Critical Metals soars on second US rare earths deal

Critical Metals (Nasdaq: CRML) shares surged to their highest level in more than a year after it said it signed a letter of intent with U.S.-based rare earth processor REalloys for a 10-year offtake agreement covering 15% of production from its Tanbreez rare earth project in southern Greenland.

REalloys — which operates a full-cycle rare earth processing and magnet manufacturing facility in Ohio and is preparing to list on Nasdaq — also owns the Hoidas Lake rare earth project in Saskatchewan.

“The Tanbreez project presents a remarkable opportunity for REalloys, given its rich, long-life deposits of heavy rare earth elements — vital to the defense industrial base of the United States and our allied nations,” REalloys CEO Lipi Mainheim said in a release. “REalloys and Critical Metals share a common commitment to reducing China’s dominance in the global rare earth supply chain.”

This deal follows a similar agreement in August with Ucore Rare Metals (TSXV: UCU; US-OTC: UURAF) for 10% of Tanbreez’s output, bringing total committed offtake to 25% of expected production. The project in southern Greenland with year-round deep-water access to the North Atlantic hosts one of the world’s largest heavy and medium rare earth deposits. Critical Metals also owns the Wolfsberg lithium project in Austria, which it describes as Europe’s first fully permitted lithium mine.

Shares of Critical Metals jumped 17.6% to $11.79 (C$16.45) apiece before markets closed in New York on Wednesday, giving the company a market capitalization of $1.22 billion.

The companies plan to finalize definitive agreements following due diligence, negotiation of final commercial terms, and regulatory approvals.

Critical streak

The off-take deal follows a productive set of months for Critical Metals, with the company last week raising its ownership in Tanbreez to a controlling stake in a $116-million transaction, and its announcement last month that a feasibility study for Tranbreez is mostly complete and due for submission in the fourth quarter. In August, strong drill results returned what the company called the project’s “strategic value” as it seeks to secure rare earth sources outside of Chinese control.  

Earlier this week, U.S. officials denied reports that Washington was considering an equity investment in Critical Metals.

Reuters had reported that the government held discussions with the company while negotiating a 5% stake purchase in Lithium Americas (TSX, NYSE: LAC), developer of the Thacker Pass lithium project in Nevada. Following those reports and Critical Metals’ announcement of a new institutional investor, CRML shares surged during after-hours trading and into Monday’s session.