Canada is backing critical minerals with policy support, tax credits and downstream processing ambitions
Mont Royal’s Ashram PEA includes an estimated C$342m in refundable Clean Technology Manufacturing Investment Tax Credits
Investors will watch infrastructure support, First Nations engagement and the pathway to a PFS
Canada has spent decades building a world-leading critical minerals industry and is now a growing focus for investment aimed at capturing more value beyond extraction.
The International Energy Agency says Canada’s slate of existing and announced projects could strengthen its function as a major global supplier of nickel, lithium, graphite, cobalt and rare earth elements.
Canada contains significant untapped resources and has the mining expertise to unlock them.
It also has low-emission hydro and nuclear power and a well-developed, stable regulatory framework to back it up.
Ottawa’s ambitions extend well beyond extraction. The government is putting nearly C$4bn in public funding behind exploration, infrastructure, processing, manufacturing and recycling, alongside investment tax credits aimed at drawing capital into domestic mining and processing.
Enter Mont Royal Resources (ASX:MRZ).
Mont Royal is positioning its Ashram rare earths and fluorspar project in Québec inside that buildout, with a large resource, a proposed downstream refining hub and an estimated C$342m tax credit already factored into its preliminary economic assessment.
The appeal is two-fold: Canada is targeting more critical minerals, and Ashram sits directly in a policy category Ottawa is seeking to convert into a domestic supply chain.
“Having a foot in both countries, I think that overall Canada has been more proactive in giving critical minerals projects a clearer pathway,” Mont Royal Resources CEO Nick Holthouse said.
Policy leverage
Government backing is now a key differentiator between Western critical minerals projects that advance and those that stall.
This is especially true in rare earths, where projects contend with high capital costs, stricter compliance and a market lacking the liquidity and visible pricing of bulk commodities.
Producers must also convince customers to pay a premium for secure non-Chinese supply, even as Chinese reference prices remain lower.
“Without government support, projects like this are much harder to fund,” Holthouse said.
“Unfortunately, that is still the reality of the REE industry and where the market is today.”
The C$342m in refundable Clean Technology Manufacturing Investment Tax Credits included in Ashram’s PEA is therefore a central part of the investment case.
It is not cash in the bank.
The benefit is contingent on project spend and development. If realised, it could materially improve Ashram’s path to production by lifting post-tax cash flow while reducing its net funding burden.
Holthouse said government support gave investors confidence and could help projects attract the funding needed to move forward.
Rising competition among buyers could also push processing and value-chain development further up the policy agenda.
ODI Global analyst Olena Borodyna wrote in January that resource-rich countries were increasingly trying to negotiate greater value addition rather than simply export raw materials.
This policy shift gives Ashram a clearer development runway.
It puts Mont Royal in a jurisdiction prepared to support projects that can help reduce dependence on China, although it does not remove financing, pricing or execution risk.
Critical-minerals policy can improve the conditions around a project.
But it cannot turn an uneconomic mine into a viable one or create customers by decree.
Mont Royal’s advantage is that policy support complements an already defined project, rather than substituting for one.
Ashram’s scale
Ashram is already significant globally.
The monazite-mineralised, carbonatite-hosted deposit has a JORC resource of 204Mt grading 1.9% total rare earth oxides.
Mont Royal’s updated PEA outlined average annual production of about 17,466t of saleable rare earth oxide, including 4035tpa of NdPr, across an initial 30-year mine life.
And the base case uses only about 25% of Ashram’s current mineral resource.
The economics are equally large: a post-tax NPV of C$2.03bn, a post-tax IRR of 22%, a 3.9-year payback and life-of-mine revenue of about C$24.6bn.
The capital requirement is substantial, making the tax credit and infrastructure story critical.
But resource size and headline economics are only the starting point in rare earths. The harder test is whether a project can turn ore into a saleable product at commercial scale.
That is why Mont Royal is working through the trade-off opportunities identified in the PEA before moving deeper into the next stage of project studies.
Holthouse says there is no rush to launch directly into a PFS regime.
“PEA has presented several study trade-off options that are worth chasing down, first,” Holthouse said.
Downstream push
Canada’s critical minerals strategy is about more than opening mines. Ottawa wants to keep more of the processing value at home, giving Mont Royal’s proposed Saguenay refining hub added strategic weight.
That domestic focus is central to the push.
China’s advantage has often rested less on owning the resources and more on controlling the midstream and downstream stages where concentrates are separated, refined and turned into usable products.
Ashram brings the upstream scale and Saguenay adds the downstream ambition.
And that lines up neatly with Canada’s stated ambition to develop more complete domestic value chains, rather than simply increase mine output. A project that connects concentrate production with refining fits more directly into that strategy.
The investment case now rests on whether those factors can be connected by infrastructure, government support, commercial partners and offtake agreements.
Holthouse said rare earth pricing remained another financing challenge, despite emerging alternatives to Chinese pricing.
“REE pricing is still not particularly transparent,” he said.
“This makes financing more difficult, if not impossible, from typical sources of capital and this is where more non-conventional financing options become important.”
This remains a key risk.
Fluorspar angle
Ashram also brings a second critical minerals angle through fluorspar.
Mont Royal has demonstrated the scale of fluorspar across the broader Ashram system and is weighing whether to add a dedicated recovery circuit as part of the PFS.
That could give Ashram another strategic product stream. Fluorspar is used across aluminium, steel, refrigerants, chemicals, semiconductors and battery-related supply chains with China remaining a major global supplier.
The attraction is optionality.
Successful metallurgical work could diversify Ashram’s product mix and widen its pool of potential customers and partners.
But there is still a commercial test. Mont Royal must show that recovering fluorspar adds enough value to justify the additional capital and operating complexity.
Infrastructure test
The next major value lever may be less about resource size than access.
Ashram’s remote location means logistics and regional infrastructure will be decisive in determining whether it can be built economically.
Mont Royal is exploring opportunities to share infrastructure with other projects, governments and First Nations. The Naskapi Nation has launched an independent study into possible regional access corridors, while Mont Royal continues engagement with Inuit, Naskapi and Innu communities.
This is where policy support becomes tangible for project delivery.
Tax credits can improve project economics, but roads, power and logistics will determine whether the project gets built.
Québec’s low-emissions power and established mining expertise support the larger development case, but Ashram still needs a workable solution to the regional infrastructure challenge.
Progress on access will be one of the clearest markers for investors.
Holthouse said government support gave projects something equally important: a clearer pathway and timeline.
“Without that support, it can be very hard to even get a project to the starting line,” he said.
“It creates momentum. It gives companies the confidence to keep spending money, keep doing the work, and keep moving the projects forward.”
An infrastructure MoU, funding arrangement or regional access agreement could become a meaningful catalyst, moving Ashram from a large strategic resource to a more financeable development proposition.
What comes next
Mont Royal is working through trade-off and optimisation studies before moving into the next stage of its PFS work.
It is also advancing permitting, environmental baseline work, stakeholder engagement and further assessment of fluorspar recovery.
The investment proposition is becoming more straightforward.
Ashram offers scale, meaningful NdPr exposure and a PEA pointing towards robust economics. Canada’s tax credits and downstream ambitions provide policy leverage.
Saguenay adds processing optionality; fluorspar could provide a second strategic product stream.
The unresolved question is execution.
Mont Royal still needs to convert policy consensus into infrastructure, partnerships, permits, financing and a commercially proven product pathway.
That is why near-term attention will centre on infrastructure and the PFS, rather than further resource growth.
Ashram is already large. The next question is whether it can become buildable.
Canada’s critical minerals push gives Mont Royal a favourable backdrop.
If Ashram can fit into that national buildout, the project becomes more than a rare earths deposit.
It becomes a test of whether Canada can translate critical minerals policy into investable supply chains.
The policy tailwind is real, but the re-rating case depends on Mont Royal demonstrating that support can translate into buildable project benchmarks.
This article does not constitute financial product advice. You should consider obtaining independent financial advice before making any financial decisions.
At Stockhead, we tell it like it is. While Mont Royal Resources is a Stockhead advertiser, they did not sponsor this article.
Originally published as Mont Royal rides Canada’s critical minerals reset