Kendrick Resources has signed a definitive agreement with Bonya Exploration for a 70% stake in two exploration licences in Namibia.
These licences, EPL4458 and EPL 6691, hold potential for the development of a rare earth mining project.
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The collaboration stems from reconnaissance and evaluation efforts by Kendrick’s team.
Discussions are ongoing with Bonya to determine the most efficient strategies for evaluating and developing the rare earth carbonatites within the licences.
Under the terms of the agreement, Kendrick will pay Bonya and its shareholder, Wilhelm Shali, $300,000 (£222,344) in cash and issue 22 million ordinary shares.
An additional $500,000 and three million shares will be issued if the licences receive an 18-month extension.
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By GlobalDataShali, a Namibian businessman with a background in exploration and mining, will join Kendrick as a non-executive director upon completion of regulatory checks.
Kendrick is set to fund work needed to advance the project to a preliminary economic feasibility study (PEFS).
After this phase, Bonya plans to establish a special purpose vehicle (SPV) to drive project development and secure further funding.
The SPV will be wholly owned by Bonya as part of a joint venture between the parties.
The partners are entitled to a 30% carried interest concerning exploration and production costs linked to the licences.
Upon commercial production, Kendrick will initially retain 60% of cash flows until all advanced funds are recovered, with the remaining 40% distributed according to equity interests.
A 2% net smelter royalty will also be applicable. In the event of a sale involving the licences or Bonya’s assets, Kendrick will receive half of any proceeds.
Kendrick Resources executive chairman Colin Bird said: “We are pleased to announce that we have exercised our option on the two rare earth licences close to Luederitz in Namibia. Our technical due diligence has been most satisfactory, demonstrating that the projects have very high potential relative to other global rare earth projects.
“We are particularly pleased with the huge amount of data that we will inherit including actual drill-holes, unassayed core, numerous trenches and geophysics, together with basic metallurgical test work.”
