How to Read a Rare Earth Resource Estimate
Information only, not investment advice. This guide explains how the rare earth industry works; it does not recommend any company or security.
A rare earth resource estimate tells you how much rock a deposit holds, how rich it is in rare earth oxides, and how confident the geologists are in those numbers.
The headline tonnage is rarely the most useful figure in the release. The sections below cover each part of a typical announcement, from grade and resource categories to cut-off and economic studies, and finish with a worked example using two made-up deposits.
What is in a rare earth resource estimate?
A rare earth resource estimate is a formal statement of the tonnes of mineralized rock in a deposit and the grade of that rock. In Canada it falls under National Instrument 43-101. In Australia it follows the JORC Code. A qualified person, usually a geologist, has to sign off on it.
Most estimates come as a table. Each row is a resource category, and the columns usually show:
- Tonnes of rock, often in millions of tonnes (Mt).
- TREO grade, as a percentage or in ppm.
- Contained TREO (tonnes multiplied by grade).
- Grades or ratios for key magnet elements.
- The cut-off grade used to draw the line around the resource.
Our guide to what rare earth elements are covers the elements themselves.
What does TREO mean, and how do % and ppm compare?
TREO means total rare earth oxide, the combined grade of all the rare earth elements in the rock, counted as oxides. Companies report it as a percentage or in parts per million. One percent equals 10,000 ppm, so 0.5% TREO is the same as 5,000 ppm.
Grades vary a lot between deposit types. The USGS reports that some alkaline igneous projects have found roughly 0.3% to 2.6% total rare earth oxide. South China ionic clays run much lower, from about 0.04% to 0.25%, which is why a clay grade and a hard-rock grade can't be compared directly.
Some reports use TREYO instead, which adds yttrium oxide to the total, and a TREYO grade will read higher than a TREO grade for the same rock.
To turn an oxide grade into metal, or ppm into percent, use our mining grade converter.
Why does the magnet rare earth share matter more than TREO?
The magnet rare earth share is the portion of the TREO made up of the elements used in permanent magnets. Announcements often group neodymium and praseodymium (NdPr) with dysprosium (Dy) and terbium (Tb). The USGS notes that clean energy magnets usually use praseodymium, neodymium, samarium and dysprosium.
Rare earths aren't priced alike. For 2025, the USGS estimated an average NdPr oxide price of US$69 per kilogram. Its estimates for lanthanum oxide and cerium oxide were US$1.00 and US$1.71 per kilogram. Lanthanum and cerium can make up a large share of a deposit's TREO while adding little to its value.
Most announcements include a line showing NdPr as a share of TREO, or a magnet rare earth oxide (MREO) figure. At the same headline grade, a deposit where NdPr is a quarter of the TREO holds two and a half times the NdPr of one where it's a tenth. Our guide to rare earth magnets explained covers why these elements drive demand.
What are inferred, indicated and measured resources?
Resource categories rank the estimate by geological confidence, from lowest to highest: inferred, indicated and measured. The CIM Definition Standards set out what each one means for Canadian reporting.
- Inferred: based on limited evidence and sampling. Continuity is implied but not verified.
- Indicated: based on enough reliable drilling and testing to support mine planning and a pre-feasibility study.
- Measured: based on detailed data, with tonnes and grade estimated within close limits.
Under CIM rules, inferred resources must not be turned into reserves. They also can't be used in the economic analysis of a pre-feasibility or feasibility study, so a project whose resource is mostly inferred needs more drilling before it can support either one.
Why is a resource not a reserve?
A mineral resource is rock with reasonable prospects for eventual economic extraction. A mineral reserve is the economically mineable part of a measured or indicated resource, as shown by a pre-feasibility or feasibility study. Turning one into the other means applying modifying factors, which include mining and processing methods, costs, legal factors and markets.
In Canada the gap between the two is wide. The USGS estimates that measured and indicated rare earth resources in Canada exceed 14 million tonnes of rare earth oxide. It puts Canada's rare earth reserves at 830,000 tonnes, meaning most of the country's known rare earths haven't yet been shown to be economic to mine.
What is a cut-off grade?
A cut-off grade is the lowest grade at which rock is counted in the resource. Anything below it is left out. Under CIM guidance, the qualified person should explain why the resource could eventually be mined, and the assumptions behind that view should cover the cut-off grade, recovery, price and costs.
Moving the cut-off moves the headline numbers. A lower cut-off brings in more tonnes but drags the average grade down, while a higher cut-off gives fewer tonnes at a higher grade. Many reports include a table at several cut-offs, which shows how much the tonnes and grade shift as the line moves.
The cut-off basis varies too. Some companies set it on TREO, some on NdPr and some on a dollar value per tonne, and estimates on different bases aren't directly comparable.
How does deposit type affect cost and recovery?
Deposit type is the kind of geology that hosts the rare earths, and it largely sets how hard and costly they are to get out. The USGS names four main settings: carbonatites, alkaline igneous rocks, ionic clays and placer (mineral sand) deposits.
- Carbonatites host the world's largest rare earth deposits and tend to be rich in light rare earths.
- Ionic clays have low grades, but the rare earths come off the clay with weak acids. They are often rich in high-value heavy rare earths, the group that includes dysprosium and terbium.
- Mineral sands can yield monazite as a by-product of mining titanium and zircon minerals.
Recovery is the share of rare earths the plant can get out of the ore. The USGS points out that rare earths often sit in more than one mineral and must be separated from each other. A resource estimate says nothing firm about recovery. That evidence comes from metallurgical test work on samples that represent the deposit.
How is a resource estimate different from a PEA, PFS or DFS?
An economic study is a separate report that tests whether a resource could be mined at a profit. The resource estimate describes the geology, and the study layers mining, processing, costs and prices on top of it. The three main levels are:
| Study | What it does | Can it use inferred resources? |
|---|---|---|
| PEA (preliminary economic assessment) | An early look at potential economics | Yes, with warnings |
| PFS (pre-feasibility study) | Compares options; minimum step to declare reserves | No |
| DFS or FS (definitive or feasibility study) | Detailed study that can support a build or finance decision | No |
Under National Instrument 43-101, a PEA that includes inferred resources has to say so with equal prominence. It also has to warn there's no certainty the PEA will be realized. Any project value in a PEA is an early estimate, not a finding that the deposit is economic.
The three studies differ in how much work sits behind them, not just in their names. Canadian regulators put it bluntly in CSA Staff Notice 43-307: the level of detail, precision and confidence in the outcomes is significantly different. A PEA can only show the potential viability of a resource. The CIM standards describe a pre-feasibility study as a comprehensive look at a range of options, at a lower confidence level than a feasibility study. A feasibility study is detailed enough to serve as the basis for a final decision to build or finance the mine.
Watch for a company that leans on a PEA to justify skipping ahead. The same staff notice says a company that uses a PEA to go straight to a feasibility study or a production decision may be treating it as something it isn't.
Every study's economic analysis has to report three numbers under the standard technical report form:
- Net present value (NPV): today's value of the mine's future cash flow after costs, at a stated discount rate. Check which rate and which metal prices were used, because both change the answer a lot.
- Internal rate of return (IRR): the yearly return the project would earn on its upfront spending.
- Payback period: how many years of production it takes to earn back the initial capital.
The form also requires the capital and operating cost estimates and a sensitivity analysis, which shows how the numbers change if prices, costs or grades move. For a rare earth project, the NdPr price assumption usually matters most. Our guide What Is an NI 43-101 Technical Report? explains where these studies are filed and who signs them.
How do two deposits with the same headline compare?
Two deposits with the same tonnes and grade can still be worth very different amounts. This made-up example, with round numbers that describe no real project, shows why. Deposits A and B each report 50 Mt of indicated resources at 1.0% TREO.
Both hold the same contained TREO, since 50,000,000 tonnes times 1.0% gives 500,000 tonnes.
| Illustrative | Deposit A | Deposit B |
|---|---|---|
| Resource | 50 Mt at 1.0% TREO | 50 Mt at 1.0% TREO |
| Contained TREO | 500,000 t | 500,000 t |
| NdPr share of TREO | 10% | 25% |
| Contained NdPr oxide | 50,000 t | 125,000 t |
| Assumed recovery | 80% | 50% |
| Recoverable NdPr oxide | 40,000 t | 62,500 t |
Deposit B holds two and a half times as much NdPr in the ground, but its harder metallurgy cuts much of that lead once recovery is applied. The table also leaves out mining and processing costs, which would come from an economic study.
What should you check first in an announcement?
These six questions cover the main points in any rare earth resource estimate:
- How much is measured and indicated, and how much is only inferred?
- Is the grade TREO or TREYO, and in % or ppm?
- What share of the TREO is NdPr, Dy and Tb?
- What cut-off was used, and on what basis?
- What is the deposit type, and is there recovery test work?
- Is there an economic study yet, and at what level?
Real company figures appear on our list of rare earth stocks, which covers listed rare earth companies at every stage.
How to Read a Rare Earth Resource Estimate: frequently asked questions
What does TREO mean in a rare earth resource estimate?
TREO stands for total rare earth oxide. It is the combined grade of all the rare earth elements in the rock, counted as oxides. It is shown either as a percentage or in parts per million (ppm), where 1% equals 10,000 ppm.
Is a mineral resource the same as a mineral reserve?
No. A resource is material with reasonable prospects for eventual economic extraction. A reserve is the economically mineable part of a measured or indicated resource, as shown by a pre-feasibility or feasibility study. Inferred resources must not be converted to reserves.
Why does the magnet rare earth share matter more than TREO?
Light rare earths such as lanthanum and cerium can make up a large share of a deposit, and they sell for very little. Magnet rare earths such as neodymium and praseodymium are worth far more per kilogram. Two deposits with the same TREO grade can differ widely in value if one holds far more neodymium and praseodymium.
What is the difference between a PEA, a PFS and a DFS?
A preliminary economic assessment (PEA) is an early economic study that can include inferred resources. A pre-feasibility study (PFS) weighs a range of options and is the minimum needed to declare reserves. A definitive or bankable feasibility study (DFS) is the most detailed and can support a decision to build or finance a mine.
Does a bigger rare earth resource mean a better project?
Size is one factor alongside grade, the share of magnet rare earths, the deposit type and how well the minerals can be recovered. A smaller deposit that is easy to process can carry better economics than a huge one that is hard to treat.
Sources
- CIM Definition Standards for Mineral Resources and Mineral Reserves (2014)
- Ontario Securities Commission: National Instrument 43-101, Standards of Disclosure for Mineral Projects
- USGS Fact Sheet 2014-3078: The Rare-Earth Elements, Vital to Modern Technologies and Lifestyles
- USGS Mineral Commodity Summaries 2026: Rare Earths
- CSA Staff Notice 43-307, Mining Technical Reports: Preliminary Economic Assessments (2012)
Related guides
- What Is an NI 43-101 Technical Report?The Canadian rule behind every resource estimate and mining study, and what a technical report must contain.
- How to Read Drill ResultsGrams per tonne, core length versus true width, and the details a drill-result release should include.
- What Are Flow-Through Shares?How Canadian junior miners fund exploration, and how the 15% and 30% exploration tax credits work.
- What Are Rare Earth Elements?Seventeen metals, most of them not rare at all. What they are and what they are used for.