ASX-listed mineral explorer Ionic Rare Earths (IonicRE) has reached a deal to further increase its stake in the Makuutu rare earths project in Uganda.

IonicRE already owns a 60% stake in the project, and with this transaction its total interest will grow to 94%.

The company will accomplish this by purchasing a 34% stake in local Ugandan operating entity Rwenzori Rare Metals, the Makuutu project owner, from Rare Earth Elements Africa. The remaining stake will be held by Ugandan Partners.

It expects the move to be a significant step towards financing and offtake negotiations with third parties.

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By GlobalData

These third parties are interested in partnering with IonicRE to access heavy rare earth elements that can be produced through the project’s development.

The Makuutu rare earths project covers around 298km². It is located about 40km from Jinja and 120km from the capital city of Kampala.

IonicRE claims that the project is nearing production of the first mixed rare earth carbonate from the project, in the first quarter of next year.

The company has agreed to issue 425 million of its shares along with 350 million performance rights, after it secures the mining licence for the project’s stage one development over retention licence (RL) 1693.

An additional 350 million performance rights will also be issued if the company secures binding funding commitments in both debt and/or equity to fully fund the project’s construction.

After the shares and rights are issued, Rare Earth Elements Africa will own around 9% of IonicRE’s share capital.

IonicRE managing director Tim Harrison said: “Makuutu isn’t just any rare earth project; it is a strategic asset, and importantly one of the most advanced ionic adsorption clay projects globally. Makuutu can unlock near term supply of heavy rare earths into the advanced manufacturing demand that far exceeds existing supply.

“It has immediate strategic value to these new supply chains forming. With a dominant 71% magnet and heavy rare earth basket content, Makuutu stands tall as one of the most advanced heavy rare earth projects globally. Positioned strategically, it’s poised to fuel the emerging supply chains across Europe, the US and Asia.”

Last month, the company obtained 92% of land access agreements for the mining licence application for stage one development at the project.

The Makuutu project is said to have similar characteristics to southern China ionic clay-type deposits, a source of heavy rare earth oxides.