BRE spins off Amargosa project with $30-50m Alurion IPO

Demerger and IPO to Unlock Amargosa Value

Brazilian Rare Earths Limited (ASX:BRE) is set to spin off its Amargosa Bauxite-Gallium Project in Bahia, Brazil, into a new entity, Alurion Resources Limited (Alurion), accompanied by an initial public offering (IPO) targeting $30-50 million. The move aims to crystallise value from the 568 million tonne JORC-compliant resource and sharpen strategic focus across distinct mineral assets.

Eligible BRE shareholders will receive approximately 0.5607 Alurion shares for every BRE share held on the record date, with the distribution expected to occur shortly after the shareholder meeting scheduled for 10 July 2026. This in-specie distribution will be complemented by a pro-rata priority offer in the IPO, priced at $1.05 per share, with a shortfall offer and broker/institutional placements to follow.

Alurion’s Project and Financial Profile

Alurion will hold the Amargosa Project, a large-scale, advanced-stage bauxite deposit with significant gallium and critical mineral potential. A recent scoping study forecasts a 5.1 million tonnes per annum direct shipping bauxite operation with a 17-year mine life, delivering an after-tax NPV8 of US$630 million and an IRR of 82% at a $71/tonne CIF China price. Capital expenditure is estimated at US$119 million to first production, with operating costs placing Amargosa in the first quartile of the global seaborne bauxite cost curve.

The IPO proceeds will fund further drilling to upgrade resource confidence, metallurgical studies including beneficiation pilot plant commissioning, environmental permitting, land acquisition, and working capital. Alurion’s board brings extensive mining and finance expertise, with a management team experienced in Brazilian bauxite operations and critical minerals development.

BRE’s Strategic Focus and Shareholder Impact

Post-demerger, BRE will retain a substantial shareholding in Alurion estimated between 16% and 17%, subject to a 24-month escrow period. This allows BRE to maintain exposure to Amargosa’s upside while focusing on its core rare earths and critical minerals projects, including Monte Alto, Pelé, and Sulista in Bahia. These rare earth projects have seen recent exploration success, including ultra-high-grade drilling and trial mining licences.

For BRE shareholders, the demerger offers a choice: retain exposure to the rare earths portfolio via BRE shares, participate in the growth of the bauxite-gallium project through Alurion shares, or both. Small shareholders and those in ineligible jurisdictions will have their Alurion entitlements sold via a sale facility, with net proceeds remitted accordingly.

Next Steps and Considerations

Shareholder approval for the capital reduction and in-specie distribution will be sought at the 10 July meeting, with proxy forms due by 8 July. The IPO priority offer for eligible shareholders opens on 15 June and closes on 29 June. Alurion aims for ASX listing by late July 2026, with trading expected to commence shortly thereafter.

The transaction is subject to customary conditions, including regulatory approvals and market conditions. BRE’s board unanimously recommends approval, highlighting the potential for unlocking shareholder value and creating two focused, well-capitalised entities.

Investors should note the speculative nature of exploration and development projects, the early stage of Amargosa’s development, and the risks inherent in commodity price volatility, permitting, and financing. The scoping study economics are promising but require further validation through pre-feasibility and feasibility studies.

With the rare earths and bauxite-gallium sectors both critical to the energy transition, BRE and Alurion’s distinct focuses position them to capture value in complementary mineral markets. The demerger and IPO mark a pivotal step in crystallising this potential.