Arafura Rare Earths is poised to cosy up with FYI Resources – which is making a bid for independent critical minerals processor Minhub Operations (MOPL) – to investigate the joint development of a midstream mineral sands rare earths processing facility in the Northern Territory.
FYI says it has signed a binding heads of agreement for the staged acquisition of 100 per cent of MOPL. The privately-owned outfit was specifically established to develop, construct and operate a mineral processing plant in Australia to facilitate the development of rare earths-rich mineral sands deposits.
Cementing its intent, FYI handed over $200,000 for the exclusive right to deal with MOBL during a three-month period after signing to undertake due diligence on what is known as the Minhub project. MOPL will use the funds to continue with the project’s development.
To further seal the deal, FYI will hand over 4 million of its shares and commit a further $450,000 towards a feasibility study to earn a 50 per cent piece of MOPL. Upon completion of a successful feasibility study, the company can then mop up the remaining 50 per cent by issuing another 15 million shares or by forking out $2.5 million in cash – at the vendor's discretion.
MOPL, as a 100 per cent subsidiary of FYI, would act as project manager throughout the feasibility stages and operate the project once in production.
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Arafura is pleased to explore opportunities associated with the Minhub Project as a possible pathway to expand downstream processing at the Nolans Project, further strengthening the position of the Northern Territory as a key contributor to the global clean energy revolution. Arafura Rare Earths managing Director Gavin Lockyer
Rare earths are among the key building blocks of an electrified economy. Only a handful of processing hubs exist outside of China, presenting significant geopolitical challenges to companies seeking entry into the burgeoning rare earths market.
Prior to the announcement, Arafura and MOPL shook hands on a non-binding cooperation agreement to investigate the joint development of the Minhub mineral sands processing facility in Australia’s Top End. Under the agreement, Arafura can earn up to 50 per cent in the Minhub project by chipping in an equal share toward the feasibility study, which is slated for completion early next year and will formalise the partnership agreement.
For its troubles, Arafura has the first right of refusal to purchase xenotime and monazite, neodymium (Nd) and praseodymium (Pr) from the Minhub project for further downstream processing at its Nolans operation. The duo is also investigating further options for processing other heavy rare earths such as dysprosium and terbium.
Moving forward, FYI has agreed to co-fund up to $1.1 million towards the Minhub project over 18 months, with Arafura meeting half of the costs.
Nolans boasts a resource estimate of 56 million tonnes at an average 2.6 per cent rare earths oxides and 11 per cent phosphate.
A key pillar of the project will be downstream processing, with Arafura signalling clear intent for a beneficiation, extraction and separation plant – something of a rarity in Australia’s mining industry to date.
The project has been estimated by Arafura to cost $1.6 billion, with a net present value of $2.4 billion and an internal rate of return of 19.3 per cent over a 38-year mine life.
Arafura has already signed offtake agreements to supply NdPr oxide to major motor vehicle manufacturers Hyundai and Kia, and with American giant General Electric to produce wind turbines.
With development rapidly progressing at its own world-class rare earths project, Arafura is looking further afield to secure additional feed for its downstream processing hub at its Nolans project. As FYI makes a bid for MOBL, Arafura looks to have inadvertently secured a solid partnership with a motivated purveyor of critical minerals.
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