Ionic Rare Earths (ASX:IXR) share price plummets 19% today

The Ionic Rare Earths Ltd (ASX: IXR) share price is diving today after the company released the results of a completed scoping study.

| More on:
asx share price falling represented by graph of paper plane trending down

Image Source: Getty Images

The Ionic Rare Earths Ltd (ASX: IXR) share price is diving today after the company released the results of a completed scoping study.

During late afternoon trade, the mineral exploration company’s shares are going for 3.8 cents, down 19%.

What did Ionic Rare Earths announce?

Investors are heading for the hills, sending Ionic Rare Earths shares south after digest the company’s latest update.

According to its release, Ionic Rare Earths advised it has received positive results from its Makuutu scoping study. The results obtained showed the potential to develop a sustainable, long-life, critical rare earth supply to international markets.

The study looked at an open-pit mine running a modular heap leach operation to create a mixed rare earth carbonate product. The base case scoping study considered running the mine over an initial period of 11 years.

Within the first year, production output could achieve 800 tonnes of rare earth oxide equivalent product. However, as more modules are added, the study assumes production could reach up to 3,800 tonnes in year 11.

The life of the mine is expected to deliver earnings before interest, tax, depreciation and amortisation (EBITDA) of $1.71 billion. In addition, post tax free cash flow would total $1.02 billion, with a net present value of $428 million.

Pre-production capital expenditure is projected to cost approximately US$89 million for the first module. Expanding operations to cater for the second module is forecasted to be about US$40 million. Thereafter, adding modules from 2 to 5 would amount to US$172 million funded by the company’s project cash flow.

Ionic Rare Earths declared a strong cash position of more than $12 million for the end of March.

More on the Makuutu Rare Earths project

Located 120 kilometres east of Kampala in Uganda, the Makuutu Rare Earths project is an ionic adsorption clay-hosted rare earth element deposit. The project is 100% owned by Rwenzori Rare Metals Ltd., a private Ugandan company. However, Ionic Rare Earths has acquired a 51% shareholding in Rwenzori Rare Metals.

The Makuutu project consists of 5 licences and is serviced by infrastructure such as roads, rail, power, and cell communications.

Words from the managing director

Ionic Rare Earths managing director, Tim Harrison commented on the result, saying:

The completion of this study with its positive project economics represents a critical milestone for the company. Combining the long life potential, with the low-cost modular capital development and high margin basket potential at Makuutu, confirms the project as one of the best potential new sources of critical and heavy rare earths in the near term.

We see this project as technically and financially robust and eminently financeable, and the company has received strong expressions of interest from strategic parties interested in accessing Makuutu’s unique basket composition that contains approximately 70—75% critical and heavy rare earths.

Looking ahead, Mr Harrison further commented on the company’s strategic direction, adding:

…We now move formally towards the BFS (Bankable Feasibility Study) which we plan to complete by Q3 2022, prior to submitting the Mining Licence in October 2022 that will allow us to make a Final Investment Decision with a low capital development threshold, and capable of generating strong shareholder returns over a long-life operation at Makuutu.

About the Ionic Rare Earths share price

Over the past 12 months, the Ionic Rare Earths share price has gained over 560%, with year-to-date performance sitting above 130%. The company’s shares reached a multi-year high of 6.5 cents earlier this month before profit-taking swooped in.

At today’s price, Ionic Rare Earths commands a market capitalisation of roughly $127 million, with 3.1 billion shares on issue.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Aaron Teboneras 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.

More on Resources Shares

A person bounces another up high from a seesaw as the one in the air looks through a telescope into the future.
Resources Shares

Own ASX lithium shares? Here’s a global expert’s outlook on lithium demand (and supply)

Could lithium prices continue to surge?

Read more »

Calculator on top of Australian 4100 notes and next to Australian gold coins.
Dividend Investing

How big is the BHP dividend yield going to be in 2022 and 2023?

BHP is forecast to pay a large dividend over the next year. How large will the dividend yield be?

Read more »

A woman is left blank after being asked a question, she doesn't know the answer.
Resources Shares

Do any ASX lithium stocks pay dividends?

Do any ASX lithium stocks actually pay out dividends in 2022?

Read more »

Miner holding cash which represents dividends.
Dividend Investing

Which ASX 200 mining share has the highest dividend yield in May?

Bear in mind that a trailing dividend yield is backwards looking. It's no guarantee as to future payments.

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Resources Shares

Why did the Cobalt Blue share price leap 5% this morning?

The Cobalt Blue share price has been exhibiting volatility lately. Here's why.

Read more »

A woman sits at her computer in deep contemplation with her hand to her chin and seriously considering information she is receiving from the screen of her laptop regarding the Xero share price
Broker Notes

Is the Fortescue share price cheap after dropping 10% in a month?

We check what brokers have to say on the iron ore giant.

Read more »

A drawing of a rocket follows a chart up, indicating share price lift
Share Gainers

Here’s why the Australian Strategic Materials share price is surging 31% today

The ASX rare earths and critical metals miner has come under selling pressure since hitting record highs in November last…

Read more »

Green arrow with green stock prices symbolising a rising share price.
Resources Shares

Why is the Core Lithium share price charging 7% higher?

Core Lithium shares are on fire on Monday...

Read more »