Gold and silver producer Hochschild Mining has acquired the BioLantanidos ionic clay rare earth deposit in Chile for $56.3m.
Hochschild has previously invested $2.5m in the deposit, which features a high concentration of a series of rare earth elements used in magnets for electric cars and wind turbines.
The investment made during 2018 and early this year gave the company a 6.2% equity stake in the deposit, with the option to increase ownership.
The project features ionic clay resources that are the same as those identified in China but different from the majority of other rock-based rare earth projects globally.
An initial modular project has also been developed on a 300ha area in the Penco region, around 15km from Concepción in Chile.
BioLantanidos owns around 72,000ha of concessions.
Other modules are anticipated to be assessed in the future, offering significant low capital expenditure growth potential.
An on-site pilot facility built at the project showed both technical and commercial viability with the opportunity to scale up into industrial operations.
Hochschild plans to revise the feasibility study over the next 18 months and appoint a management team to oversee the development of the project.
Hochschild Mining CEO Ignacio Bustamante said: “We believe that consolidating 100% of this early-stage rare earth deposit in Chile represents a unique opportunity for our shareholders and is the direct result of Hochschild’s deep understanding of the region.
“The investment is also the result of an extensive long-term project to identify commodities with very strong growth characteristics as well as our ability to discover regional investment options that might not otherwise be available.”
Hochschild Mining’s stock price fell by over 5% on the London Stock Exchange from 199.10p to 188.30p a share, giving the company a current market capitalisation value of £962m. This is below the company’s 2019 peak of 227p a share on 29 August but above its lowest value of 155p on 31 May.
Hochschild Mining share price in 2019
Hochschild currently operates three underground mines, two situated in southern Peru and one in southern Argentina.
The company produced 19.7 million attributable ounces of silver and 260 thousand attributable ounces of gold in 2018. Its production target for 2019 is 37 million attributable silver equivalent ounces.
According to data analytics company GlobalData Hochschild Mining achieved revenue of $704m in 2018, a small decrease of 2.6% from $723m in 2017. Its net income also fell by 69% from $42m in 2017 to $13m in 2018.