London-listed Hochschild Mining is expanding into a market it believes offers exponential growth opportunities – rare earths.
The miner announced on Wednesday that it bought the 93.8% of the BioLantanidos ionic clay rare earth deposit that it did not already own for a consideration of $56.3-million.
"We believe that consolidating 100% of this early-stage rare earth deposit in Chile represents a unique opportunity for our shareholders and is the direct result of Hochschild's deep understanding of the region. The investment is also the result of an extensive long-term project to identify commodities with very strong growth characteristics, as well as our ability to discover regional investment options that might not otherwise be available,” CEO Ignacio Bustamante said in a media statement.
BioLantanidos is a private Chilean company that is controlled by the private fund FIP Lantanidos, managed by private equity firm Mineria Activa. Hochschild previously invested $2.5-million in the project during 2018 and early 2019 in exchange for a 6.2% equity stake with an option to increase ownership.
Bustamante said that Hochschild remained focused on precious metals and on its exploration-based strategy, but added that the diversification gave the company the potential to acquire a unique deposit.
The project consists of ionic clay resources, similar to those found in China, but very different from most other rock-based rare earth projects worldwide. Mineralisation occurs from the surface to 20 m to 30 m deep and mining will not require explosives.
The clay undergoes a simple washing process in which rare earths will be desorbed into a solution, concentrated and calcined to obtain a rare-earth oxide.
Further, there is no requirement for a tailings dam as the washed clay is expected to be returned to the openpits.
Hochschild said that the process did not require potentially harmful chemicals and that the project was expected to be one of the lowest cost rare-earth producers.
BioLantanidos has prepared a feasibility study, which Hochschild said it intended to revise over the next 18 months.