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229. Bull, Bear & Beyond – Leading Edge Materials: executive interview
12 Plays3 days ago
In this interview, we speak with Kurt Budge, CEO of Leading Edge Materials, about the strategic development of the Norra Kärr heavy rare earth project in Sweden. He provides an update on the pending mining lease decision, discusses the redesigned flow sheet that decouples extraction from processing to streamline environmental permitting, and explains the significance of the deposit's high dysprosium and terbium content. Kurt also highlights how the project is aligned with the evolving regulatory push for independent, ex-China supply chains and comments on the structural pricing bifurcation emerging in the heavy rare earths market. He concludes by outlining the key de-risking catalysts investors can expect over the coming months as the company targets production by 2030, alongside option value from its Woxna graphite and Bihor Sud assets.
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Transcript
Introduction and Project Overview
00:00:07
Speaker
Good afternoon. This is Edison TV. My name is Andrei Litvin. I'm a mining analyst at Edison Group. And today we are speaking with Kurt Bach, CEO of Leading Edge Materials. Leading Edge is advancing the Norcar Heavy Ray Earth project in Sweden.
00:00:21
Speaker
The project is strategically positioned to supply the European market at a time when the global heavy-ray earth industry is facing significant supply constraints and sharp price increases.
Strategic Positioning in Critical Minerals
00:00:32
Speaker
The company also has a number of important catalysts coming up, which we'll discuss today alongside other topics. Kurt, welcome. Hello, Andrei. I would like to start with a big picture question.
00:00:46
Speaker
Living-edge materials sits at the intersection of some of the most powerful themes in global markets today. This is critical minerals, European supply security, and the permanent magnet supply chain.
00:00:58
Speaker
How would you describe the opportunity for an investor looking at leading-edge materials story today?
Swedish Government Decision Impact
00:01:04
Speaker
Well, I think we're at a point in the development of our heavy rare earth project, Norrish Air, where we're waiting for a final decision from the Swedish government on the mining lease.
00:01:12
Speaker
And I think that what that represents is a majorly risking event. but also a value inflection point for investors. It takes us, it gives us a transition to becoming a real project.
00:01:25
Speaker
You know, the waiting for a mining permit is never a fun period. So to get that in our hands is going to be great. And I think that allows the momentum then to really start to build in the project.
00:01:37
Speaker
It enables us to have more substantive conversations with other actors in the supply chain, especially when it comes to downstream and the potential to discuss offtake agreements. So a lot of things start to fall into place once you've got the the mining lease in your hand.
00:01:54
Speaker
Well, this is great. Just moving on to the evaluation of the project and
Valuation and Catalysts for Growth
00:01:58
Speaker
the company. so our research earlier this year, Initiation Note, valued the Noricar project at 1.8 billion US dollars on an unrisked basis.
00:02:07
Speaker
And this is based on the fairly conservative rare earth oxide price assumptions. And your current market cap currently sits at around 77 million Canadian dollars.
00:02:22
Speaker
And looking at other valuation metrics like EV resource compared to the peer group, I think the valuation picture looks very compelling as well. What do you think are the key catalysts that you believe could help close this cap? Well, I think number one is a recognition that, well, again, getting the mining lease in our hands, so we achieve that de-risking event. But I think a recognition that not all rare earth projects are created equally. And I think sometimes investors get fixated on size.
00:02:49
Speaker
There are a lot of rare earth projects out there that are more lights focused. Norahshare is relatively unique because of its heavies ah content. And 52% of the rare earths in Norahshare are heavies. And the two key ones, Disprosium and Meturbium, are the ones that really get the restriction in supply from China.
00:03:09
Speaker
and And then that's what exacerbates scrambling in the supply chain, especially in Europe.
Scarcity of Rare Earth Elements
00:03:15
Speaker
for for those two key metals, which have, they I describe them as sort of the magic dust that you put into manufacturing permanent magnets, and those go into all sorts of critical industries, you know, and and the front of mind one at the moment is defence.
00:03:31
Speaker
So I think um we once we get through past the the mining lease decision, we de-risk the project, um we get security of over the deposit, and then, you know, we can really start to like um educate the investors on the quality of the deposit that we have and its heavies the dysprosium, the terbium, the yttrium.
00:03:51
Speaker
um Compared to other projects this is this really is a standout. This is exactly what I was going to ask next and I think not many people probably realize that dysprosium and terbium are actually among the scarcest and most critical elements in the rare earth supply chain.
00:04:10
Speaker
and Noricar is being developed to produce more Disprosium and Terbium than almost any other, I think, advanced Western project. Can you explain to us in plain terms what makes the Noricar deposit so unusual and why that matters strategically and commercially for the industry and the project as well?
00:04:30
Speaker
I think I probably jumped to ahead of the game. um it's It's literally the fact that out of the entire profile of rare earths in the deposit, 52% of those are the heavies.
00:04:42
Speaker
And it's those three key ones, mainly is the dysprosium and terbium. So ah well when I was in Brussels and I was in Brussels several times last year,
00:04:53
Speaker
and And the constant theme was about rare earths and permanent magnets. And at the EU's Raw Materials Week in November, you know I think there was a Reuters article that came out around that time that was a crisis in heavy rare earths.
00:05:08
Speaker
And the CEO of Vacuum Schmelzer, the largest Western manufacturer of of permanent magnets were saying, you know, we need to we need to solve this problem and we need to solve it now. And even in recent weeks, I see ah comments from the G7 that there is no time to lose. Action needs to be taken. So it's these heavy rare earths, the dysprosium and terbium that sit within Norrish air.
Impact of China's Export Restrictions
00:05:36
Speaker
And it's when when when we talk about the actual, you know, The quality of deposit, that's one thing, but actually we can describe ourselves as the most advanced project in Europe because we have an ambition to be in production by 2030. That's you know within four years time. The the extraction part of Norrish Air is a relatively relatively simple quarrying operation. Yes, we have to do some work on our hydrometallurgy, but we have a pre-feasibility study worksheet flow sheet from 2015. So yeah, it needs more work, but we have a good understanding of how to to deal with the metallurgy characteristics of Norrish Air. So it's, you know, when you look at other projects around the world, it's not a classic mineralization, but you know, the types of mineralizations that have been mined historically and sent to China for processing. And then we've all watched as China's built its capability and we've been happy to buy on the market.
00:06:33
Speaker
um that's that's exacerbated the situation that we now face. and And there is some frustration on my part, but I think this is another point in time that I think the the conversation is changing in Europe at the moment.
00:06:47
Speaker
you know They can look at what's happening in the rest of the world. The US administration has taken a very proactive stance in in terms of investing directly into rarer stocks.
00:06:59
Speaker
and And that has then enabled the capital markets to then provide finance as well. We've seen similar support ah provided in in Canada and Australia.
00:07:09
Speaker
um It's The European Union has got the Critical Role Materials Act. It's got lots of good ah tools for for enabling the industry to to build its capability. But yeah I think there's going to be more of that action coming through now because it's not quick enough. Number one, it's just things aren't happening quick enough. and But the situation isn't resolving itself um in terms of China's um strategic hold of China.
00:07:39
Speaker
heavy rare earths that Europe and and and the rest of the world relies on. We'll talk about the project economics a little bit later as well, but first I just wanted to touch upon the pricing situation that you always already just mentioned as well.
00:07:53
Speaker
I think it's a well-publicized fact that China introduced export restrictions and controls on some critical minerals and rare earths in particular in 2025. And this has fundamentally changed the conversation around the rare earth pricing outside China and Europe in particular.
00:08:13
Speaker
What does it mean for the economics of Noracar and how does Leading Edge in general think about the pricing assumptions in your project planning and development? Well, I think ah what we've seen clearly and Benchmark Mineral Intelligence and other analysts have been sort of explaining that that there is a bifurcation in ex-China pricing, in regional pricing of rare earths and specifically heavy rare earths in Europe.
00:08:42
Speaker
I think What happened last year in April, as you touched on, dysprosium and terbium were restricted. The prices spiked. The supply chain was scrambling around to see where they could get hold of of those materials.
00:08:59
Speaker
And they weren't available. And I think um what that what that has forced people to do is to think, well, at some point in time, we will effectively return to what we want.
00:09:12
Speaker
perceived to be normality before, where everything is freely available on the global market. And if you pick up the phone, you can place an order and it'll be here in X number of weeks.
00:09:22
Speaker
um I think i've I've witnessed the French government describe what they're doing in terms of critical raw materials, how they have visibility across France in different supply chains, they want to know what industry's procurement strategies are, they're putting government policies in place to stimulate downstream capacity, they're doing bilateral deals to all the companies involved in the supply chain and then also um
00:09:53
Speaker
a signing deals with ah the upstream players to make sure that France as a country has got its its needs
Strategic Importance of Noricar in Sweden
00:10:01
Speaker
sorted. And I think other countries are starting to to see that as well.
00:10:05
Speaker
um Specifically around the, again, sorry, going back to the mining lease, yesterday in Sweden, sorry, on Friday, the the government granted the exploitation concession or or refused the appeal against a a mining lease that was granted to Boliden, and that was for a copper project called Nautinen.
00:10:26
Speaker
And the kind of language they were using around the the the reasons and the justification for granting or refusing the appeal were around strategically important Sweden and Europe needs more supply of copper. It's an increasing demand for copper um and and they don't want to be over reliant on any any other jurisdiction. And the same logic can be applied completely to our case. You know, Nautenum was described as one of the largest deposits of copper in Sweden.
00:10:56
Speaker
Norrish Air is one of the largest deposits for heavy rare earths in Sweden and heavy rare earths are cri critical raw material and strategically important to the downstream players in Europe. So there's a lot going in our favour at the moment. Looking at the fundamentals, I think this pricing situation, verification is not just like a short term situation, most likely it's its it could be a longer term backdrop for the industry going forward as well, i
De-risking Strategies and Economic Assessment
00:11:22
Speaker
assume.
00:11:22
Speaker
yeah Just moving back to the ah project, NoriCar, In 2021, the company published the preliminary economic assessment on the project, which outlined a robust 26 years operation and producing more than 5000 tons per annum of total rare earth, and with a significant byproduct revenue streams as well. So as you move towards the preliminary feasibility study this year, which areas are likely you think to be the biggest focus of the de-risking for the project?
00:11:57
Speaker
Are we ah talking about looking at resource confidence, metallurgy, by-product economics, CAPEX optics or just overall development configuration? Well, we we we benefit from having 17 years of technical work from when the first exploration permits were granted in 2009. And also the fact that we're repeating steps have previously been taken. So there was a mining lease in 2013. There was the work to support that application. There was a pre-feasibility study done on on the rare earths only ah as as as the base case back in 2015. We enhanced that base case because we added in industrial minerals into the commercial story of Norrish Air. So now we have a project that not only liberates the heavy rare earths, but also produces Nephilim Cyanide Feldspar product. And so so we start from a good foundation of technical work that we already have.
00:12:51
Speaker
As I touched on earlier, the actual mining process, the mining, ah the extraction, the mineral processing taking place at at site, that becomes a priority because that drives environmental permitting. We have a relatively constrained footprint.
00:13:07
Speaker
So i'm I'm optimistic that given again the strategic need for heavy rare earths, that that will not be an issue for us to get the environmental permits for Norrish Air. the The significant redesign of the project and effectively a decoupling from the extraction of mineral pro so from the hydrometallurgy which will now take place on an industrial site to be determined that that uh has clearly simplified the permitting of the norrish air site so that the recovery of the heavier errors but then also we we will put the industrial premises on a site um that's used to permitting and controlling those types of processes so again i'm
00:13:46
Speaker
I'm optimistic that we will be able to meet sort of a production goal of within four years by 2030. And also, as well as all of that, I think, again, mining lease first, but then that changes the the ability for us to have ah the conversations with ah potential offtake partners who want to lock in this supply of heavy rare earths, which is what every other you know supply chain permanent magnet project is trying to do.
Engineering, Permitting, and Partnerships
00:14:17
Speaker
We see that in Europe. um What's been a slight obstacle to us is that we've been waiting for the mining lease. Once we've got that in our hands, then that becomes a real. And clearly that's something that underpins the commercial viability and our ability to raise capital.
00:14:31
Speaker
um So, um yeah, I think, you know, we've we've got a lot going, but the focus is primarily engineering around the Norrish Air site, permitting the Norrish Air site, the environmental permit, which will fall into place, I hope. And then we we we accelerate with our hydrometallity and the the refinement of the pre-feasibility study worksheet that we developed in 2015.
Additional Assets and Investor Value
00:14:55
Speaker
Obviously, Norikar is your headline project, current store project and the main focus of your development. But leading edge materials also holds the ah fully permitted Voxen graphite mine and on in Sweden.
00:15:12
Speaker
You recently increased the stake in the Behor suit nickel cobalt project in Romania to 90%. How should investors think about those assets? And do you think there is a scenario potentially where these projects could become a significant value drivers in their own right? I think they have the potential to add value to the overall valuation of Leading Edge. But I think fundamentally Norahshare drives the value case. I think they they they offer option value for for shareholders. Clearly, as you touched on,
00:15:42
Speaker
Voxner is built and it's permitted. It can produce 10,000 tons flake graphite concentrate a year. We need, as I've stated publicly, we have been working on a ah restart case that continues to see whether there' was a commercial opportunity in the same way that Rare Earths and heavy rare earths specifically are talked about being really critical.
00:16:06
Speaker
The discussion around graphite is somewhat the same, whether or not it be defence applications or um the EV market in Europe. And and and again, it seems i'm I'm picking up that um the battery supply chain again is becoming more more talked about and and and secure supplies and regional supplies. i mean, we haven't touched on the fact that you know when COVID came around,
00:16:31
Speaker
um supply chains that had some length to them got disrupted. So if you've got regional supply chains that are much shorter, then that gives you greater confidence that you're actually going to get the critical raw materials that will then flow into your manufacturing processes.
00:16:46
Speaker
So that's, you know, we've got some work to do on Voxner, so there's an option value, but it's built that the assets actually exist. so you can actually go and kick the tyres effectively at Voxner.
00:16:58
Speaker
And then with B-Horse Sud, clearly B-Horse Sud is advantaged because it's a brownfield exploration licence area. um As I've stated many times, tens and tens of kilometres of underground development. We have a former historic uranium mine within the the property. And um we've got lots of polymetallic mineralization evident across the license area, which we tried to put some color on in a press release earlier this year.
00:17:28
Speaker
What we haven't done yet is to to actually come up with a resource or an exploration target. And really, that's that's the objective of this next next stage of work at at the Avram Yanku, in the Avram Yanku area.
00:17:41
Speaker
So again, Bihorsud, it has scaled as an exploration license. It has historic mining on it. um We just need to to come up with some more results and hopefully we can you know start to build that into the value story for for Leading Edge. But again, it's at this stage, it's option value.
00:17:59
Speaker
Thank you, Kurt. This was Edison TV in conversation with Kurt Baj, CEO of Leading Edge Materials. Thank you for watching.