Hudson Resources and Neo Performance Materials sign agreement for Sarfartoq REE Project

Located just 60 km from the international airport in Kangerlussuaq, the project is close to tidewater and a major port facility and is directly adjacent to some of the best hydroelectric potential in Greenland.

Neo, through a special purpose entity (SPE), plans to explore and develop the Sarfartoq Project to further diversify its global sourcing of rare earth ore and to expand the rare earth supply chains that feed Neo’s rare earth separation facility in Estonia. That facility was recently awarded a Gold Medal for its sustainable practices by EcoVadis, the well-respected global sustainability auditor.

Neo is also pursuing plans to break ground on a greenfield rare earth permanent magnet manufacturing plant in Estonia that is intended to provide European manufacturers with the permanent magnets needed for electric and hybrid vehicles, wind turbines, and energy-saving electric motors and pumps. The Sarfartoq Project also is a key element of Neo’s ‘Magnets-to-Mine’ vertical integration strategy.

Completion of the sale of the license (the transaction) is subject to various conditions, including approval from the Government of Greenland for the transfer of the License, expected to take approximately six months, and approval of the TSX Venture Exchange (the TSXV) on the part of Hudson.

Neo intends to assign its rights under the agreement to an SPE controlled by Neo that would hold the license and continue exploration and ultimately extraction of the rare earth elements on the project.

The key terms of the Agreement are as follows:

• Hudson receives a non-refundable initial cash payment of US$250 000 upon signing of the agreement.
• Upon receipt of approval from the Greenland government, Hudson will transfer the license to Neo or the SPE.
• Hudson will receive an additional US$3 250 000 upon closing of the transaction.
• If within five years from the date of closing of the transaction (1) the SPE transfers the license, or there is a change in control of the SPE pursuant to an acquisition or merger, then Hudson will receive 5% of the total consideration received by the SPE in connection with such transfer, or (2) the SPE conducts an initial public offering on a stock exchange (IPO), then Hudson will receive 5% of the fully diluted equity interests in the SPE immediately prior to the IPO.

The license covers the large Sarfartoq carbonatite complex that hosts Hudson’s ST1 REE project and the Nukittooq Niobium-Tantalum project. The REEs on the property have a high ratio of neodymium and praseodymium at 25 – 40% of total rare earth oxides (TREO). Hudson completed a preliminary economic assessment on the ST1 project in November 2011 that outlined a National Instrument 43-101 compliant resource containing 27 million kg of neodymium oxide and 8 million kg of praseodymium oxide.

3 km east of the ST1 Zone is another high-grade zone (ST40) that hosts one of the rare earth industry’s highest-known ratios of neodymium oxide to TREO – 45% – as shown by Hudson’s original mineralogical work.

Neo and the SPE expect to conduct additional exploratory drilling and other work to move the project forward to eventual commercial operation. Neo also intends to enter into an offtake agreement with the SPE with rights to purchase 60% of the ore or mineral concentrate produced from the project.

Jim Cambon, Hudson’s President, commented: “We are very pleased to have signed this agreement with a global leader in the production of advanced materials. As the world faces critical shortages of rare earth elements outside of China, we are pleased to help bring the Sarfartoq project a step closer to commercial reality. This deal provides a significant cash injection to the company and importantly, also gives Hudson shareholders potential significant upside in the future value of the Sarfartoq projects through equity or additional consideration.”

Constantine Karayannopoulos, Neo’s President and CEO, added: “Neo continuously pursues supply chain optionality in order to ensure that our customers have a dependable supply of engineered rare earth products. Once in production, this project will significantly increase the diversity of global rare earth supply for our processing facilities around the world. It also is another step in our Magnets-to-Mine vertical integration strategy. Based on our significant experience in assessing strategic mineral resources around the world, we believe the Sarfartoq resource in Greenland is a strategic asset that uniquely complements Neo’s European rare earth magnet growth strategy. This resource would supplement our current supply of rare earth concentrate from Energy Fuels in the US. We are very confident and supportive of the Greenlandic government’s vision for sustainable-focused mining as the driver of their economic development, job creation, and growth. We are looking forward to working with Greenland to responsibly develop this resource into a producing mine, of which Neo would be the primary customer.”

Read the article online at: https://www.globalminingreview.com/finance-business/24082022/hudson-resources-and-neo-performance-materials-sign-agreement-for-sarfartoq-ree-project/