PERTH (miningweekly.com) – Rare earth miners Northern Minerals and Iluka have struck a strategic partnership agreement over the Browns Range project, with Northern Minerals announcing a A$78-million funding package.

Under the agreement, the two companies have inked an offtake agreement for all of the available concentrate from Northern Minerals’ Browns Range project, capped at the delivery of 30 500 t of contained rare earth oxide (REO), and covering the project’s initial eight-year mine life.

Iluka said on Wednesday that the concentrate will be a valuable additional source of feedstock for its Eneabba rare earths refinery in Western Australia and will be a significant contributor to establishing the Eneabba refinery as a long-term producer of highly valued heavy, as well as light, permanent magnet REOs.

Iluka in April this year took a final investment decision (FID) on the Eneabba rare earths refiner.

At a cost of between A$1-billion and A$1.2-billion, the refinery would have a 17 500 t/y total REO capacity, and would employ 300 people during construction and around 270 during its operations.

Construction is slated to start in the second half of this year, and first production is expected in 2025.

To support Northern’s development of Browns Range, Iluka will make an initial investment of A$20-million in Northern via a A$15-million convertible note and A$5-million share placement, providing Northern the funding required to complete a definitive feasibility study (DFS), promoting delivery of an FID on Browns Range over the next year.

Iluka will subscribe for 125-million shares in Northern Minerals, at a price of 4c each.

Meanwhile, the funding arrangements between Northern and Iluka will also see a future placement to Iluka, following an FID for the Browns Range project, under which Iluka could be issued an additional 230-million shares, priced at 6c each, for a further A$13.6-million investment.

The funding also includes a call option/put option arrangement under which Iluka will be issued up to an additional 653.3-million shares at a maximum price of 6c per share raising up to A$39.2-million. The issue and grant of the call option and put option is conditional on Northern Minerals shareholder approval.

The call option could be exercised at any time until the end of December 2025, and is conditional upon a positive FID for the Browns Range project and Iluka completing a due diligence on the project’s DFS.

Northern Minerals told shareholders that the funding package would enable the company to complete the DFS for a mine and commercial-scale beneficiation plant at Browns Range, provide ongoing working capital, and contribute to the future equity component of the capital and commissioning costs for the Browns Range project.

The company is targeting completion of the DFS in the third quarter of 2023, with first production forecast in 2026, subject to regulatory approvals.

“These funding initiatives and our strategic partnership with Iluka are a major step towards achieving our goal of developing Browns Range into a significant alternative producer of dysprosium and terbium, which are critical metals in a low carbon future increasingly reliant on rare earth permanent magnetic electric motors,” said Northern Minerals executive chairperson Nick Curtis.

“We can now confidently proceed with plans to establish a commercial-scale beneficiation plant at Browns Range.”

Iluka MD Tom O’Leary said the company’s agreement with Northern Minerals was a further step towards delivering on the significant, industry building opportunities presented by the development of Australia’s first fully integrated rare earths refinery at Eneabba.

“Previously, intermediate rare earth products such as Northern Minerals’ concentrate would require export overseas prior to refining to produce separated REOs. This is no longer the case. Iluka’s agreement with Northern Minerals demonstrates the Eneabba refinery’s strategic importance in fostering new supply chains for critical minerals that are essential to global electrification and the transition to a low carbon economy.

“There is mutual commercial benefit for both parties, as well as downstream consumers of rare earths, and the value addition will occur in Australia for the first time,” said O’Leary.

“Iluka’s funding contribution provides Northern the means to complete its DFS and, subject to that, proceed to FID on Browns Range next year. For Iluka, it’s an attractive opportunity to secure an additional source of quality feedstock for the Eneabba refinery. Browns Range aligns strongly with Iluka’s strategy in terms of location, timing and product differentiation. We are delighted to have reached agreement with Northern to support this important development.”