The Swedish government has granted Leading Edge Materials (TSXV: LEM) a 25-year mining lease for what the company calls one of Europe’s most important rare earth deposits.
In a statement on Monday, the Canadian exploration company for critical minerals said that its Nora Kar project in southern Sweden had been granted an exploitation concession after an official recommendation from the country’s mining inspection body favoring its development.
According to Leading Edge, the deciding factor in the government’s decision was the strategic importance of the project for Sweden and the European Union, citing a previous study by the Geological Survey of Sweden that confirmed Norra Carr is one of the richest rare earth deposits in Europe.
Specifically, the report highlighted a particularly high proportion of so-called “heavy rare earths” at the project – terbium, dysprosium and yttrium – all of which are key inputs in the production of permanent magnets used in electric cars, wind turbines and other advanced technology, including defense applications.
With no rare earth production anywhere in the EU today, the government has concluded that supplying Sweden and Europe with this vital raw material clearly outweighs competing land use interests, the company said.
“The government’s decision confirms that this is a heavy rare earth deposit of strategic importance, located in a Tier 1 jurisdiction,” commented Curt Budge, CEO of Leading Edge, in a press release.
Shares of Leading Edge Materials rose nearly 28% following the announcement, bringing the company’s market capitalization to about C$85 million.
Rich in heavy rare earths
In a company statement, Budge also noted that the Norra Kärr project has the “capacity to supply all of Europe’s annual dysprosium requirements along with purposeful production of terbium and yttrium,” providing a “realistic solution” for the continent as it looks to reduce its dependence on Chinese imports.
The 2021 Preliminary Economic Assessment (PEA) for the project identified a potential 26-year mine operation producing an average of 5,340 tons per year of mixed rare earth oxides (MREOs), based on material representing approximately 30% of the project’s inferred resource of 110 million tons grading 0.5% total rare earth oxides (TREOs).
Leading Edge said that one of the most important features of the project is the high ratio of heavy rare earth elements (dysprosium and terbium) to light rare earth elements (neodymium and praseodymium) present in the resource. At a ratio of 2.5 to 1, this means that for every kg of NdPr produced, Norra Kärr is expected to produce 0.4 kg of DyTb. Meanwhile, the average ratio of projects in the peer group is 38.5 to 1.
Based on older, much lower rare earth prices for Dy and Tb, Nora Carr’s PEA report gave an after-tax net present value (at a 10% discount) of US$762 million, an internal rate of return of 26.3%, and average EBITDA of US$206 million.
PFS, let next
With the mining lease now secured, Leading Edge said it will move the project towards an updated pre-feasibility study (PFS) and enter into talks with potential partners and financiers in order to bring Norra Kärr into production.
“With European supply chain resilience now a political imperative, Leading Edge Materials is on track to develop Europe’s first heavy rare earth mine,” Budge said.
At the same time, the company will also look to develop its environmental permitting process, pledging that it will be “developed to the highest environmental standards, in close dialogue with the local community, including those who remain skeptical of the project.”
The mining concession for the Nora Kar project was previously canceled in 2016 due to environmental concerns, three years after its initial issuance. Leading Edge has since taken steps to address these concerns and reduced the project to a 65% smaller footprint.
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