Key highlights

• Axel REE has prioritised its Woolrich project for in-situ recovery field testing in Brazil.

• The company reported resource and metallurgical milestones across its Brazilian projects in the September quarter.

• Gallium and scandium potential is cited as upside, with this update noting important limitations to the results.

Axel REE (ASX:AXL) reported a series of resource and metallurgical milestones across its Brazilian projects in the September quarter, according to its Quarterly Report lodged with the ASX on 30 October. The most significant strategic decision was to prioritise the Woolrich deposit, within the Caladão Project in Minas Gerais, for controlled in-situ recovery (ISR) field validation.

The global Caladão rare earth resource increased by 24% to 708.6 million tonnes at 1,443 ppm total rare earth oxides (TREO). The global gallium resource rose 31% to 575.7 million tonnes at 37.05 ppm gallium.

At Woolrich, the resource more than doubled to 264.6 million tonnes at 1,101 ppm TREO and 34.7 ppm gallium, including a maiden Indicated Resource of 110.1 million tonnes.

Why Woolrich?

The answer lies in metallurgy as much as size. After quarter-end, Axel produced its first mixed rare earth carbonate (MREC) from ISR column leach solutions generated from Woolrich material. The product graded 54.4% TREO, with magnet rare earth oxides accounting for 35.9% of the basket, including 34.1% neodymium-praseodymium and 1.75% dysprosium-terbium.

Testwork achieved 97% TREO and 99% magnet rare earth oxide precipitation without a dedicated impurity-removal stage. Uranium and thorium in the product were very low, at 0.78 ppm and 0.10 ppm respectively. Managing director Dr Patience Mpofu attributed the low impurities to Woolrich's naturally buffered regolith, which has shown limited mobilisation of impurities during magnesium sulphate leaching.

In other words, Woolrich appears to combine scale with leach chemistry that may allow a simpler flowsheet. Those are the qualities that make a deposit a candidate for ISR, where solutions are pumped through the ground rather than ore being mined and hauled.

Important limitations

The carbonate was produced at laboratory scale, yielding 15.11 grams of dried product from tests run by CORE Resources in Australia. Column tests simulate field conditions but cannot fully reproduce how solutions move through natural ground. Field validation is the step designed to test exactly that, including whether leach solutions can be controlled and recovered efficiently.

ISR for rare earths in clays is less established than conventional mining, and it raises environmental questions about groundwater and solution containment that regulators will examine closely. Axel has not yet published an economic study for an ISR operation.

Gallium and scandium upside

Separately, metallurgical testwork at the Tiger Creek project achieved recoveries of up to 95% gallium and 74% scandium, which the company said substantially improved on earlier programmes. Gallium is used in semiconductors and has been subject to Chinese export controls, adding strategic interest. Recovery in testwork does not yet establish commercial viability.

Valuation reference

Axel calculated an indicative gross basket value of US$42.72 per kilogram of TREO for the carbonate, using spot prices from 21 October. Basket values are gross figures that exclude processing costs, payability and price movements, so they should not be read as Revenue estimates.

Why it matters

Brazil's ionic clay deposits have drawn growing interest as potential non-Chinese sources of heavy and magnet rare earths. A successful field trial would be a meaningful step for Axel, while a failure to replicate laboratory results would reset expectations.

What to watch

Investors may watch for the design and permitting of the Woolrich field trial, further MREC tests and any scoping study.

How the pieces fit together

The quarter's results connect logically. A larger Indicated resource at Woolrich gives the company enough confidence to plan field work in a defined area, while the carbonate test shows the kind of product that could be made. Gallium adds a possible second revenue stream. Each step, however, still has to be proven outside the laboratory.