Brazilian Rare Earths to raise $66m

Shares in Brazilian Rare Earths have soared on the ASX since they listed late last year. Picture: Marcelo Sayao, EPA

The Gina Rinehart-backed Brazilian Rare Earths is capitalising on its soaring share price by moving to raise equity, raising $66m through Canacord and Petra Capital.

As the group with a $3.65 share price entered a trading halt on Wednesday, it told the market that its shares would be halted until Friday at the latest when it would then announce the results of its capital raising.

The terms of the deal are a $66m institutional placement at $3.30 per share, a 9.6 per cent discount to the last close.

The funds were being used to pay for an acceleration of drilling at its rare earth element discovery in Brazil.

The money will also be used for mine planning work at its flagship Monte Alto discovery in Brazil.

Hancock Prospecting, the company of billionaire Mrs Rinehart, and Whitehaven Coal joined the register in a pre-IPO round some years back.

It listed in December, raising $50m in its initial public offering with shares offered at $1.47, soaring to $1.60 on the first day wiht its market value over $300m.

Working as its adviser is Highbury Partnership.

DataRoom reported in February that there were suggestions in the market that the company’s rare earth deposit was the highest grade globally.

The company has built up a 1,683 square kilometre tenement package and established a large 510 mega tonne rare earth resource.

It recently announced that it had obtained official registration and consent from the Brazilian Nuclear Energy Commission to export mineral concentrates and products containing uranium and rare earth minerals.

In addition, it has entered into a deal with Brazilian Nuclear Agency INB for the collaboration on development potential uranium feedstocks, and agreement for the export of rare earth concentrates that may contain uranium.

Analysts from Canaccord said that they considered the chances of further exploration success at Brazilian Rare Earth’s Monte Alto and Sulista projects as high.

Petra Capital analysts said that to date, the average drilling grades at the Sulista and Monte Alto deposits are materially higher than the reserve grades of producers Lynas and MP Materials.

Its Sulista project is located 80km southwest of the flagship Monte Alto project and has revealed ultra-high grade rare earth mineralisation of up to 22.4 per cent total rare earth oxide.

The analysts earlier this year had forecast a $509m net present value for the stage one monazite project, but calculated a $2.3bn net present value for the higher-grade stage two project development.

Market experts say the rise of Brazilian Rare Earths comes amid a ground swell of interesting project out of the South American nation at a time that battery metals are heavily sought after amid the transition to renewable energy.