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Why the RareX (ASX:REE) share price is up 400% in a year

asx share price increase represented by golden dollar sign rocketing out from white domes of lithium
Image source: Getty Images

It’s certainly a good day to be a RareX Ltd (ASX: REE) shareholder. RareX shares are up 11.54% today to 14 cents a share. It was an even better story earlier in the day too. Just after open, RareX shares hit an intra-day high of 16 cents, which was a rise of around 23%.

But that pales in comparison to what this company has been up to over the past 12 months. Since 3 March 2020, RareX shares are up an eye-watering 400%. But (and here’s where it gets really fun), if an investor had held out buying until 20 March 2020, they would instead be sitting on a gain today of 1,400%.

So who is this wunderkind company? And what has fuelled this stellar rise?

The RareX share price steals the spotlight

RareX is a rare earths mining company based in Western Australia. Rare earths are a group of 17 elemental metals used to make essential components in electrical devices, motors and batteries.

These metals aren’t exactly household names in the same way copper, iron, gold or lithium are. But they are still very important industrial inputs that are essential to the manufacture of phones, hard drives, speakers, microphones and electric vehicles.

RareX specialises in the exploration and development of two rare earth metals in particular: neodymium and praseodymium. As the company pointed out in a presentation yesterday, these two elements are essential components of rare earth permanent magnets. RareX also highlighted that every electric vehicle manufactured requires approximately 1-2kg of rare earth permanent magnet in its motor. Wind turbines also require rare earth permanent magnets.

The company also told investors that neodymium and praseodymium prices, along with the prices of other rare earths like terbium and dysprosium, have “risen sharply” over the past few months.

RareX’s flagship asset is the Cummins Range Rare Earths project in Western Australia. The company owns 100% of this project.

RareX tells us that neodymium, praseodymium, dysprosium and terbium together make up 93% of the ore contents from Cummins Range. In other words, it has become a far more lucrative asset in recent months due to the rising prices of these commodities.

Further, the share price of the ASX’s largest rare earths company – Lynas Rare Earths Ltd (ASX: LYC) – has also exploded in recent months. Lynas shares are now up 282% over the past year, up 56% year to date in 2021 so far. Things have just been going the rare earths sector’s way, it seems.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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