This report is based on public company disclosures, filings and announcements reviewed by GSN; figures are as stated by the company and have not been independently verified.

Imagine rare earths recovered not by conventional mining, but by moving leach solutions through the ground and bringing the dissolved metals back to surface. The company itself describes this as a potential low-impact in situ recovery development pathway. For Axel REE (ASX: AXL), that pathway is still being evaluated rather than proven. But the resource numbers the company has now released give it a larger and better-defined deposit on which to test it.

Axel REE has increased the Caladão project mineral resource estimate in Minas Gerais, Brazil, by 24 percent to 708.6 million tonnes at 1,443 parts per million total rare earth oxides. The primary driver of this expansion is the Woolrich deposit, which the company has more than doubled. According to the company, the upgraded Woolrich resource now stands at 264.6 million tonnes at 1,101 parts per million TREO and 34.7 parts per million gallium. This represents a 107 percent tonnage increase from the previous estimate of 128 million tonnes, which was entirely Inferred.

The significance of this update lies in the quality of the data, not just the quantity. Independent consultant GE21 based the updated Mineral Resource Estimate on drilling completed through July 2026. The company stated that 42 percent of the Woolrich resource is now classified as Indicated, including a maiden 110.1 million tonnes at 1,073 parts per million TREO. The remaining 154.5 million tonnes remains Inferred. This shift from a purely Inferred resource to one with a substantial Indicated component matters for any future technical study, as it reflects increased geological confidence.

Axel REE is not treating this resource update as an end in itself. The company explicitly stated that Woolrich is the priority area for evaluating a controlled in situ recovery field validation program. In situ recovery, or ISR, involves leaching minerals in place rather than through conventional mining. Axel REE plans to continue magnesium sulphate leach optimisation and hydrogeological characterisation before designing this field validation program. The goal is to test solution migration, containment, transmissivity, recovery, and wash-out behaviour under field conditions before any move to larger-scale pilot evaluation.

This announcement places Axel REE at a fork in the road. Much now rests on whether ISR behaves as hoped at Woolrich under field conditions. The updated resource provides the geological confidence the company says it needs to move forward, but the path from resource to production remains fraught with technical hurdles.

One possible future is that the field validation program succeeds. If Axel REE can demonstrate that the system behaves as intended at Woolrich, the potential low-impact ISR pathway the company is evaluating would gain real support. Gallium adds another element to the project. The company noted that the Caladão gallium resource has risen 31 percent to 575.7 million tonnes at 37.05 parts per million. Gallium recovery, however, is still being investigated, so any value from it depends on work that has not yet been done.

A second, more cautious future is that the field validation program reveals significant technical challenges. ISR is highly dependent on the specific geological and hydrogeological conditions of the deposit. If the leach solutions do not behave as expected, or if containment proves difficult to maintain, the company may be forced to reconsider its extraction strategy. The company acknowledged that the mining and processing cost assumptions in the resource estimate are theoretical inputs rather than forecasts. Without a completed technical study, the economic viability of the project remains uncertain.

A third possibility is that the project evolves into a hybrid model. Axel REE might find that ISR suits certain parts of the resource while other approaches suit others. The broader Caladão resource comprises 598.5 million tonnes of Inferred material at 1,512 parts per million TREO and 110.1 million tonnes of Indicated material at 1,073 parts per million TREO across four deposits, with the resource footprint covering about half of the 420-square-kilometre project area. The company’s stated sequence, field validation before any larger-scale pilot evaluation, already points to testing ISR on a smaller scale first.

To our eye, the most compelling aspect of this announcement is the company’s focus on data. Axel REE has yet to complete a technical study, and it is instead working through the foundational leach, hydrogeological and field work needed to evaluate the ISR pathway. The company’s managing director, Patience Mpofu, stated that the increased geological confidence provides a stronger foundation for integrating metallurgical, hydrogeological, and field data. This step-by-step approach suggests the company wants to understand how the system behaves under field conditions before going further.

However, the desk notes that the company has yet to complete a technical study. The resource estimate is based on total geochemical assays and is constrained within an optimised open-pit shell, with ISR evaluated separately rather than used as the basis for the resource, so it may not fully reflect the economics of an ISR operation. The company is also investigating recovery options for gallium, with no metallurgical test work yet completed on gallium recovery at Caladão Area B. These gaps mean that the full potential of the resource remains unproven.

What to watch: The company calls the planned Woolrich field validation program an important next milestone. Axel REE plans to continue leach optimisation and hydrogeological work before designing this program. The company has not provided a specific timeline for the start or completion of the field validation, but it is clearly the next critical step in the project’s development. Investors should also monitor the progress of the gallium recovery work, as this could affect the project’s economics.

This is analysis and opinion from GSN’s AI newsdesk, based on the public documents listed below; it is not investment advice.

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