Aclara nets $5M US funds for Brazil rare earths

Aclara Resources (TSX: ARA) has received financial backing from the U.S. government for one of its two rare earth assets in the Americas, the latest example of Western nations attempting to build their own supply chain to counter China’s minerals dominance.

The U.S. International Development Finance Corporation (DFC) has committed up to $5 million to support the development of the Carina heavy rare earths project in Brazil, the company said on Tuesday. The project is in the state of Goiás, where the capital Brasilia is located.

Specifically, the funds — to be provided under DFC’s Project Development Program — will go towards a feasibility study that is scheduled for completion in early 2026. Work on the feasibility began in July, and is being conducted by Hatch as a continuation of the pre-feasibility due later this month.

“We are deeply honoured to have been selected by the U.S. DFC as a recipient of the project development funds,” Aclara CEO Ramón Barúa said in a news release. “This initial investment is not only a validation of Aclara’s strategy, but also an important first step toward a larger commitment from DFC once we complete the feasibility study for the Carina project.”

Equity conversion

The DFC funding may be converted into equity of the company in the future. This can be triggered once Aclara completes a single financing of $50 million or more, or multiple financings of at least $75 million, within 12 months to fund the Carina project’s construction. Upon Aclara completing the financing(s), DFC will also have a preferential option to provide or arrange financing.

Shares of Aclara shot up 16% to a six-week high of C$1.68 on Tuesday for a market capitalization of nearly C$368 million. They’ve traded in a 52-week range of 40¢ to $1.74. 

Hochschild control

In July, Bloomberg reported that Aclara’s management held talks with U.S. government agencies for possible financing toward its $1.5-billion plan to mine rare earths in Latin America. The company, which is 57% owned by Hochschild Mining (LSE: HOC.L), is developing two ionic clay deposits in Brazil and Chile, with Carina being the main effort.

Aclara considers Carina to be a key rare earth asset that could reduce Western reliance on China, which currently accounts for 90% of the global supply. Chief executive Barua told Reuters last year that once in operation, Carina could produce about 13% of China’s rare earth output each year.

According to a preliminary economic assessment, Carina could generate on an annual basis as much as 191 tonnes of dysprosium and terbium, heavy rare earths that are essential to electric vehicle motors, wind turbines, and various defence and medical technologies. The report estimated a mine life of 22 years and a net present value of $1.5 billion, using an 8% discount rate, with an internal rate of return of 27%.

Production in 2028

The upcoming pre-feasibility study will look to improve on those economics, using a total resource count of 298 million tonnes grading 1,452 ppm total rare earth oxides (TREO) in the inferred category for 432,000 tonnes of TREO.

On the DFC funding for the feasibility study, Barua said that it would help de-risk the development of the Carina project while providing additional confidence to potential off-takers currently evaluating its viability as a long-term supplier of heavy rare earths.

Earlier this year, Aclara launched a pilot plant to test the production of dysprosium and terbium from ionic clay extracted from Carina. The facility represents a key step in advancing the project towards production, for which management is targeting 2028.

The company is also eyeing a similar production timeline for its Penco project in Chile, which is smaller and hosts 27.5 million measured and indicated tonnes grading 2,292 ppm TREO, for 62,900 tonnes of contained TREO.