Vancouver-headquartered Medallion Resources’ stock received a boost on Monday, after the company announced that it had received inquiries from several rare earth element (REE) refineries interested in receiving specifications and potential volumes of its REE concentrate product.
These refineries are considering their response to the US Department of Defense’s recent Funding Opportunity Announcement (FOA), directed toward light REE processing and separation.
Medallion is proposing a US-based REE process plant that will be able to provide feedstock for separation by either existing or future refining facilities. The Medallion plant will use monazite sand, a REE-rich by-product mineral which is abundantly available within the US. The company’s proprietary process extracts a REE chemical concentrate from high-grade monazite sand in a clean, safe and automated operation without the need for mining or upgrading.
The FOA is seeking proposals to establish or enhance domestic light REE processing and separation capacity under the Defense Production Act (DPA). The estimated government funding contribution for this project is up to $40-million for accepted proposals and requires matching funding.
Medallion’s product, a light rare-earth concentrate enriched in the magnetic metals neodymium and praseodymium is in short supply outside China. In fact, Beijing prohibits its export to ensure value-add stages are completed within China.
Over the last few years, under direction from Beijing, six State-owned enterprises have consolidated the bulk of the Chinese domestic rare-earth mining and processing capacity and now dominate that marketplace. China currently controls about 85% of global rare-earth production.
The Trump administration has expressed strong support for the US military to become less reliant on foreign-sourced materials and processing technology. A key area of concern has been the high concentration of supply of rare-earth products from China, and the lack of a robust US supply alternative in the short to medium term.
In July 2019, The White House issued presidential determinations under Section 303 of the DPA that “domestic processing, separation, production of REEs is now essential to the national defense". This permitted the federal government to incentivise US and Canada rare-earth industrial base accordingly, which includes this current light REE FOA.
The current defense project focuses on production of neodymium and praseodymium or when produced together “NdPr” oxide products. NdPr is commercially the most important and valuable of all the REEs for its use as the key input to rare-earth, permanent magnets. These magnets are embedded in military equipment that includes the F-35 fighter, Tomahawk and Javelin missiles, Aegis-equipped destroyers, and smart bombs.
Shares in Medallion closed 10% higher on the TSX-V on Monday at C$0.13 each, having touched an intra-day high of C$0.14 apiece. The company’s 52-week high is C$0.28 a share.