Shares in halloysite-kaolinite and graphite player Itech Minerals Ltd (ASX: ITM) are roaring today and now trade up 21% at 29 cents.
Itech shares have been in the green all session following a company update on its interests at the Eyre Peninsula Kaolin Project in South Australia.
The company has received analytics on the first batch of 10 historical drill hole samples at the Ethiopia Prospect, located at the Peninsula.
Results show significant total rare earth element oxides (TREO) in all 10 holes and over 1,100 parts per million (ppm) of total rare earth element oxides in clay fraction.
With these results, let's analyse the extent of what Itech released today.
Why is the Itech Minerals share price charging higher?
For a bit of background, Adelaide Exploration Ltd first identified thick intervals of high purity kaolin clay at the site in 2007 over an area of 1km squared.
A preliminary 10 holes were sub-sampled at the time to assess potential of resource and mineralisation, and there were some notable results obtained.
Itech has since resampled the 10 holes and undertaken a kaolin beneficiation process, which has led to an upgrade in the average rare earths grade by 184%.
The results obtained from the resampling confirm Itech's view "of the dual potential for high purity kaolin and coincident ion adsorption clay (IAC) rare earth element (REE) mineralisation".
Specifically, the TREO were found in each of the 10 holes sampled, with an average beneficiation to 180% in the clay fraction.
The rare earth's intersected display a large percentage of neodymium and praesidium. Both are critical elements for the production of permanent magnets in electric vehicles and renewables.
In its own analysis, Itech explained that the rocks found at the Ethiopa prospect are naturally enriched with both of these rare earths, in addition to a mineral called feldspar.
Over millennia, the rocks become weathered by rain and organic matter and end up producing slightly acidic groundwater. It is this phenomenon that sees the feldspar converted to kaolin clay, where the 'tightly bound' rare earths then disperse throughout the clay minerals.
One benefit of this occurrence, Itech says, is that contaminants like uranium and iron are removed by the weathering process, "leaving the rocks enriched in kaolin clays with loosely bound [rare earth's] and quartz grains".
What's next for Itech Minerals?
Now that it has confirmed the bolus of its hypothesis, the company has since resampled an additional 12 drill holes to analyse for the "full suite" of rare earths.
It is analysing the holes with values of the element Cerium – also a rare earths element – above 100ppm.
One hole, labelled ETH-029, has a concentration of over three times the Cerium in the best samples submitted for analysis to date.
Results from the sampling are expected to take 5–6 weeks according to Itech, as it concurrently awaits further drilling approvals.
Itech says the results from this round of test work will help focus the drilling program on areas with the best potential to strike resource and mineralisation.
What did management say?
Speaking on the announcement, Itech Minerals managing director, Mike Schwarz said:
The nature of high purity kaolin and REE mineralisation at Ethiopia opens the path for the potential of an extremely low-cost source of these two critical minerals. Processing of the high purity kaolin increases the REE grades and extracting the REEs makes a higher quality kaolin product, potentially leading to more financially robust project economics.
After listing in late October, Itech has already gained 42.5% for early investors. Whilst it is still early days, this is well ahead of the benchmark S&P/ASX 200 index (ASX: XJO)'s return in that time.
