Victory Metals’ heavy rare earth thesis enters a catalyst-rich phase

Cashu Research has initiated coverage of Victory Metals (ASX: VTM) with a BUY rating and a 12-month price target of A$3.50. Against the report’s current price of A$1.41 on 17 March 2026, that target implies 148% upside. The report classifies the investment risk as HIGH, reflecting Victory’s development-stage status and the uncertainties still ahead.

This is Cashu Research’s view, not personal financial advice. Its investment case centres on North Stanmore, a heavy rare earth project in Western Australia, and the potential for the asset to benefit from growing Western demand for non-Chinese supplies of strategically important minerals.

Cashu Research argues that rare earths have moved beyond being solely a mining and commodity story. China’s April 2025 export controls introduced licensing requirements covering seven medium and heavy rare earth elements, including dysprosium and terbium. The report says the policy shift increased the strategic importance of projects able to supply these materials outside China.

The distinction between light and heavy rare earths is central to the thesis. Dysprosium and terbium are added to permanent magnets in small quantities to improve resistance to demagnetisation at elevated temperatures. The report links that property to defence applications, electric vehicle drivetrain motors and offshore wind turbines, while noting that it sees no commercially viable substitute for these uses.

North Stanmore is presented as unusually well positioned because it contains all seven elements covered by China’s export controls, alongside gallium, scandium and hafnium. Its average HREO/TREO ratio is 39%, reaching up to 83% in satellite zones. Cashu Research says this combination of heavy rare earth enrichment, a Western jurisdiction and a multi-element resource could increase the project’s value to government and industrial partners.

The project is located about 6km north of Cue in Western Australia, adjacent to the Great Northern Highway. Victory holds a contiguous tenement package of more than 16,500 hectares, with a further approximately 12,500 hectares under application. The report identifies access to roads, regional rail, airports and port infrastructure as a logistical advantage.

North Stanmore’s clay-hosted geology is another important part of the investment argument. The ore is described as soft and free-digging, requiring no blasting, while the proposed processing route uses leach circuits rather than pyrometallurgy. A March 2025 scoping study estimated operating costs of A$25.50 per ROM tonne and projected a two-year capital payback.

An August 2025 JORC mineral resource update increased the resource by 29.5% to 320.6 Mt at 510 ppm TREO. Mineralisation remains open in all directions, and the report says the resource could support a mine life exceeding 60 years at scoping-study throughput rates. It also contains 4,788 tonnes of gallium oxide, as well as significant scandium and hafnium.

The most immediate technical catalyst is the flotation work announced in March 2026. First-pass flotation delivered a 48x TREO concentration upgrade, from 1,251 ppm to 5.9% TREO, with 81.5% recovery and more than 95% ore mass rejection upstream. Cashu Research believes that, if validated and incorporated into the Q2 2026 Pre-Feasibility Study, the result could reduce the project’s capital intensity.

Earlier test work also indicated approximately 80% rare earth recovery in about 30 minutes. Further fine-fraction separation improved terbium grades by 53%, dysprosium grades by 25% and scandium grades by 100%, suggesting additional optimisation potential. However, the report cautions that the 48x result remains based on sighter test work and requires full-scale validation.

Victory has also established potential strategic relationships. Sumitomo Corporation has signed a non-binding Letter of Intent covering potential offtake and strategic cooperation. Separately, the US Export-Import Bank issued a non-binding Letter of Interest for up to US$190M under its China and Transformational Exports Program. Neither arrangement is presented as final financing or a binding offtake contract.

The Q2 2026 PFS is therefore the key upcoming milestone. Cashu Research expects it to incorporate the flotation results and rapid leach kinetics, and to support discussions with EXIM, other export credit agencies, strategic partners and offtakers. Subject to financing and approvals, the scoping study modelled commissioning in Q3 2028.

The March 2025 scoping study outlined a potential post-tax NPV of A$1.2B, a 52% IRR, A$337M of capital expenditure and an approximately 31-year mine life. In the report’s valuation discussion, VTM’s A$1.40 price is described as equivalent to 14% of the post-tax lower-case scoping NPV. That comparison highlights the potential valuation gap if the project advances successfully, but it is not a measure of completed production or realised cash flow.

Cashu Research derives its A$3.50 12-month target using a risked NAV approach and a 70% discount to the post-tax lower-case scoping NPV. The report says that discount could narrow toward 50% after the PFS, implying a revised target of approximately A$4.70. Its scenario analysis also includes a bear case of approximately A$2.10 using an 80% discount.

North Stanmore remains pre-PFS, and the scoping study carries plus-or-minus 35% accuracy. Project economics could change materially as engineering advances toward definitive feasibility standards. Rare earth prices are also highly exposed to Chinese policy decisions, and a sustained normalisation of Chinese supply could reduce the premium supporting the project’s economics.

The strategic case is not guaranteed either. Further US–China diplomatic agreements could reduce the urgency for Western alternatives, while the US EXIM Letter of Interest is non-binding. Victory must still coordinate government grants, EXIM debt, strategic investment and offtake arrangements, creating financing execution risk.

Finally, the flotation breakthrough could produce different results when optimisation and hydrometallurgical integration are completed. For Cashu Research, the investment case depends on the PFS confirming that the metallurgical gains can translate into lower capital and operating costs, while the company secures the financing and partnerships needed to move North Stanmore toward construction.