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News.com.au
06-07-2025
- Business
- News.com.au
ASX companies carving out best pieces of African REE pie
Africa's rich endowment of minerals such as rare earths has captured plenty of attention Not all countries are equal with some having stable governments and attractive mining regimes Aldoro holds the highly prospective Kameelburg project in the leading jurisdiction of Namibia There's no denying that investing in Africa is risky given the incredibly potent mix of conflicts, political turmoil and corruption but this is offset by its rich mineral endowment that often wins the risk-reward calculation. Of course, Africa is made up of a patchwork of different countries and some of them present vastly superior regimes that are based on successful examples from more developed mining economies. It certainly doesn't hurt that some of the most sought after critical minerals such as uranium and rare earths can be found in abundance in the continent. Rare earths in particular have proven to be an irresistible draw card with Aldoro Resources (ASX:ARN) executive chairwoman Quinn Li telling Stockhead that it provided the opportunity to find resources outside of China. 'China has pretty much dominated the whole supply chain and also the majority of the resource so Africa has become a hotspot for rare earths exploration and development,' she added. A favoured jurisdiction Aldoro owns the highly prospective Kameelburg rare earths and niobium project in Namibia, which is considered a mining jurisdiction in Africa that ticks all the right boxes. Namibia features a stable government that has been in place since it gained independence from South Africa in the 1990s, well-established infrastructure such as rail and deepwater ports, and a mining regime that's modelled after the well-established Australian and Canadian models. It is also well known for its mineral endowment, which provides 25% of the country's revenue, and is known for its uranium and diamonds though critical minerals such as rare earths are increasingly becoming a drawcard. Despite its attractions, the company did not actually seek to find a project in Namibia. Rather, Aldoro found what it described as a phenomenal project in private hands and which it thought would add considerable market value to the company. That it was located within a prime jurisdiction such as Namibia was considered a 'blessing' with Li adding that geologically, Africa was similar to Western Australia in being rich in all kinds of mineralisation. Given this mineral endowment, which has seen major Chinese companies and Australia's Paladin Energy (ASX:PDN) collectively sink billions of dollars into the development of uranium mines, and the regime, Aldoro has committed to investing in exploration of Kameelburg. Drilling proving up potential To date, exploration at Kameelburg has more than validated the company's belief in its prospectivity. The latest drill hits have extended rare earths and niobium mineralisation some 300m to the north after returning hits of up to 193m grading 1.74% total rare earth oxides, 0,23% niobium pentoxide and 229ppm molybdenum in the upper REE dominant layer and 46m at 0.76% TREO and 0.45% Nb in the lower niobium dominant layer. All three holes also ended in mineralisation, which bodes well for extensions at depth. Kameelburg is currently defined over more than a kilometre in length and 550m in width with mineralisation extending to a depth of 510m though carbonatite of this type could extend to depths of between 800-1000m, which prompted Aldoro to acquire new drill rigs capable of drilling deeper holes. Li said the drill results to date had confirmed if not exceeded the company's predictions and it was now very confident where the ore body was located. 'We are pretty much in the final stage to get our mineral resource estimate announced this month,' she said. Li added that the company had previously been limited to drilling holes up to a depth of 510m by the rigs and that it was looking forward to using the new rigs to drill further down and prove the prediction that mineralisation extended up to 800-1000m down. 'If we can drill holes and intersect mineralisation at 740m, it would be a very easy and clinical way of increasing the resource by some 40%,' she said. This has the potential to be hugely positive as Kameelburg has been compared to the Niobec Saint-Honoré project in Quebec that has a resource of 640Mt at 0.41% niobium and 1.63% TREO. However, Kameelburg may have the advantage of scale and mineability as the carbonatite body covers more than 160 hectares and is near surface compared to Saint-Honoré, which sits across a 40-hectare footprint buried beneath 100m of limestone and overburden. Aldoro has also been a good corporate citizen with its very good relations with the Namibian Mines Department, provision of assistance to the local community, employing locals and engaging environmental consultants to ensure compliance with government regulations. Looking ahead, the company expects to carry out metallurgical testing soon with results expected by the end of August. It will then carry out deeper drilling in early September using the new rigs. All this work has the potential to deliver significant boosts to the scale of mineralisation at Kameelburg, which will in turn increase the company's commitment to carry out further exploration at EPL 7372 – one of the three licences that make up the project. Other ASX African plays Aldoro isn't the only ASX-listed company with operations in Africa. While RareX (ASX:REE) is best known for its Cummins Range project in Australia, it has teamed up with Iluka Resources to jointly submit a proposal to the Kenyan Government to secure and develop the promising Mrima Hill project. This proposal leverages Iluka's Eneabba REE processing facility in WA, which is under construction. Success will lend the consortium one of the largest undeveloped REE deposits in the world. Mrima Hill has a non-JORC NI43-101 resource of 150Mt grading just under 4% total rare earth oxides with 0.7% niobium along with other metals. It sits just 15km from the Indian Ocean, 85km from Mombasa and in close proximity to Energy Fuels' Kwale mineral sands project. Working with Iluka presents the opportunity to build an alternative supply chain that alleviates the pressure imposed by Chinese dominance of the sector. Meanwhile, Peak Rare Earths (ASX:PEK) is in the process of being taken over by China's Shenghe Resources under a deal worth some $158m. It holds the Ngualla project in Tanzania, one of the largest and highest grade undeveloped rare earth deposits in the world with a multi-generational resource of 214Mt grading 4.8% TREO and 1.02% NdPr, which is enough to fuel an initial 24-year mine life. Development is expected to entail the construction of an open pit mine, mill, concentrator, community projects and associated infrastructure. US$3.2b market cap company Shenghe is listed on the Shanghai Stock Exchange and is an existing shareholder in PEK, with binding offtake rights to rare earths production from the Ngualla rare earth project in which PEK holds an 84% interest. It is also the largest importer of REE concentrate into China with its operations spanning REE mining, beneficiation, refining, trading and alloy and metals production.
Yahoo
24-03-2025
- Business
- Yahoo
We Think Aldoro Resources (ASX:ARN) Needs To Drive Business Growth Carefully
We can readily understand why investors are attracted to unprofitable companies. Indeed, Aldoro Resources (ASX:ARN) stock is up 336% in the last year, providing strong gains for shareholders. But while history lauds those rare successes, those that fail are often forgotten; who remembers In light of its strong share price run, we think now is a good time to investigate how risky Aldoro Resources' cash burn is. For the purpose of this article, we'll define cash burn as the amount of cash the company is spending each year to fund its growth (also called its negative free cash flow). First, we'll determine its cash runway by comparing its cash burn with its cash reserves. A company's cash runway is calculated by dividing its cash hoard by its cash burn. As at December 2024, Aldoro Resources had cash of AU$1.3m and no debt. In the last year, its cash burn was AU$2.3m. Therefore, from December 2024 it had roughly 7 months of cash runway. That's quite a short cash runway, indicating the company must either reduce its annual cash burn or replenish its cash. Depicted below, you can see how its cash holdings have changed over time. View our latest analysis for Aldoro Resources Because Aldoro Resources isn't currently generating revenue, we consider it an early-stage business. Nonetheless, we can still examine its cash burn trajectory as part of our assessment of its cash burn situation. As it happens, the company's cash burn reduced by 42% over the last year, which suggests that management are mindful of the possibility of running out of cash. Admittedly, we're a bit cautious of Aldoro Resources due to its lack of significant operating revenues. We prefer most of the stocks on this list of stocks that analysts expect to grow. Even though it has reduced its cash burn recently, shareholders should still consider how easy it would be for Aldoro Resources to raise more cash in the future. Companies can raise capital through either debt or equity. Many companies end up issuing new shares to fund future growth. By comparing a company's annual cash burn to its total market capitalisation, we can estimate roughly how many shares it would have to issue in order to run the company for another year (at the same burn rate). Since it has a market capitalisation of AU$59m, Aldoro Resources' AU$2.3m in cash burn equates to about 3.9% of its market value. That's a low proportion, so we figure the company would be able to raise more cash to fund growth, with a little dilution, or even to simply borrow some money. Even though its cash runway makes us a little nervous, we are compelled to mention that we thought Aldoro Resources' cash burn relative to its market cap was relatively promising. We don't think its cash burn is particularly problematic, but after considering the range of factors in this article, we do think shareholders should be monitoring how it changes over time. On another note, Aldoro Resources has 6 warning signs (and 4 which make us uncomfortable) we think you should know about. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies with significant insider holdings, and this list of stocks growth stocks (according to analyst forecasts) Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
