Peak and Shenghe extend partnership to fund Tanzania REE mine
Australia’s Peak Rare Earths has signed a nonbinding term sheet with Chinese miner Shenghe to support the development and funding of the Ngualla rare earths element (REE) project in Tanzania.
The term sheet contemplates Shenghe acquiring 50% in the entity that holds an effective 84% of the Ngualla project by subscribing for new shares worth A$96-million.
The implied valuation, on a post-transaction basis, is A$0.36 a share, which Peak points out is a 100%-plus premium to its current share price on the ASX.
Upon completion, Peak will not be required to contribute any additional equity funding towards the development of the Ngualla project. The difference between the project’s total development costs and Shenghe’s A$96-million investment will be funded via a Shenghe arranged debt facility, which is expected to be on terms more favourable than a typical international project financing facility.
Peak executive chairperson Russell Scrimshaw said that the Ngualla project was positioned to become the world’s next rare earth operation.
Shenghe executive chairperson Huang Ping shared this view, stating that the Chinese major believed the project was “the premier undeveloped rare earth project in the world”.
It has estimated ore reserves of 18.5-million tonnes grading 4.8% total rare earth oxides (TREOs) for contained TREOs of 887 000 t. Mineral resources are estimated at 214.4-million grading at 2.15% TREOs for 4.61-million tonnes TREOs.
The project has a mine life of about 20 years, based on only ore reserves.
Run-of-mine throughput is estimated at 800 000 t/y dry ore.
Rare-earth ore mined from the Ngualla deposit will be processed through a concentration plant at the mine site. Production is an estimated 37 200 t/y of concentrate.
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