Pass the Auxico-rd
- $47.964M Market Capitalization
Auxico Resources Canada Inc. (AUAG.C) announced today that it has signed an agreement with Cooperativa Estanifera de Mineradores da Amazônia Legal Ltda. (CEMAL). The Company’s latest agreement is related to the production of tin, niobium, and rare earth from the Massangana tailings in the State of Rondônia, Brazil. According to estimates, these tailings contain 30,000,000 tonnes.
Furthermore, a study prepared by the German Mineral Resources Agency and the Geological Survey of Brazil indicates that three types of products could be generated from these tailings. This includes columbite concentrate containing 34.07% niobium, monazite concentrate containing 37.74% total rare earth oxide (TREO), and cassiterite concentrate containing 54.92% tin.
In particular, the feed material from the tailings received by Auxico averaged 4.56% TREO, indicating rare earth content of 1,370,000 tonnes. In total, the provided concentrate contained 63.49% TREO. Keep in mind that rare elements are commonly used in a wide range of applications, including magnets, catalysts, and batteries, to name just a few. According to the Government of Canada, the manufacturing of permanent magnets accounted for 29% of the demand for rare elements in 2020.
Currently, Auxico is conducting a feasibility study to process 3,000,000 tonnes a year of tailings at a rate of 10,000 tonnes per day. Ultimately, the objective of this project is to produce per year 135,000 tonnes of monazite concentrate, 19,500 tonnes of cassiterite concentrate, and 45,000 tonnes of columbite concentrate. This project will be conducted in three phases that will be executed as follows.
Project Phases
- Phase 1: launched within the next 12 months. The company will conduct a pre-production study including on-site visits and sampling to verify current resources and present indications
- Phase 2: construction will commence for an ultrasound-based processing facility capable of eliminating radioactive elements contained in tailings. The plant is planned to have a capacity of 100,000 tonnes per year
- Phase 3: 50,000 tonnes of rare earth concentrates produced by the aforementioned plant will be shipped to the United States (US) for final separation. In anticipation, Auxico has prepared a scoping study for the refining of rare earth elements in Little Rock, Arkansas
Regarding the radioactivity of the elements found in the tailings, Auxico has successfully removed the thorium, a naturally occurring radioactive metal, from concentrate samples. The Company was able to do so using the ultrasound-assisted extraction (UAEx) process, which reduced the thorium content to less than 0.1% from an original value of 6.23%. Superman would be proud.
Overshadowed Value
To provide some context, niobium is a rare metal commonly used in alloys such as stainless steel. Niobium improves the strength of alloys, especially at low temperatures, making it ideal for jet engines, rockets, and gas pipelines, among others. With this in mind, niobium is a valuable metal priced at $42,280 per tonne in 2018. Yet, despite being used for many applications, not many know of the metal.
Globally, the largest niobium deposits are located in Brazil and Canada. In fact, 98% of the world’s active reserves of niobium are situated in Brazil. Needless to say, through its latest Joint Venture (JV), Auxico has its hand in Brazil’s cookie jar. In addition to niobium, the Company also has a foot in the global tin market, which was estimated at a size of 387 kilotonnes in 2021. Currently, tin is valued at $39,158.69 per tonne.
Overall, the total capital expenditure for the Auxico’s planned plant in Brazil and the elemental separation in the US has been estimated at USD$300,000,000. Bearing this in mind, the Company has received a term sheet from Broughton Capital for USD$300,000,000 debt financing, of which the terms are currently being negotiated.
Terms of the Agreement
Under the terms of the agreement, Auxico will earn 85% of the profits of the JV by paying USD$2,000,000 over the next year. Additionally, the Company will be responsible for providing the necessary capital to engage in the production of the relevant concentrates. An initial payment of USD$500,000 will be made within 30 days of the date at which the agreement was signed, or June 7, 2022.
Subsequently, a payment of USD$250,000 will be made on or before September 30, 2022, a payment of USD$250,000 on or before December 31, 2022, and a final payment of USD$1,000,000 will be made on the anniversary of the first payment. Moving forward, Auxico plans to initiate a sampling program of the tailings as well as prospect primary and secondary deposits identified from satellite imagery.
Proposed Program
- (1) compilation of all available technical data
- (2) prospect the highly fractured NW and NE lineaments cutting the Massangana Granite Ring structures in search of pegmatite/quartz veins primary source of the mineralization
- (3) prospect the drainage accumulation sites for the secondary alluvial mineral deposits
- (4) conduct a LIDAR survey over the property to get a more accurate representation of the structural features and also to more accurately map and calculate the area/volume of the tailings
Regarding the property’s primary structures, four ring structure intrusions highly fractured by secondary faults have been identified. Moreover, numerous flow and drainage accumulation sites that have not yet been exploited have also been identified. These sites may represent alluvial mineral deposits, similar to previously exploited deposits.
Auxico’s share price opened at $0.77 today, up from a previous close of $0.73. The Company’s shares were up 9.59% and were trading at $0.80 as of 10:58 AM EST.
