra Verde – which is being acquired for US$2.8 billion by USA Rare Earth Inc (Nasdaq: USAR). China is seeking to keep its iron grip of a stranglehold over rare earths that it has built over the past 40 years, and a groundbreaking study from the IEA has quantified this risk – with US$6.5 trillion worth of downstream production outside China at risk from REO supply disruption, across the automotive, high-tech, defence and energy sectors.
This initial hole was drilled through a known mineralised corridor, which again confirmed incredible grades to a down-hole depth of 116m, considerably deeper than previous drilling. The percentage of MREO contained within TREO consistently averaged 15.8% to 16.4% across the various intervals, with the full 116m intercept containing US$1,020/t of in situ MREO value – which rose to US$2,060/t in the 31m interval. There was also Ga that averaged 51.7g/t across 13 samples, and TREO mineralisation that extended down to 210.9m albeit with lower grades after the 116m mark.
PNN is up around 40% since this assay was released, and the upcoming value-creating catalysts have serious potential to drive the company further from its current $59 million market cap. With $7.5 million in cash – a $51.5 million enterprise value is highly leveraged to confirmation of lateral scale, additional high-grade holes and favourable mineralogical and metallurgical results, which will precede metallurgical studies – as well as an MRE that will be published before the end of the year. The coming weeks represent a particularly opportunistic time to own PNN while the company seeks to reveal a meaningful amount of MDF’s potential in a rapid period of time, keeping up with an already impressive pace that saw the acquisition completed, resources mobilised and drilling commenced within 7 weeks.
The diamond drilling program at MDF was recently expanded from 3,000m to 4,000m, and combined with the 800m wider-diameter diamond core program – the amount drilling undertaken at MDF will be doubled from prior to its acquisition, which consisted of 50 diamond drill holes for a total of 4157.59m and 106 auger holes for a total of 846.5m. There are downhole intervals from a number of different drill holes that have recorded extraordinary levels of MREO and have potential to continue at deeper levels that PNN is now testing, with results including 2m at 33,750ppm (3.375%) NdPr, 834.7ppm Dy and 249.9ppm Tb from 9m, 2m at 32,530ppm (3.253%) NdPr, 813.6ppm Dy and 225.4ppm Tb from 44m, as well as 2m at 30,600ppm (3.06%) NdPr, 745ppm Dy and 181.8ppm Tb from 31.95m.
PNN has leapfrogged the many early and time consuming years in initial exploration by acquiring an advanced project that has been heavily studied, and is able to jump straight into testing the extents of mineralisation, proving up a resource, undertaking mineralogical and metallurgical investigations and seeking development approvals. Metallurgical results are typically very significant newsflow events for rare earths projects, and there were 3 prior studies completed between 2012 and 2016 at the project that PNN is able to compound with its current investigations. The potential to reject the cerium material during mining and/or early processing was presented in a 1992 study that explained how cerium was oxidised and retained as cerianite, while the high value REEs migrated further down the weathering profile and were concentrated in secondary minerals or adsorbed phases.
There’s a potentially similar processing analogue in the Mountain Pass mine owned by MP Materials (NYSE: MP), and while acknowledging that is a primary hard rock deposit while MDF is at this stage a weathered lateritic-supergene version, both projects are bastnäsite-bearing, so it’s worth noting the processing and metallurgy that has been evaluated. Prior studies on Mountain Pass’ bastnäsite ore has recorded that flotation at 40 to 45°C produced a cleaner concentrate containing 58.7% RE₂O₃ at 67% recovery, comparable to the commercial beneficiation method but with lower heating intensity than boiling-pulp flotation. Additionally, a more recent bastnäsite beneficiation study also shows the same principle of flotation being used to upgrade REO grade while rejecting gangue minerals, with one rougher flotation test producing 41% REO grade, 78% recovery and 91.5% calcite rejection. Calcite is a major problem in bastnäsite flotation because of its downstream acid consumption, so being able to demonstrate the rejection of non-valuable calcite gangue material while recovering bastnäsite is a relevant case study for what PNN can hopefully achieve with cerium-rich cerianite and other unwanted minerals from bastnäsite-hosted Nd-Pr-Dy-Tb at MDF. A very important aspect of MDF is that it is no longer a true carbonatite deposit, as it contains no calcium or magnesium carbonate minerals – which is a massive advantage if acids are used in processing. It’s also worth noting that the strong concentration of mineralisation near the surface, and along the side of hill at MDF would make an open-pit mine very accessible with little overburden, compared to the 5.8 to 1 strip ratio that MP has with the remaining reserves at Mountain Pass.
The 1992 study based on pre-1986 work with limited drilling interpreted the mineralised body at MDF to be around 410m long, 215m wide and 10m to 35m thick using a 0.5% ThO₂ cut-off – which are dimensions that PNN is aiming to significantly increase with the current drilling campaign. The northwest and southeast ends of the deposit are considered high priority areas for extensions both along strike and at depth given the incredible grades that were intersected with excellent continuity. The northeast and southwest areas are only partially constrained, so there is scope to extend there as well. When considering that most of the drilling as been concentrated on 10% of the project area, with much wider spaced holes extending to roughly 20% that are in desperate need of testing the gaps that were not adequately explored – there is significant scope to expand the project, which is the exact type of upside being chased by the US institutions who led the $10.25 million placement that PNN executed a couple of months ago in conjunction with the acquisition. The addition of a strategic $1.7 million recently raised from a well-known international specialist resources investment fund compounds the importance of and potential rerate from this exploration campaign.
Brazil is fast becoming the Western world’s hotspot for sourcing rare earths outside of their domestic options, and both the EU and US are starting to compete for supply. After USA Rare Earth Inc (NASDAQ: USAR) announced its planned acquisition of Serra Verde for US$2.8 billion, which followed the US government providing the mine with a US$565 million financing facility, the EU pounced on PNN’s neighbour Viridis Mining and Minerals (ASX: VMM) for near-term supply.
China is doing everything it can to keep its grip on the supply chain, from banning the purchasing of certain rare earth products by Japanese companies to jailing smugglers, and even setting up a whistleblower hotline to encourage reporting of potential exports that are currently illegal. More than a decade of ruthless consolidation within China’s rare earths industry resulted in what were hundreds of miners and processors in 2010 being consolidated into ten main players by 2013, which eventually became the two state owned behemoths who control most of the industry now – China Rare Earth Group and China Northern Rare Earths Group High-Tech.
With the West trying to play catch up on decades of innovation and IP in a preposterously short time, and with debatably not enough talent to do so, PNN has a brilliantly strategic asset in its current CEO Alistair Stephens – the 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. Alistair brings rare earth development experience from Arafura’s Nolans and Lindian’s Kangankunde projects, which together host more than 7Mt of contained TREO, with Nolans now at FID/construction-readiness, and Kangankunde under construction and targeting first production in Q4 2026.
The location of PNN’s maiden hole can be seen below, in conjunction with the distribution of previous drill holes and standout assays. The NW and SE sections of the deposit are currently being targeted with both extensional and closer spaced drilling:
Source: PNN
A northwest looking cross section of the assay can be seen below, with MREO concentrations shown on the left and TREO on the right – highlighting the superb grades present at MDF from surface:
Source: PNN
The pie charts below depicts the massive gain in grade and efficiency if the ore at Morro do Ferro is amenable to cerianite rejection, with the pie on the left representing whole rock geochemical analysis and the pie on the right showing REO distribution excluding all cerium:
Source: PNN
The diamond drill rig currently spinning at Morro do Ferro can be seen below. The project has key factors that are ideal for mining, such as containing no native vegetation – with the trees being a eucalyptus plantation that is due for harvest in the near future:
Source: PNN
The chart below breaks down the sectors that make up the US$6.5 trillion worth of industry at risk of disruption from rare earths supply:
Source: IEA
The market has liked what it has seen so far from this campaign it will be continue to get a read on how much untapped potential there is at MDF with the further assays due from the PNN’s maiden drilling campaign, which is an excellent catalyst for revaluation and one that will set the company up to engage in high value metallurgical studies – making it an opportune time to own PNN.
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