Heavy Rare Earths Limited (ASX: HRE) - What Drives the REE Economics.
Coffee with Samso Episode 181 is with Richard Brescianini, Executive Director of Heavy Rare Earths Limited (ASX: HRE)
The HRE story is a management-focused project led by Richard Brescianini, a highly experienced operator in the REE industry, and people like him are few and far between. His insights into the sector are extremely valuable, especially considering the lack of visibility to non-China related industries. Richard's time with Arafura Resources Limited is invaluable to the company.
In this episode, you will get to know Richard and understand his thinking process as he drives the current project forward. Speaking with Richard, it becomes clear that he operates on a different wavelength. Viewers of Coffee with Samso should take away the fact that Richard is a skilled practitioner in a complex industry with its fair share of secrets.
Richard has personally visited the factories that produce magnets and has engaged with both factories and refineries competing in an economy controlled by a State. It is interesting to note that while the Chinese State acts as the ultimate puppeteer, they also foster fierce competition within the sector to drive productivity.
The HRE Story
The story of Heavy Rare Earths Limited is all about the Cowalinya project in Western Australia. The project is located 70km south-east of Norseman, a small gold mining town 187km directly south of Kalgoorlie.
Figure 1: Location of the Cowalinya project in Western Australia. (Source: Heavy Rare Earths Limited)
The Cowalinya area was primarily chosen on the basis of historical drilling which indicated the presence of anomalous rare earths in fresh bedrock and higher grade supergene concentrations of rare earths in the overlying in-situ weathered saprolite profile.
Samso's Conclusion
Over the past 24 months, the Samso platform has had the privilege of showcasing a series of Clay Rare Earth stories. It has truly demonstrated why the Samso platform is effective in sharing stories in long form. The complexity of understanding the Clay REE business is precisely why the Coffee with Samso conversations with experts like Richard Brescianini are so valuable.
In the case of Heavy Rare Earth, Richard emphasizes the importance of leaching the REE out with acids and finding the right balance between cost and profits.
Essentially, the market price needs to be lower than the cost of extracting the metals. Richard's extensive industry experience and understanding of the complexities behind the scenes in China give him a unique advantage that his peers may not possess.
One key takeaway from these conversations is that there is no longer any doubt about the ability to extract the metals. Numerous companies have released metallurgical results showing successful extraction. The focus now shifts to having the necessary resources, grade, and ingredients to make things happen. If someone discovers a more efficient method to extract a greater amount of metals from any grade, it would be a game-changer.
It appears that the HRE resource will be substantially upgraded, with a higher grade than initially stated. The REE business is a long-term game, and wise investors should do their own research (DYOR) and consider long-term investment strategies.
Looking ahead, a potential partnership in non-China based downstream operations could be the next step for HRE. This would add further value to the process. The Esperance region is an ideal location for such partnerships, especially if non-China economies aim to establish a stronger foothold in the supply of REE and manufacturing. It would be a logical decision for the Australian government to support the creation of value-adding industries in this area.
Chapters:
00:00 Start
00:20 Introduction
00:43 Who is Richard Brescianini?
01:36 All about HRE
02:50 The HRE advantage in terms of metallurgy
10:01 Is there a geological control on the grade?
14:07 Is it all about labs now?
18:30 Ionic or non-ionic are not deal-breakers
22:34 Game changer in the clay sector
25:31 Importance of geological advantage
29:13 Future demand of the REE market
32:47 What needs to go right for HRE and what could go wrong for the likes of HRE?
39:20 The positives and negatives of the market
45:45 Economics in the REE market
49:41 News flow
52:27 Why HRE?
57:16 Conclusion