Namibia Critical Metals (TSXV:NMI) - JV Funded Rare Earth Project, PFS Due Oct 24

Jul 18, 2024

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Interview with Darrin Campbell, President & CEO of Namibia Critical Metals Inc.

Recording date: 16th July 2024

Namibia Critical Metals (TSXV:NMI) is positioning itself as a significant player in the heavy rare earth elements (REE) sector with its Lofdal project in Namibia. The company's focus on dysprosium and terbium, two critical elements for permanent magnets used in electric vehicles and wind turbines, sets it apart in the REE market.

Key highlights of the investment case include:
Strategic Resource: The Lofdal project primarily contains dysprosium and terbium, which make up about 85% of the project's rare earth basket. These are among the highest-value rare earths, critical for green technologies.

Significant Resource Expansion: Recent exploration has dramatically increased the resource estimate from 6,000 tons to 94,000 tons of contained Total Rare Earth Oxides (TREO), extending the potential mine life to about 20 years.

JOGMEC Partnership: A joint venture with JOGMEC, a Japanese government agency, provides funding and potential access to Japanese industrial partners. JOGMEC is investing up to $20 million to earn a 50% interest in the project.

Advanced Stage: A Preliminary Feasibility Study (PFS) is expected in October 2024, with a Definitive Feasibility Study (DFS) to follow in about 10 months.

Favorable Jurisdiction: Namibia offers a stable, mining-friendly environment with experience in handling slightly radioactive materials.

Flexible Ownership Structure: NMI has the option to maintain a 44% interest or be diluted to a minimum 21% carried interest, potentially allowing progression to production with minimal dilution.
Market Timing: While rare earth prices are currently at 10-year lows, industry experts anticipate a recovery, potentially coinciding with Lofdal's development timeline.

Supply Chain Diversification: As a non-Chinese source of heavy rare earths, Lofdal could play a crucial role in diversifying global supply chains.

The company faces challenges, including current low rare earth prices and the technical complexities of rare earth processing. However, the involvement of JOGMEC and the project's advanced stage mitigate some of these risks.

Upcoming catalysts include the release of the PFS in October 2024, completion of the DFS in 2025, and potential partnerships with Japanese industrial companies. The global push for clean energy and technology could also drive increased demand for heavy rare earths.

CEO Darrin Campbell believes the current market presents an opportunity, stating, "I think now is a good time to hedge against what's expected to be rapidly rising rare earth prices over the next decade."

With 65% insider ownership, management interests appear well-aligned with shareholders. The company's unique structure offers significant optionality, potentially allowing it to reach production with minimal further dilution.

Investors should consider Namibia Critical Metals as a long-term play on the critical minerals sector, particularly in heavy rare earths essential for green technologies. While the project offers substantial potential, investors should be aware of the inherent risks in junior mining companies and the volatility of rare earth markets. As the company approaches key milestones and the rare earth market potentially recovers, Namibia Critical Metals could see significant value creation, offering an intriguing opportunity for investors looking to gain exposure to the critical minerals sector.

View Namibia Critical Metals' company profile: https://www.cruxinvestor.com/companies/namibia-critical-metals-inc