Lindian Resources has entered a strategic partnership with Iluka Resources to develop its flagship Kangankunde rare earths project in Malawi and establish a revenue stream.
The partnership encompasses a binding $20m (A$30.64m) loan facility and a 15-year full-form offtake agreement for the offtake of 90,000 tonnes (t) of rare earth monazite concentrate from the Kangankunde project, amounting to 6,000t annually.
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Additionally, Iluka holds the right of first refusal to participate in the phase two expansion of Kangankunde, which could involve up to an additional 375,000t of concentrate, or 25,000t per annum for 15 years.
This is contingent on Iluka offering to fund 50% of the expansion costs and accepting Lindian’s revised commercial terms, laying a foundation for further growth.
Iluka’s due diligence and customary conditions precedent remain pending for the loan’s finalisation.
The rare earth monazite concentrate produced at Kangankunde will be fed to the fully integrated Eneabba rare earths refinery facility in Western Australia (WA), a project co-funded by the Australian Government.
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By GlobalDataThis strategic partnership enhances Kangankunde’s position as one of the premier and most developed rare earth ventures globally.
The loan, with a five-year tenor and a grace period until project completion, carries a weighted average interest margin of approximately 9.7%.
The Kangankunde project is anticipated to produce premium monazite concentrate over a 45-year life of mine.
With a high-grade deposit yielding a 55% total rare earths oxide-grade monazite concentrate, the project has garnered interest from multiple parties for long-term partnerships.
Lindian is also progressing with its phase two expansion study, aiming to significantly increase production capacity.
Lindian executive chairman Robert Martin said: “These agreements will provide a multi-decade source of feed for Iluka’s Eneabba refinery facility in Western Australia, backed by the Australian Government. The floor price protection, no financial ratio covenants and offtake-linked terms are fit-for-purpose for the company, ensuring the long-term interests of shareholders are enhanced.
“The funding and offtake agreements represent a major de-risking milestone for stage one of our Kangankunde rare earths project, providing increased confidence for all our stakeholders by showing a clear pathway to production.
“The larger stage two production expansion has also been significantly de-risked, with Iluka having a ROFR [right of first refusal) for up to an extra 25,000tpa of product if it makes an offer to fund 50% of the capital cost.”
