Harvest Minerals (AIM: HMI) shares jumped 66% in early trading after the AIM-listed Brazilian fertiliser and mineral development company announced a binding agreement to acquire Scanty Mineração Ltda.
Scanty, currently a wholly owned subsidiary of Union Star Metals (ASX: USM), holds a portfolio of eight rare earth projects across 27 exploration tenements in Brazil.
The projects include Capão Bonito and Sguario, where the geology is considered prospective for ionic clay-hosted rare earth mineralisation.
Harvest said the acquisition supports its expanded critical minerals strategy and builds on encouraging rare earth results from its 100%-owned Arapuá project in Brazil.
Previous work at Arapuá returned average Total Rare Earth Oxide concentrations ranging from 2,110.53 ppm to 2,656.99 ppm and confirmed rare earth mineralisation within the “Bone” lithotype.
The Scanty portfolio targets both ionic clay-hosted and hard rock rare earth mineralisation across the Cerro Azul, Capão Bonito, Itapeva, Sguario, Mucambo and Guaratinga project areas.
The projects are located within established mineral provinces, including the Poços de Caldas Alkaline Complex and the Bahia Rare Earth Province.
The consideration includes an initial A$200,000 cash payment and the issue of 40,000,000 new Harvest shares on completion.
Further milestone payments of up to A$300,000 may become payable, alongside the assumption of approximately A$1.5 million of deferred acquisition payments and associated 1.5% net smelter royalty obligations.
Those deferred payments are conditional on Harvest defining an inferred mineral resource of at least 20 million tonnes at 1,000 ppm rare earth oxides within 36 months of completion, and completing a scoping study recommending a pre-feasibility study within 48 months.
Executive chairman Brian McMaster said the acquisition gives Harvest exposure to multiple high-quality rare earth assets while maintaining capital discipline.
He said Brazil’s rare earth sector is attracting strong investor interest because of its potential to deliver large-scale ionic clay deposits outside China.
The company noted that the assumption of certain deferred payment obligations constitutes a related party transaction, as Brian McMaster and Luis Azevedo were among the original vendors of Scanty.
Harvest said its independent directors, having consulted with nominated adviser Strand Hanson, consider the terms fair and reasonable for shareholders.
