Sweden grants 25-year rare earths concession

The Swedish government has granted Leading Edge Materials (TSXV: LEM) a 25-year mining lease for one of Europe’s leading heavy rare earths projects after the company addressed environmental concerns and reduced its footprint. 

The government revoked a previous concession in 2016 for the Norra Kärr project in southern Sweden due to environmental concerns, three years after its initial issuance. Since then, Leading Edge has taken steps to address those concerns and reduced the project’s size by 65%, the company said on Monday. 

“The government’s decision affirms that this is a strategically important heavy rare earth deposit, located in a tier one jurisdiction,” Leading Edge CEO Kurt Budge said in a release. The Norra Kärr project has “the capacity to supply all of Europe’s annual dysprosium requirements alongside meaningful terbium and yttrium production,” he said. 

Those heavy rare earths are key inputs in the production of permanent magnets used in electric vehicles, wind turbines and other advanced technologies, including defence applications. A study by the Geological Survey of Sweden highlighted Norra Kärr as one of Europe’s richest rare earth deposits with a high proportion of heavy rare earths. The continent currently doesn’t produce the metals. 

Greenland 

Norra Kärr is similar to Critical Metals’ (Nasdaq: CRML) Tanbreez project and Kvanefjeldheld by Energy Transition Minerals (ASX: ETM), both in Greenland, because of their bulk, low-to-mid grade and very large-scale. 

A 2021 preliminary economic assessment (PEA) on Norra Kärr had outlined a potential 26-year mine operation producing an average of 5,340 tonnes per annum of mixed rare earth oxides (MREOs), based on material representing approximately 30% of the project’s inferred resource of 110 million tonnes grading 0.5% total rare earth oxides (TREOs).

A key differentiator of the project, said Leading Edge, was its high ratio of the far scarcer heavy rare earths (dysprosium and terbium or DyTb) to light rare earths (neodymium and praseodymium or NdPr) contained within the resource. At 2.5 to 1, it means that for every kg of NdPr produced, Norra Kärr is expected to yield 0.4 kg of DyTb. Meanwhile, the average ratio for projects in its peer group is 38.5 to 1, it said.

Based on older and much lower rare earth prices for Dy and Tb, the PEA report gave Norra Kärr a post-tax net present value (at 10% discount) of $762 million, an internal rate of return of 26%, and average annual earnings before interest, taxes, depreciation and amortization of $206 million.

Permitting

With the mining lease now secured, Leading Edge said it will move the project towards an updated prefeasibility study (PFS) and enter talks with potential offtake partners and financiers in order to bring Norra Kärr into production.

“With European supply chain resilience now a policy imperative, Leading Edge Materials is on track to develop Europe’s first heavy rare earths mine,” Budge said.

At the same time, the company will also look to advance its environmental permitting process, pledging that it will be “developed to the highest environmental standards, in close dialogue with the local community, including those who remain skeptical of the project.”

Shares of Leading Edge Materials soared 21% to C32¢ apiece by mid-Monday in Toronto, taking the company’s market capitalization to C$81.1 million.