Koppamurra’s 99% IRR Rests on Heap-Leach Hydraulics

Australian Rare Earths’ June 2026 pre-feasibility study moved Koppamurra from a large ionic-clay resource to a defined development case. The study reported a post-tax net present value of A$858 million, a 99% internal rate of return and a payback period of about 0.9 years, supported by a maiden probable ore reserve of 26 million tonnes at 920 parts per million total rare earth oxides.

Those headline returns are unusually strong for a project with an initial capital estimate of A$178 million. They also make the technical assumptions more important. Koppamurra’s value depends on free-dig mining, agglomeration and heap leaching of clay, followed by impurity removal and production of a mixed rare earth product. The next test is whether the flowsheet behaves at pilot scale as it did in laboratory and column work.

Ionic clay is simple to mine but difficult to scale predictably

The deposit is shallow and does not require conventional drilling, blasting or hard-rock crushing. That can reduce mining energy and capital intensity. However, low-grade clay places a premium on solution chemistry, permeability and water management.

Heap leaching requires the agglomerated material to retain enough physical structure for leach solution to flow evenly through the heap. If clay compacts, channels or swells, recoveries can fall and cycle times can lengthen. Laboratory tests cannot fully reproduce the hydraulic behaviour of a commercial heap exposed to weather and variable ore.

Australian Rare Earths is preparing roughly 30 tonnes of material for pilot work. The programme needs to demonstrate repeatable extraction, acid consumption, impurity rejection and a workable water balance. Recovery alone is not enough if reagent use or residue handling erodes the apparent capital advantage.

The reserve gives the study a mineable base

The 26-million-tonne probable reserve provides a defined portion of the resource for the initial development case. It is important because it incorporates mining, processing and economic assumptions rather than merely describing mineralised tonnes.

Yet a reserve derived from low-grade ionic material remains sensitive to product prices, recovery and operating costs. The revenue basket depends on the distribution of magnet rare earths, not only total rare earth oxide grade. Neodymium, praseodymium, dysprosium and terbium content should therefore be tracked alongside TREO.

The PFS economics also assume a staged development model. Staging can reduce upfront risk, but later expansion must be funded and built while the first phase operates. The rapid stated payback will only be credible if commissioning reaches design performance quickly.

Permitting and residue management remain material

Australian Rare Earths is targeting a mining lease application in 2026. The project spans parts of South Australia and Victoria, and development will require confidence around groundwater, land access, rehabilitation and the management of leached clay.

Ionic-clay projects are sometimes presented as environmentally simpler than hard-rock mines because they avoid blasting and high-temperature cracking. They still move large volumes of material and circulate chemical solutions. The quality of containment, water recycling and progressive rehabilitation will influence both permitting and social acceptance.

Koppamurra’s PFS establishes a compelling paper case. The next value-creating result is not a larger resource headline. It is pilot evidence that the heap-leach process can maintain permeability, recovery and product quality at a scale that supports the study’s low-capital economics.