Australian mining company Iluka has signed an agreement with rare earth miner Northern Minerals for the delivery of rare earths concentrate from the latter’s Browns Range project in Western Australia.
Under the agreement, Northern will supply all concentrate from the Browns Range project to Iluka, until the contained rare earth oxide (REO) reaches 30.5kt.
Iluka said the concentrate from the project would be used as feedstock for its fully integrated rare earths refinery at Eneabba in Western Australia.
As part of the agreement, Iluka will initially invest $20m in Northern. This will include $15 through a convertible note and $5m in share placement.
The proceeds will be used by Northern to complete a definitive feasibility study (DFS) to help make a final investment decision (FID) over the next year on the Browns Range project.
Iluka could also be issued an additional 230 million Northern shares for a further investment of A$13.6m as part of the funding arrangements between Northern and Iluka, following an FID on the project.
The funding also covers a call option/put option arrangement, whereby Iluka will receive an additional 653.3 million Northern shares, each at a maximum price of 6c.
The call option could be exercised by Iluka at any time until the end of December 2025. This is conditional upon the completion of diligence on the project’s DFS by Iluka and a positive FID for the Browns Range project.
Upon deal closing, Iluka’s shareholding in Northern would be up to 19.9%.