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Stockhead - Kristie Batten: Economics for BCM’s ‘unique’ rare earths project coming soon

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One of Australia’s top mining journalists, Kristie Batten writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

Brazilian Critical Minerals (ASX:BCM) is looking forward to a big 2025 in which the market sees the value of its Ema rare earths project.

Ema has an inferred resource of 1.01 billion tonnes at 793 parts per million total rare earths oxide, using a 500ppm TREO cut-off, including a higher-grade component of 331 million tonnes at 977ppm TREO, based on a 900ppm cut-off.

BCM managing director Andrew Reid told Stockhead the company had ticked off a lot of milestones in 2024, including the maiden resource, metallurgical test work and the potential for in-situ recovery production, and planned to continue the momentum this year.

“We want to update the MRE, and we’re going to do that in a couple of steps through the first quarter,” he said.

“We’re going to roll out the scoping study results, which will probably somewhere around the middle of the quarter, and then we are also going to do the field permeability trials, where we really test how quickly we can move solution and reagents through the ground, which is key for the type of ISR that we’re talking about.

“And if all that’s good, then we really start to look towards the end of the year and getting a feasibility study pulling all that together.

“Hopefully, we’ve got a project that makes money, and we can almost start construction in probably 18 months – the permitting process is quite quick in Brazil.”

Giving BCM confidence is the project’s suitability for lower cost, environmentally friendly ISR.

Reid said it was a point of difference between BCM and its peers.

“Our project, the look and feel of it is something unique on the ASX, and to my knowledge, hasn’t been done outside of the big clay-hosted mining areas of China and Myanmar, so we’re just very lucky,” he said.

“We’ve got a type of deposit that can allow for a very cheap and simple and effective style of mining and processing.

“It’s very simplistic in its nature and should be very, very capex-light, something like 10 times lower capex than most other projects in the world.”

Reid is confident lower capex will make funding easier.

“We might not even need to get any debt. We might not need government funding. If you don’t need government funding, then you save yourself years of pain of going through a process,” he said.

“And really the only method of getting debt financing currently has been through government support, because the commercial banks don’t really understand the projects well enough, and they can’t assess the risk because of the complexity of the sort of the overarching China influence.”

Given the proposed use of magnesium-based green reagents, Reid expects the project to have strong ESG credentials.

“This method really is not new, and it’s not novel, and it’s not unique, because 30% of the world’s rare earths is currently being produced by this exact method,” he said.

“I’m sitting pretty sweet at the moment – I’ve got a low-capex project which mimics the style of mineralisation that the Chinese know and understand and have been mining for 30 years.

“We’re hoping the opex is sort of Chinese-style in terms of its makeup and quantum, so it’s really fingers crossed for us now for the next month or so, as we get the scoping study done.”

Despite strong progress in 2024 and looming catalysts in 2025, BCM’s market cap is less than A$10 million, well below its other rare earth peers in Brazil, which include high-profile Meteoric Resources and Gina Rinehart-backed Brazilian Rare Earths.

Fellow developers Meteoric and BRE and each have market caps of more than $200 million, despite trading at well below 2024 highs.

Canaccord Genuity analyst Reg Spencer recently visited Meteoric and BRE’s projects and maintained speculative buy ratings. His price target of 40c for Meteoric is four times current trading levels, while his target of $5.50 for BRE is more than double Friday’s close.

BCM’s share price also more than halved throughout 2024 amid weak market conditions for rare earths.

But Reid was hopeful the company could start to demonstrate the value of the Ema project and close the gap with its larger peers.

“I think there’s a perception, with other commodities like gold and iron ore, that grade has some bearing on economics,” he said, pointing out that BCM’s head grade was five times lower than Meteoric.

“We’ve got a unique project with a unique set of circumstances, with some great results that we put out, and I think that we will certainly position ourselves to have the opportunity to be bigger, in terms of the economics that this project can generate at a very low price relative to all the other projects that are out there, even some of the highest grade ones, because the beauty of rare earths is that grade is not king.”

At Stockhead we tell it like it is. While Brazilian Critical Minerals is a Stockhead advertiser, it did not sponsor this article.