Perth-based Red Mountain Mining (ASX: RMX) has entered into an earn-in and joint venture agreement with Unearthed Resources Pty Ltd over two highly-prospective rare earths and nickel-cobalt exploration licences within the Mt Mansbridge project in WA’s Kimberley district.
Under the terms of the agreement, Red Mountain will commence the earn-in of up to a 100% interest in the Killi Killi Ree and Déjà vu tenements in three phases, each at its own election based on exploration results.
Phase 1 of the agreement will commence once a number of conditions have been satisfied including a successful due diligence process and receipt of shareholder and regulatory approvals.
Unearthed Resources will have a free-carried interest in Mt Mansbridge until such time as Red Mountain elects to withdrawal from its phased earn-in obligations.
If this occurs, the unincorporated joint venture will continue with Red Mountain as manager and on the basis that each party must contribute to the project costs according to their respective equity interests.
“Mt Mansbridge is an exciting opportunity for [us] to obtain leverage to the significant and valuable rare earths market,” said Red Mountain director Jeremy King.
“Subject to finalising due diligence, we intend to move forward aggressively on a focused exploration program for which we are comfortably fully-funded.”
Located approximately 130 kilometres south-east of the township of Halls Creek, the Mt Mansbridge project is wholly-owned by Unearthed Resources Pty Ltd and consists of two contiguous granted exploration licenses over a total area of 245 square kilometres.
The area has been subject to exploration activity since the 1970s for uranium, gold and diamonds with unsuccessful results.
Red Mountain said the presence of the rare earth mineral xenotime at Killi Killi had been overlooked in past exploration and there exists an opportunity to determine if economically-viable concentrations exist.
The Déjà vu prospect contains an ultramafic intrusion associated with cobalt grades of up to 0.34% and disseminated copper and nickel sulphides identified from drilling.
Red Mountain said it would fast-track exploration and development of Mt Mansbridge in response to dwindling global supplies of rare earth elements and battery minerals due to the growing demand for lithium-ion from the electric vehicles sector.
With China currently responsible for more than 80% of global supply of rare earths, Red Mountain said there are supply chain concerns that Beijing could “use its dominant position as a rare earths exporter to the US as leverage in the trade dispute with the sector being the next front in the trade war”.
This has resulted in a strong global intertest in the identification and development of non-Chinese sources of rare earths to reduce the dependence on supply from China.
“The future supply of heavy rare earths is critical in the development of high-tech applications and high-performance magnets used in electric vehicles and wind turbines,” it said.
“The crackdown by Chinese authorities on the mining of ionic clay deposits in Southern China for environmental reasons, the lack of substitutes along with very few significant sources of heavy rare earths outside of China, has resulted in a favourable outlook for heavy rare earths.”
Global diversification away from the Chinese supply chain represents an “excellent opportunity” for Red Mountain to explore and develop new sources of heavy rare earths outside of China.
At mid-afternoon, shares in Red Mountain Mining were 50% higher at $0.006.