Aclara Resources Inc. (TSX: ARA), is a rare Earth mineral resources company based out of Chile. Currently, the company is in its initial development stage with approximately 450,000 hectares of mining concessions in the Maule, Nuble, Biobio, and Araucania regions of Chile and recently listed.

Key Highlights

• Penetrating the Heavy Rare Earth Elements (HREE): The company is focusing on becoming a strategic player in supplying the ‘HREE’, Dysprosium (Dy), and Terbium (Tb) materials which are very crucial for many industrial applications including electronics, clean energy, automotive, aerospace, and defense. The company is moving ahead very ambitiously to become one of the self-reliant players in this niche segment which is majorly dominated by limited nations, in which China's dominance is a challenge.

• Environmental, Social & Governance norms: The company is taking ESG norms on a very note while making sure the extraction process doesn’t involve blasting, crushing, milling, but ensuring significant levels of recirculation of water used in the process. Going one step ahead, the company leaves a strong footprint by working on the exploration sites in terms of revegetating them with native forests and species across the areas.

• Efficient operations: To lower the damage to the environment and bring down the cost of operations, the company is aiming at the very low strip ratio, conventionally handling of the materials, using fertilizers as a common reagent, and effortless separation of waste and the most important features which company takes pride in the usage of non-contaminating reagents in the process.

Source: Company presentation 

• Capital Expenditure leading to growth prospects: The company did not keep its ambitious plans on the papers just, rather it shaved out USD 9.18 million in the quarter ended on September 2021 to purchase fixed assets as compared to the CAPEX of USD 8.59 million for the quarter ended on December 2020.

• Narrowing down of Losses: For the reported period the company stated Net losses of USD 0.17 million as compared to the net losses of USD 0.31 million for the quarter ended in December 2020.

Stock recommendation

The company is involved in the exploration and mining of the RARE Earth materials which are in immense demand across Electronic Vehicles, clean energy, defense, to name a few. For this, the company is incurring Capital Expenditure and optimizing its business operations to comply with the ESG norms too. 

The company opened the public trading at CAD 1.79 which was the high till now and currently dropped down to CAD 1.15 levels.  Since the stock is listed recently, the analysis is concluded on the limited trading history available in the public domain, and based on that, the near term support ‘can’ be placed around CAD 0.90 to CAD 1.0 levels if nothing major unexpected comes up in the company operations. As a result, we recommend a “Watch” rating on the stock at the closing price of CAD 1.15 on February 17, 2022.

1-Year Price Chart (as on February 17, 2022). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

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