The Foreign Investment Review Board has approved a $30m Chinese investment in ASX listed Northern Minerals, clearing the way for rapid development of the company’s Browns Range heavy rare earths pilot plant in W.A.
Northern Minerals announced this week that FIRB had raised no objections to the $30m investment by Huatai Mining, which is part of Chinese coal trader Shandong Taizhong Energy.
Under the deal, which has already seen Northern Minerals receive a down payment of $3 million, the FIRB approval was the final condition precedent for an additional $27m to flow from Huatai Mining to the company.
The first of the three additional $9m payments is due by the 28th of October this year and the second and third $9m tranches are due in November and December respectively.
The Huatai investment has been a game changer for Northern Minerals and has helped boost the junior’s share price by 113% from 6.8 cents when the deal was announced on 2 August to 14.5 cents this week.
Funds from the first $9m tranche will enable Northern Minerals to begin pre-commitment works for construction of a pilot plant at Browns Range, including mine planning, drilling, water supply, engineering design and an extension of the accommodation camp.
Huatai is set to emerge with up to 31% of Northern Minerals and will be a key partner in developing Browns Range as the world’s first significant producer of dysprosium outside of China.
Browns Range is also the first mine in Australia focused on production of the heavy rare earth, dysprosium, which trades at two to three times prices for light rare earths.
Heavy rare earths are critical ingredients in high-end, very large permanent magnets used in electric vehicles, wind turbines, air conditioning compressors, fan drives and a host of other industrial applications.
Northern Minerals’ Managing Director, George Bauk, said “The execution of the Huatai Mining transaction is an important step in the development of Browns Range as a globally significant dysprosium operation.
“Our project team has a clear objective and focus of delivering the pilot plant operation at Browns Range before the end of 2017. This transaction keeps us on track for a final investment decision and construction commencement in early 2017.”
By Matt Birney
