Following a key approval, one broker tips 80% upside for this ASX rare earths stock

Brazilian Rare Earths Ltd (ASX: BRE) secured a key approval this week, with the Brazilian Government granting the company a trial mining licence for the “ultra-high grade” Monte Alto rare earth and critical minerals project the company is developing.

The team at Canaccord Genuity has had a look at the announcement, and while they haven’t changed their target price on the company, the target is still well above the current share price of $4.30. More on that later.

Major news

Firstly, what did the company itself say this week?

Brazilian Rare Earths said the newly-granted licence allows it to extract up to 2000 tonnes per year of product from the Monte Alto deposit, “enabling BRE to produce bulk shipments for potential customer offtakes and metallurgical testing at its Camaçari pilot plant”.

Trial mining at Monte Alto will also support the commissioning and operation of the company’s fully permitted pilot plant, which remains on schedule to start operations in the third quarter of 2026.

Brazilian Rare Earths managing director Bernardo da Veiga said:

Securing the Trial Mining Licence is a significant milestone for Monte Alto and a major step forward in BRE’s integrated ore-to-oxides development pathway in Brazil. This approval reflects the strength of our permitting work, the quality of our engagement with local communities and government stakeholders, and the advantages of Monte Alto’s deliberately low-impact development model. With ultra-high-grade mineralisation, dry processing and a quarry-scale operating model, Monte Alto has been designed from the outset to support a staged, capital-efficient path through permitting and development. Just as importantly, trial mining can now supply high-grade material for customer evaluation and for our fully permitted pilot plant at Camaçari, linking upstream production with downstream processing capability in Brazil. That integrated model is central to our strategy to rebuild a leading Brazilian rare earths and critical minerals supply chain.

Shares looking cheap

Canaccord said it continued to look towards the publication of a maiden mineral resource estimate as a key valuation catalyst for the company.

As a recap, our modelled development scenario is based on an assumed Mining Inventory of just 3 million tonnes of ultra high grade primary material, which … supports a 10-year project at 7ktpa NdPr oxides through an integrated mine + refinery development. A larger mineral resource estimate would clearly support a longer mine life, in our view.

Canaccord has a speculative buy rating on Brazilian Rare Earths shares and price target of $8, which is 86% higher than the current share price.

The ASX rare earths company was valued at $1.24 billion at the close of trade on Wednesday.

The post Following a key approval, one broker tips 80% upside for this ASX rare earths stock appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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 Scott Phillips.