Rare Earths

Good news is ‘no news’ for another casualty of the market’s lithium hate-fest: Hastings tanks despite a rosy update

Thu 23 Jun 22, 6:27pm (AEST)
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Key Points

  • Hastings has entered into a binding agreement to acquire a 30% interest in the Yangibana rare earth project JV tenements currently held by Cadence Minerals
  • The mine life of the Yangibana rare earths project has followings today’s announcement been extended by around one year to 16 years
  • Spot Neodymium-Praseodymium prices having recovered 13% over the past six weeks

If the share price movements tell anything today, it’s probably this: The only cure for ‘lithiumitis’ (it’s a thing, really) is stay incubated from anything to do with rare earths or EV battery-related stocks until current symptoms abate.

Seemingly good results, which only weeks ago would have had the market salivating for more, are now being treated with varying degrees of disdained.

Echoing similar treatment to the good news served up by IGO (ASX: IGO) today, the market also gave Hastings Technology Metals (ASX: HAS) the cold shoulder after the Australian rare earth (REE) company’s positive update to the ASX this morning.

The news

Hastings has entered into a binding agreement to acquire a 30% interest in the Yangibana rare earth project JV tenements currently held by Cadence Minerals (NEX/LON:KDNC; OTC: KDNCY) and its subsidiary Mojito Resources.

Cadence has agreed to sell its 30% working interest in the Yangibana project tenements to Hastings - the operator and owner of the remainder of the Yangibana Project, - for $9m.

The acquisition is expected to be settled by the issue of fully paid ordinary shares in Hastings, and at a price based on 30 days volume-weighted average price (VWAP) prior to completion.

What is Yangibana?

To the uninitiated, Yangibana is a significant rare earths Project, containing substantial Neodymium and Praseodymium resources - the two most valuable rare earths - with net present value (NPV) of $1bn.

Covering around 650sqm containing some 9 mining Leases, 2 prospecting licenses and 19 exploration licenses. 

in February, the Australian Government’s Northern Australia Infrastructure Facility (NAIF) approved a $140m loan facility to Hastings and Yangibana, making it the first Australian rare earth project to receive NAIF funding.

What ignited the market’s former fling with Hastings?

Back on February the market was lauding Hastings for going some way – via Yangibana to easing supply chain security concerns around China’s stranglehold rare earth sector.

Making Hastings even more attractive, the company has already signed numerous long-term off-take agreements.

For example, a deal with Schaefller and one with Thyssenkrupp, plus as several non-binding memorandum of understandings (MoUs), already represent around 77% of off-take during the first five years of Yangibana’s production.

By mid-year, management expected to be expected to be in full scale process plant construction.

Management expects the mixed rare earths carbonate (MREC) produced by Yangibana to meet around 6-8% of global demand for the critical minerals of neodymium and praseodymium used in the manufacture of permanent magnets.

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Hastings Technology Metals share price over six months.

 

What brokers think

In the last 12 months the Hastings share price has climbed 25%, and since late January has dropped from $0.315 to $0.20.

Consensus on Hastings is Buy.

Despite the attention given to the rare-earths sector, this mid-cap stock is covered by remarkably few brokers and those that do appear to be playing a wait-and-see game before updating their outlooks.

Meantime, after assay results from the company’s Simon’s Find deposit were released, Macquarie notes the potential to extend current resources.

While an updated resource estimate is expected in the second half of FY22, the mine life of the Yangibana rare earths project has, followings today’s announcement, been extended by around one year to 16 years, and management believes further extensions are likely.

With spot Neodymium-Praseodymium (NdPr) prices having recovered 13% over the past six weeks, the broker maintains an Outperform rating and $0.40 target price – double what the stock closed at today.

Written By

Mark Story

Editor

Mark is an award-winning investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics, a diploma in journalism and has completed the Institute of Directors course. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content.

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