Why is this ASX rare earths share exploding 200% today?

This small cap share is storming ahead on Wednesday.

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Key points

  • A rare earths share is taking the market by storm today
  • The company's plans to acquire an ionic clay rare earths project in Brazil appear to be exciting investors 
  • The materials sector is climbing a more modest 0.15% today 

The S&P/ASX 200 Materials Index (ASX: XMJ) is up 0.15% in late afternoon trading on Wednesday, but this ASX rare earths share is rocketing far higher.

The Alvo Minerals Ltd (ASX: ALV) share price is soaring 200% at the time of writing, currently fetching 43.5 cents. It was priced at 14.5 cents a share at market close yesterday.

So why is this ASX rare earths share having such a top run?

What's going on with this rare earths company?

Investors appear to be buying up the ASX rare earths share today on the back of acquisition news.

Alvo Minerals has signed a binding agreement to buy the Bluebush Rare Earth Element project in Brazil. This is adjacent to the company's Palmeiropolis exploration base.

Touting the benefits of the project, Alvo highlighted Bluebush is adjacent to the Serra Verde Ionic Clay Rare Earth Element Project. This is said to be the "only genuine Ionic Clay project currently in construction outside of China".

Commenting on today's news, Alvo managing director Rob Smakman said:

We plan to rapidly test the ionic clay mineralisation potential at Bluebush, which is such a similar exploration setting to that of Serra Verde.

Bluebush hosts high grades at surface, broad zones of saprolite which have barely been tested, and the mix of Magnet or Critical REEs [rare earth elements] to Total REEs appears very similar to those at Serra Verde.

Early-stage exploration work at the mine has revealed high-grade rare earth elements at shallow levels with "values up to 4,500 parts per million Total Rare Earth Oxide (TREO)".

Alvo noted it has the "team, the tools and expertise" to rapidly advance the project.

Share price snapshot

The Alvo share price has risen 57% in the last year and 166% in the past month.

For perspective, the ASX 200 Materials Index has lost 1.52% in the last year.

This ASX rare earths share has a market capitalisation of around $24 million.

Motley Fool contributor Monica O'Shea 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 Scott Phillips.

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