Red Metal (ASX:RDM) has reached a significant milestone at its Sybella rare earth deposit in Queensland, announcing the commencement of a pre-feasibility study (PFS) to evaluate the economic viability of heap leach processing at the globally unique project. The study comes as Western nations accelerate efforts to diversify rare earth supply chains, which remain heavily concentrated in China for both mining and downstream processing of critical minerals used in permanent magnets for electric vehicles, wind turbines, and defence technologies.

Three Queensland-based, internationally credentialed resource consultancies — DRA Global, AMDAD, and The Core Group — have been commissioned to design, optimise, and cost the mining operation, processing flow sheet, and associated infrastructure for the development of the Sybella Kary Zone ores.

The Sybella deposit's distinctive granite-hosted ore body contains soluble fluoro-carbonate rare earth minerals, differentiating it from the more common clay-hosted and monazite-dominated rare earth deposits. The ore body begins at surface and offers substantial tonnage potential with a zero strip ratio, positioned approximately 20 kilometres south-west of Mount Isa, a region with established mining infrastructure and workforce.

Managing Director Rob Rutherford told shareholders that the granite host rock is non-acid consuming, clay-poor, competent, and easily crushed, making it well suited for stacking into highly permeable heaps for acid leaching. Heap leaching is a widely used technique in gold and copper recovery; its potential application to rare earth ores is comparatively novel and could offer a lower-cost alternative to conventional processing routes if proven at scale.

Over the past two years, The Core Group has conducted extensive metallurgical testing to optimise criteria for rare earth heap leaching. This work has led to the design of a straightforward process flowsheet and the precipitation of a high-quality mixed rare earth carbonate (MREC) product, an intermediate material that can be further refined into separated rare earth oxides such as neodymium and praseodymium, both essential inputs for high-strength permanent magnets.

The extraction approach proposed for the Sybella ores employs low-cost bulk mining methods combined with simple ambient-temperature, weak sulphuric acid heap leach processing. According to Rutherford, this routinely applied mining and processing technique should enable the study to reach PFS level in a cost-effective and timely manner.

The PFS will further refine the design and evaluate the economics of processing 20 million tonnes per annum (Mt/a) of ore, while also examining the effects of scaling the operation down to 10 Mt/a and up to 25 Mt/a. Additionally, the study will assess the advantages of constructing an on-site acid plant versus purchasing acid on the open market, and will test the economic viability of separating the high-quality MREC into individual rare earth oxides.

"This body of work is expected to deliver our first robust economic assessment of Sybella while providing a gap analysis to guide the proposed definitive feasibility study scheduled to commence in 2027," Rutherford said. "It will also provide the data needed to advance off-take discussions with potential end users and may facilitate funding support from the Federal and State Governments and other entities."

"We anticipate announcing the results from this important study program towards the end of this year or early next year," he added.

Red Metal shares were steady at 14 cents, with a market capitalisation of $54.17 million prior to market open.