Why the Ionic Rare Earths (ASX:IXR) share price hit a 5-year high today

The Ionic Rare Earths (ASX: IXR) share price hit a 5-year high today before plunging. Let's take a look at the company's announcement.

| More on:
asx share price rising on deal represented by hand shake

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Ionic Rare Earths Ltd (ASX: IXR) share price was flying earlier today after the company announced a new partnership with a Chinese minerals' explorer.

This morning, shares in the mineral exploration company were up 14.29% to hit a 5-year record of 6.8 cents each.

Since then, the Ionic share price has plunged the red, closing down 1.79%, at 5.5 cents. In comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) was up 0.5%.

Let's take a closer look at Ionic's new partnership.

What's driving the Ionic share price?

In today's release, Ionic announced it had signed a non-binding Memorandum of Understanding (MOU) with Aluminium Corporation of China subsidiary, Chinalco.

The MOU relates to Ionic's rare earth's project in Makuutu, Uganda. Ionic claims resources at the site cover an area of 20km to 37km and could have a timeframe of at least 30 years.

According to the release, Chinalco has conducted "extensive" due diligence works on the site over the past year. This includes assessing local infrastructure, drilling results, and Ugandan regulations. 

As part of the MOU, Ionic and Chinalco have agreed to use "reasonable endeavours" to cooperate in accelerating the development of the Makuutu project. As well, Chinalco may be able to invest in future Ionic projects, including direct investments in the Makuutu project. Chinalco is described as "the largest rare-earths miner and separator on the planet by market capitalisation".

Most of the MOU is non-binding except for some provisions, and the exclusivity portion will expire in 12 months. Despite the exclusivity clause, Ionic reserves the right to continue discussions with third parties that began before the MOU was signed.

Management commentary

Ionic managing director Tim Harrison welcomed today's announcement, saying:

We are very pleased to have signed this MOU which, further endorses the quality of the project and its strategic importance and will now enable the Makuutu Rare Earths Project to rapidly advance activities in the near term. 

We see Makuutu rapidly growing into a very large, long life producer of critical and heavy rare earths. Partnering with Chinalco potentially fast tracks the development process for Makuutu and will greatly assist in value creation for Ionic.

Foolish takeaway

The Ionic share price has gone gangbusters over the last 12 months increasing by 1,060%.

The price of many rare earth minerals has also climbed dramatically recently, as western nations look to secure their own supply of the vital metals.

Rare earth minerals have a variety of applications including magnets and super magnets, electronic equipment and batteries, according to Geoscience Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
Share Gainers

Why 4DMedical, Gold Road, Syrah, and Tyro shares are racing higher today

These shares are starting the week strongly. But why?

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

2 ASX gold stocks racing higher in Monday's sinking market

Investors are sending these ASX gold stocks flying higher on Monday. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Brainchip, Helia Group, Reliance Worldwide, and Westpac shares are dropping today

These shares are starting the week in the red. But why?

Read more »

Man looking upwards contemplating which shares to buy
Broker Notes

CSL shares have climbed 10% since 11 April. Is it too late to buy?

What are analysts saying about this biotech giant after its recent rally? Let's find out.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords share just rocketed 19% on BIG news

Investors are sending this ASX All Ords share flying on Monday. But why?

Read more »

Man looking happy and excited as he looks at his mobile phone.
Opinions

Why I think this small ASX dividend share is a great buy today

This small business offers a lot of what I like for passive income.

Read more »

Miner looking at a tablet.
Mergers & Acquisitions

Gold Road shares surge 10% on $3.7 billion takeover offer

The ASX 200 gold stock is soaring after finding itself in the acquisition crosshairs.

Read more »

A head shot of legendary investor Warren Buffett speaking into a microphone at an event.
Share Market News

Warren Buffett to retire: A historic changing of the guard at Berkshire Hathaway

It is an end of era for investors with this big news.

Read more »