Iluka and Northern Minerals sign rare earths supply partnership

Subject to Northern developing Browns Range, Northern’s concentrate will be a valuable additional source of feedstock for Iluka’s 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.

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

In addition to the initial investment:

• Iluka has committed to provide additional equity funding towards Browns Range post FID through a further placement, subject to certain conditions.
• subject to shareholder approval, Iluka and Northern have agreed to the grant of put and call options over additional Northern shares. This provides Iluka with a pathway up to an ultimate 19.9% shareholding in Northern.

The supply agreement between Iluka and Northern covers all Browns Range production up to 30.5 kt of REO equivalent xenotime concentrate; at a targeted delivery profile building over the first four years post commissioning (of Browns Range) to up to around 5 ktpa REO; at a targeted average grade of 25% REO.

Pricing of the concentrate will include a fixed price component based on contained REO and an upside price sharing mechanism based on realised selling price.

The Managing Director of Iluka said:

Iluka’s agreement with Northern is 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’s concentrate would require export overseas prior to refining to produce separated REOs. This is no longer the case. Iluka’s agreement with Northern 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 for downstream consumers of rare earths; and the value addition will occur in Australia for the first time.

Read the article online at: https://www.globalminingreview.com/mining/28102022/iluka-and-northern-minerals-sign-rare-earths-supply-partnership/