Aclara Resources gets environmental OK for Chile rare earths project

The receipt of the final environmental approval for Aclara Resources’ (TSX: ARA) Penco Module rare earths project in Chile shows the need for governments to make the most of the opportunities around critical minerals, the company says.

Aclara’s Environmental Qualification Resolution (RCA) formalizes the environmental approval granted earlier this month by the Environmental Assessment Commission of the Biobío region in south-central Chile, Aclara said in a release on Tuesday. It wraps up a process that has taken longer than four years for the project. Penco is about 430 km south of Santiago.

While Executive Vice-President Jose Augusto Palma is relieved that the long environmental approval process is now done for Aclara, he said the wider context of critical mineral development calls for better coordination of government agencies when it comes to permitting.

“Peru, Chile, Brazil and Argentina are all countries that have mining as one of their key sectors,” Palma told The Northern Miner in an interview on Tuesday. “There’s a tremendous opportunity for these countries to really make the most out of this enormous demand for these critical minerals so that they can also promote the establishment of the value chain downstream.”

Western supply chain

The environmental approval marks another piece lining up for Aclara as it works to become one of the few Western companies building a vertical rare earth supply chain. Its Virginia Tech pilot plant at Blacksburg, Va. is expected to produce its first separated light and heavy rare earth oxides this year, to be mined from Aclara’s ionic clay sites at Penco and Carina Module in Brazil. The Viriginia facility is meant to support the development of Aclara’s commercial-scale separation plant in Louisiana.

Penco is estimated to produce about 774 tonnes of rare earth oxides (REO) annually over 14 years, according to a preliminary economic assessment from 2021.

Using a 5% discount rate and a base-case price of $96 per kg of REO, Penco has an after-tax net present value (NPV) of $178 million and an internal rate of return (IRR) of 23%. Initial capital of $119 million could be repaid post-tax in 4.7 years. 

“We’re very excited [and] motivated and now we can move to the next phase of the project,” Palma said. “We’re optimistic that we will be able to have all of the permits in place by early next year so we can start construction.”

Feasibility this year

Aclara aims to publish a feasibility study for Penco by the end of the year, with production potentially starting in 2027. Its Louisiana plant is also expected to be complete next year.

Shares of the company dropped 3% to $4.17 apiece mid-day Tuesday, valuing the company at about $1 billion. The stock has traded in a 12-month range of 90¢ to $5.40.

Aclara’s major shareholders include Eduardo Hochschild, with 37%; Hochschild Mining (LSE: HOC), with 20%; and CAP S.A., with 10%.