Amargosa Project Demerged from BRE with A$30-50m IPO Target

Focused Spin-Off Targets Bauxite and Critical Minerals

Brazilian Rare Earths Limited (ASX:BRE) is carving out its Amargosa Bauxite-Gallium Project into a standalone ASX-listed company, Alurion Resources Limited (ASX:ALU). The move aims to give Amargosa the dedicated capital structure and management expertise required to accelerate its development, while allowing BRE to concentrate on advancing its rare earths portfolio. This strategic separation reflects a disciplined approach to managing two large-scale mineral platforms with very different market dynamics and development pathways.

The demerger will see BRE shareholders receive Alurion shares on a pro-rata basis, alongside a priority offer in Alurion's planned IPO targeting between A$30 million and A$50 million. Post-listing, BRE expects to retain a strategic stake of approximately 17% to 18% in Alurion, maintaining indirect exposure to the bauxite project. This structure prioritises existing BRE shareholders, offering them both direct and indirect participation in Amargosa’s growth.

Amargosa’s Scale and Economics Stand Out

Amargosa is far from a greenfield prospect. With over a decade of exploration, including work by Rio Tinto and BRE, the project boasts a JORC-compliant Mineral Resource Estimate of 568 million tonnes, featuring 98 million tonnes of direct-ship bauxite grading 41.9% Total Available Alumina (TAA) and low reactive silica at 2.5%. These metrics position Amargosa competitively against Guinea’s benchmark bauxite, which currently dominates China’s import market with a 70% share.

The project’s initial development plan is deliberately straightforward: mine and ship bauxite directly without the need for beneficiation plants or major infrastructure, aiming to minimise upfront capital and speed time to market. The recently reported scoping study highlights compelling economics, with a post-tax NPV8 of US$630 million, an IRR of 82%, and a payback period of just 1.2 years, based on a modest initial capital expenditure of US$119 million including contingency.

Logistically, Amargosa benefits from proximity to the Port of Enseada, approximately 160 km by road, providing direct access to global seaborne bauxite markets. This strategic location underpins the project's potential to become a reliable source of high-quality bauxite outside the heavily concentrated West African supply chain.

Optionality in Critical Minerals and Expansion

Beyond the base case, Amargosa holds optionality in scaling production beyond 15 million tonnes per annum, potentially linked to the FIOL rail and port infrastructure. The project also contains gallium, a critical mineral with growing demand, alongside co-products such as titanium, zircon, and rare earth elements. These value levers remain subject to further technical and market evaluation but could enhance the project's long-term strategic importance.

Demerger Sharpens BRE’s Rare Earth Focus

BRE’s Managing Director Bernardo da Veiga emphasised that the transaction allows each entity to focus on its core strengths. While Alurion hones in on bauxite and critical minerals development, BRE will concentrate on advancing one of the world’s most significant rare earth provinces. This is timely given BRE’s recent strides at its Monte Alto rare earth project, including securing a Trial Mining Licence and confirming ultra high-grade mineralisation with innovative processing breakthroughs, as seen in its Trial Mining Licence for Monte Alto and ultra high-grade growth and processing breakthroughs.

The proposed demerger remains subject to shareholder and regulatory approvals, market conditions, and final documentation. The company targets lodging the Alurion IPO prospectus by mid-2026, with a listing anticipated approximately two months thereafter.