ASX-listed Lindian Resources has signed a binding term sheet to secure 51% ownership of the Sareco mixed rare earth carbonite (MREC) processing facility in Kazakhstan.

The MREC facility was previously operated by a joint venture (JV) between Japanese company Sumitomo Corporation and Kazakh national operator Kazatomprom and will now be jointly operated by Lindian (51%) and its in-country joint venture partner RA-Group (49%).

The acquisition will transform Lindian’s business from concentrate production to high-value MREC production, which attracts premium playabilities with significantly enhanced economics.

Access to an existing, operational MREC cracking facility provides Lindian with a capital-efficient pathway into downstream processing, removing the need for hundreds of millions of dollars in investment, associated development risk and multi-year construction and permitting timelines, the company notes.

The Sareco facility is already built, operational and retains its core processing infrastructure, allowing Lindian to advance downstream capability in line with the Kangankunde mine development, in Malawi, with both expected to be producing product this year.

Lindian will transport high-quality feedstock supply from the Kangankunde rare earths mine, which is expected to be fully operational by the fourth quarter of this year, to the facility in Kazakhstan.

The transaction is valued at $15-million, of which most is deferred until the facility reaches commercial production of MREC. Lindian says the capital cost to have built a new processing facility would have been more than $500-million.

“Following completion, the transaction represents a step-change in Lindian’s strategy, securing a fully operational downstream cracking facility at a fraction of the development cost, with minimised development risk thus enabling the company to move beyond concentrate sales into higher-value MREC production.

“This materially enhances Lindian’s ability to capture downstream margins, broaden its customer base and strengthen its negotiating position across offtake, separation and strategic partnership discussions,” Lindian says.

The company points out that 12 500 t/y of monazite concentrate production is expected from Stage 1 development at the Kangankunde mine, which will be processed at Sareco using a conventional sulphuric acid bake, water leach, impurity removal and carbonate precipitation flowsheet. 

Lindian will be the JV manager and the board will comprise of four directors and a Lindian-elected chairperson.