London-listed Kendrick Resources has entered into a binding and exclusive option agreement to acquire at least a 70% interest in two rare earth exploration licences in southern Namibia, giving the company until May 19 to evaluate their potential before deciding whether to proceed with a full acquisition.

The mineral exploration and development company said the option agreement was signed with Bonya Exploration to assess the prospectivity of mining rare-earth elements (REEs) on the EPL 4458 and EPL 6691 licences. The exclusivity period runs for 120 days and may be extended with Bonya’s consent.

The two licences, known as Twyfelskupje and Keishohe, are located about 55 km south-west of the town of Aus and about 65 km south-east of the deepwater port of Lüderitz. According to the company, both licence areas fall within a carbonatite and alkaline intrusive structural corridor, a geological setting associated with rare earths mineralisation.

Kendrick said on January 22 that the licence areas contain well-defined and high-grade targets within a larger prospective zone. The Twyfelskupje carbonatite complex forms a circular group of hills with a diameter of about 1 km. Historical channel and grab sampling at Twyfelskupje returned peak rare earth oxide (REO) grades of 4.47% and 4.18%, with an average REO grade of 3.12%, the company said.

Further historical laboratory work included inductively coupled plasma analysis conducted in Canada, which returned REE concentrations greater than 10 000 ppm for several elements, including neodymium, praseodymium and samarium. Kendrick said these elements were key components used in high-performance, high-temperature magnets.

At the Keishohe carbonatite complex, Kendrick said, exploration work indicated potential for three additional satellite near-surface occurrences. The company stated that some areas across the two licences were considered drill-ready and had previously been assessed using geophysical surveys and field exploration.

Work would begin immediately on assaying existing but previously unassayed drill core, together with further trenching and the identification of drilling targets. Kendrick said it would carry out technical work alongside legal, financial and regulatory checks during the option period before deciding whether to exercise the option.

Kendrick executive chairperson Colin Bird said the company viewed REEs as strategically important materials.

“Rare earths are globally accepted as new age strategic materials and these licences are located in Namibia, a country recognised for its support of the development of natural resource projects.

“The historical rare-earth values are higher than those generally reported in the industry and the high values of the magnetic elements are very encouraging since such elements are much sought after,” he said.

Bird added that prior work on the licences provided a foundation for further evaluation.

“The licences have areas which are drill-ready and have historically been well evaluated with geophysics and exploration fieldwork. We intend to accelerate our due diligence and technical preparedness in order to release the high potential of the project area. We will keep shareholders advised as our evaluation phase develops,” Bird said.

Under the terms of the option agreement, Kendrick may exercise the option at any time during the 120-day period by giving notice and entering into a definitive agreement to be negotiated with Bonya.

If Kendrick advises Bonya that it does not intend to proceed, neither party will have any further obligation to the other. The agreement cannot be terminated by either party during the option period, except if Kendrick elects not to continue.