American Rare Earths (ASX:ARR) share price slumps 9% on quarterly update

It's been a disappointing day for shareholders after the exploration company released its quarterly results.

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Key points

  • The American Rare Earths share price is plunging on the back of the explorer's latest quarterly activities report
  • The company yesterday responded to an ASX price inquiry, putting recent trading movements down to "editorial coverage" of the sector
  • Shares rocketed more than 126% from 13-20 January and are up more than 250% over the past 12 months

The American Rare Earths Ltd (ASX: ARR) share price has plummeted more than 9% during afternoon trading today after the Australian exploration company released its quarterly activities update this morning. The report comes after the company responded to an ASX price inquiry yesterday afternoon.

At the time of writing, its shares are swapping hands for 39 cents, a fall of 9.3% on yesterday's closing price.

However, despite today's plunge, the American Rare Earths share price is still up 263% over the past 12 months.

So, what's going on? Let's take a closer look…

American Rare Earths quarterly report

Today, American Rare Earths reported the following activities for the quarter ending December 2021:

  • Progression of its La Paz Project operations in North America (NA)
  • Maiden drill finalised at Halleck Creek Project (NA), which has revealed potentially more resources than La Paz
  • Permits for Halleck Creek have been approved, drilling is expected to commence in the second quarter of 2022
  • A five-year $3 million promissory note with Cobalt Blue Holdings Ltd (ASX: COB)
  • Incurred exploration expenditure of $313,370
  • A cash position of $8.16 million as of 31 December
  • A capital raise of $5.7 million with Fidelity International Limited achieved in December
  • Appointments of new executive and non-executive leaders to the company

Looking forward to the next quarter, the explorer is aiming to "create the next major rare earth and critical minerals business" and to "restore the supply chain" of these materials to the US.

American Rare Earths responds to ASX

Yesterday afternoon, American Rare Earths responded to an ASX inquiry into the securities' recent trading activity.

For reference, the American Rare Earths share price has increased by more than 105% since 13 January.

However, the explorer declared it was not aware of any information unannounced to the market which could have explained this massive price movement.

Instead, it cited "an increase in editorial coverage regarding the rare earths market in the market segments" in which the company operates.

The explorer added that reporting on the sector had increased since a Restoring Essential Energy and Security Holdings Onshore for Rare Earths Act of 2022 (REEShore) bipartisan legislative bill was introduced to the Senate of the United States.

The REEShore Act would restrict purchases of rare earths from China and encourage the extraction and processing of rare earth metals in the United States.

The increase in coverage could be a factor regarding increasing market confidence in our US based rare earths projects at La Paz, AZ and Halleck Creek, WY.

American Rare Earths share price snapshot

Between January and August last year, the American Rare Earths share price was relatively steady, sitting around 9 to 10 cents a share.

It then experienced an 8% jump back in August, after the company announced the testing of surface samples at its La Paz project.

In the last week, the explorer saw its sharpest rise of the year, increasing by around 105%.

The explorer currently has a market capitalisation of around $150 million.

Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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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