Southern Alliance Mining Delivers Strong Growth and Strategic Expansion in Rare Earths, Gold, and Iron Ore Segments

Southern Alliance Mining Ltd. (SGX:QNS), a diversified exploration and mining company listed on the Catalist of the Singapore Exchange since June 2020, is making significant strides in the rare earth elements (REE), iron ore, and gold sectors. As of February 2026, the company boasts a market capitalization of approximately S\$292.9 million and holds a unique position as Malaysia’s first and only operational REE mine operator. Below is a comprehensive breakdown of the company’s progress, key investment highlights, financial performance, and expansion plans—essential reading for shareholders and potential investors.

Key Points and Potentially Price-Sensitive Developments

• Rare Earth Elements (REE) – Major Growth Driver:
  • SAM operates the Gerik Mine via its 40%-owned subsidiary, MCRE Resources, which is Malaysia’s first and only fully operational REE mine.
  • Total reserves at Gerik: 84.0 Mt, with production now fully commercial and profitable since 2023.
  • MCRE achieved a significant jump in revenue from RM129.0 million (FY2024) to RM308.2 million (FY2025), with EBITDA rising from RM71.7 million to RM140.7 million—despite a decrease in EBITDA margin due to lower average selling prices.
  • MCRE’s rare earth operations place SAM in the 1st quartile of the global NdPr (Neodymium-Praseodymium) cost curve, a testament to its strong margin resilience and cost competitiveness.
  • MCRE stands out for its use of advanced in-situ leaching (ISL) technology, offering a lower carbon footprint and superior ESG profile compared to traditional open-pit mining.
  • Expansion potential: Only 2 out of 9 land plots at Gerik are currently in operation, with the largest plot to commence production in FY2026/27. SAM has rights of first refusal (ROFR) to acquire additional stakes in MCRE and exclusive rights to acquire 100% of the Labis REE Mine, which has completed exploration and is preparing for EIA submission.
  • MCRE’s EIA (Environmental Impact Assessment) for REE mining is approved, and the company leads in ESG practices with a green mining approach and strategic partnerships, including access to proprietary low-carbon extraction technology from China Rare Earth Group.
• Iron Ore Segment – Transition and Production Upside:
  • The Chaah Mine in Johor is SAM’s maiden asset, having produced over 9.4 Mt of high-grade iron ore as of July 2025.
  • In September 2023, SAM completed its transition to underground mining, which is expected to enhance economic viability and enable further exploration, especially in the Southern Zone.
  • FY2025 saw a notable increase in production volumes: Iron ore concentrate sales were up 22% year-on-year, while crushed iron ore sales soared 350% year-on-year.
  • Despite increased production, the iron ore segment was affected by lower global prices and slower steel industry demand, leading to a one-off, non-cash impairment loss that resulted in negative EBITDA for FY2025. However, this does not impact the group’s cash flow, and the company remains in a strong balance sheet position with RM113.7 million in cash as of July 2025.
• Gold Segment – Exploration with Promising Results:
  • SAM commenced exploratory drilling at the Tenggaroh Mine. 21.04% of assay samples indicated gold mineralization above 0.10 g/t, highlighting the potential for a viable gold deposit.
  • To date, 37 drill holes (5,753 meters) have been completed, and 4,647 samples have been analyzed. The company is prioritizing further exploration and aims to expedite development to capitalize on strong gold prices.
  • Strategic plans include establishing in-house assay laboratories, additional drilling, EIA approval, and engaging a competent person for a JORC-compliant resource and reserve statement.
• Diversification and Growth Catalysts:
  • SAM’s diversified asset portfolio gives it multiple growth levers and risk mitigation, with significant value expected from the REE sector, iron ore, and gold.
  • The company is proactively exploring opportunities across the REE value chain, including downstream activities and global partnerships, positioning itself as a first-mover in Malaysia’s REE industry.
  • Expansion plans are supported by a strong balance sheet and a focus on strategic alliances, exploration, and technology adoption.
• Management and Governance:
  • The board and management team bring over 65 years of experience in mining, legal, and financial management, providing robust leadership and operational expertise.

Sector and Market Dynamics – What Investors Need to Know

• Rare Earths Market:
  • Global REE market expected to grow from US\$7.2bn (2025) to US\$9.5bn (2030), CAGR of 5.8%.
  • Strong demand growth for magnet REEs (Nd, Pr, Dy, Tb) driven by renewable energy (wind turbines, solar panels), electric vehicles, consumer electronics, and defense applications.
  • China dominates both upstream reserves and midstream processing, controlling 95% of global REE separation and refining capacity. Recent Chinese export controls and US tariffs on magnets are driving a global push for supply chain diversification, benefiting alternative suppliers like SAM in stable jurisdictions.
  • Supply shortages are expected over the next 2-3 years as most global peers are still in the exploration phase, with meaningful new production only from 2028 onward.
• Iron Ore and Gold:
  • Iron ore prices have been under pressure due to weaker global demand, impacting segment profitability, but production volumes and asset transitions position SAM for upside in a cyclical recovery.
  • Gold exploration is a potential near-term catalyst, especially amid bullish gold prices and positive assay results from ongoing exploration.

Expansion Strategy and Capital Allocation

SAM has outlined a clear capital allocation plan for upcoming growth:

• Rare Earths (60%): Expansion of operations, further exploration, and strategic partnerships.
• Gold (30%): Accelerated exploration, investment in mining and processing infrastructure to fast-track production.
• Others (10%): General working capital, increased headcount, professional fees, and operational expenses across mining assets.

The company is also investing in R&D collaboration (e.g., MoU with Universiti Malaya) and securing necessary permits and environmental approvals for new and existing assets.

ESG Leadership and Regulatory Compliance

• ESG Practices:
  • Adoption of in-situ leaching (ISL) for REE extraction, minimizing land disturbance by over 90% compared to open-pit mining and reducing energy consumption and emissions.
  • Approved EIAs for all operating projects, including a recent 10-year mining lease extension for the Chaah Mine.
  • Active community engagement and strict adherence to regulatory requirements.
  • Strategic partnership with China Rare Earth Group for low-carbon technology.

Key Milestones and Timeline

• IPO on SGX in June 2020 (raised S\$19.0 mn).
• April 2023: MoU to acquire Gerik and Labis REE mines.
• September 2025: Completion of 40% acquisition in MCRE.
• August 2025: MoU with Universiti Malaya for REE research.
• Transition to underground mining at Chaah Mine in September 2023.
• Ongoing exploration and EIAs for Labis (REE) and Tenggaroh (Gold) prospects.

Investor Takeaways and Potential Share Price Catalysts

• MCRE’s rare earth business is a high-margin, world-class operation with immediate and long-term growth prospects, uniquely positioned in Southeast Asia as a first mover.
• Expansion into the largest plot at Gerik and the potential acquisition of Labis could be transformative and are likely to drive significant future value for shareholders.
• Gold exploration success at Tenggaroh and operational ramp-up present additional upside, especially in a favorable gold price environment.
• Strong balance sheet and cash position support ongoing investment, R&D, and operational flexibility, even amid commodity price volatility.
• Strategic partnerships and ESG leadership enhance SAM’s reputation and long-term sustainability, meeting the increasing expectations of institutional investors and global customers.

Investors should closely monitor:

• Any updates on production ramp-up at Gerik and the start of the third and largest land plot.
• Further stake acquisition in MCRE and developments at Labis.
• Progress of Tenggaroh’s gold exploration and EIA approvals.
• Global REE pricing, Chinese policy changes, and Western supply chain initiatives, as these could materially impact SAM’s revenue and valuation.

Disclaimer: This article is prepared for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. While every effort has been made to ensure accuracy, Southern Alliance Mining Ltd. and its representatives do not guarantee the completeness or accuracy of the information. Investors should conduct their own due diligence and consult their financial advisors before making investment decisions. The company’s performance is subject to market risks, commodity price fluctuations, and regulatory developments that may affect future results.

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