The 25% increase in the stock price for Sovereign Metals was based on the positive response from investors to the “transformational” opportunity presented by the announced discovery of a large deposit of critical minerals. The critical minerals were discovered through the processing of tailings from the rutile mine. The preliminary assaying results indicate that the rare earth content of the tailings is extremely high.
High-grade rare earths and the economics of recovery
Processing of the tailings uses the same process used to extract rutile, therefore there is no need to spend money on building new facilities to process the rare earth material.
This means that the company now has the potential for a third source of revenue in addition to the two other sources of revenue provided by the project’s rutile and graphite resources.
The significance of the grade of the critical minerals lies in their pricing. The current price of dysprosium is over $850,000 per ton, while the price of terbium is over $3.6 million per ton, and the price of yttrium is over $270,000 per ton. The value of these rare earth elements far exceeds the value of gold and other precious metals.
The results indicated that the tailings contained 2.9 percent total (dysprosium plus terbium) and 11.9 percent yttrium; both of which are considered critical for the production of many products that have been identified as being critical to the long-term success of Western countries.
Strategic importance for supply chains
Kasiya is now considered one of the few known sources of the heavy rare earth elements.
The company’s share price increased to 38p after the announcement. This increase reflects the confidence investors have in the company’s ability to expand the potential of Kasiya and the impact that Kasiya may have on the global dynamics of rare earth element supply.
CEO statement and geopolitical context
Frank Eagar stated that the announcement of the discovery of the critical minerals is a development that “fundamentally enhances Kasiya’s strategic importance.” He noted that the timing of the announcement is also significant, given the growing number of countries around the world that are looking to reduce their dependence on China for the supply of the critical minerals needed to develop low-carbon technologies.
China is currently responsible for providing approximately 90 percent of the world’s heavy rare earth supply and is implementing strict controls on the export of these critical minerals. As a result, Western countries are actively looking for alternative suppliers of these critical minerals. Kasiya is now included among those alternative suppliers.
Kasiya’s growing role as a diversified critical minerals supplier
In addition to the previously known significant size of the rutile and graphite deposits at Kasiya, the inclusion of the high-grade heavy rare earths makes Kasiya a critical minerals supplier with the potential to provide inputs for the development of low-carbon technologies, including battery technology, permanent magnets, and renewable energy generation infrastructure.
The addition of the third source of revenue to the project’s economics enhances the project’s viability without requiring additional expenditures of capital, a relatively rare occurrence in the mining industry. Metallurgical and economic studies are currently underway to determine how the rare earth component of the project will be developed.
Analysts believe that the discovery of the critical minerals not only provides a strong competitive advantage to Sovereign Metals but also enhances the overall resilience of global supply chains for critical minerals. Overall, the recent discovery made by Sovereign Metals has greatly enhanced the company’s ability to secure the critical minerals that are necessary to ensure the continued growth and competitiveness of Western countries. Kasiya is becoming increasingly important to the global economy as a diversified critical minerals supplier.
