Brazilian Rare Earths (ASX:BRE) Digs Into Value, Amargosa Study Puts Brazil on the Bauxite Map

Brazilian Rare Earths Red-Hot Run

Brazilian Rare Earths (ASX: BRE) surged 8% this morning after releasing a positive scoping study for its fully owned Amargosa Bauxite Gallium Project in Bahia, Brazil. The study outlined the potential for Amargosa to become a large scale, low cost direct shipping bauxite operation with strong economics and a 17 year mine life. Its position in the first quartile of the global cost curve is an encouraging sign, especially in a market where cost competitiveness often determines long term survival.

That said, investors should recognise that scoping studies are preliminary by nature and sensitive to assumptions around inflation and operating inputs. Brazilian Rare Earths noted that further analysis of ore reserves and development assurance is still required before moving toward feasibility. Even so, this release gives investors their first real look at the project’s economics and scale potential. From our perspective, while the numbers are not definitive, they give a solid starting point to assess how Amargosa could evolve into a meaningful, low cost asset within Brazil’s growing bauxite landscape.

What are the Best ASX Stocks to invest in?

Check our buy/sell tips

Brazilian Rare Earths Big Resource, Bigger Promise

The JORC resource estimate of 568 million tonnes provides a strong foundation for a long-life operation. At a spot price of US$71 per tonne, the project’s forecasts point to average annual revenue of around US$359 million, EBITDA of US$102 million, and free cash flow of roughly US$84 million. Those are attractive early metrics, especially given the relatively modest initial capital investment of about US$119 million, which supports a quick payback period of just 1.2 years. From an investor’s perspective, that places the project in a favourable position, though financing risks could still dilute shareholder value if additional capital is required down the track.

To put it simply, Amargosa’s location is one of its biggest advantages. The mine sits close to established high-efficiency rail links to the Port of Aratu and well-developed highways, which meaningfully lower long-term logistics and infrastructure costs. That setup improves free cash flow potential and overall profitability, assuming commodity prices remain stable. In short, it’s early days, but the fundamentals suggest Amargosa could become a scalable, low-cost operation that rewards patient investors who can look through the development phase.

Brazilian Rare Earths Amargosa Demerger Could Unlock Hidden Value

For Brazilian Rare Earths, this development advances its broader strategy to demerge the Amargosa Project in 2026 through an in-specie distribution into a new ASX-listed entity. The move would allow BRE to sharpen its focus on the Rocha da Rocha rare earth province while simultaneously unlocking value from its bauxite assets. Shareholders are positioned to benefit from this separation, with two analysts currently rating the stock a strong buy and placing valuations around A$6.35, representing meaningful upside from current levels.

What could make this an even more compelling opportunity is further scoping and feasibility analysis to reinforce the positive trajectory of Amargosa’s economics. While there are still steps ahead before the project reaches production certainty, early indicators point in the right direction. For long-term investors, BRE’s steady progress and strategic clarity make it one to keep on the radar.