Arafura Resources has announced a strategic agreement with a major Korean multinational, to potentially develop its Australian rare earths deposits in joint venture.
Arafura said today it had signed a non-binding memorandum of understanding with an unnamed Korean group, to “cooperate on long-term business arrangements in rare earths in Australia and Korea”.
The agreement covers Arafura’s Nolan’s rare earths project, which comprises two sites in South Australia and the Northern Territory.
Arafura plans to develop a rare earths mine at the deposit in the Northern Territory, with ore to be processed at a $1 billion facility in Whyalla, South Australia.
Part of the agreement will see the companies look at a range of financing options for the development of Nolans, particularly in Korea, Arafura chairman Ian Kowalick said.
“This highly successful group brings substantial experience in major construction projects, and its associated organisations have vast exposure to both the chemicals industry and rare earth end users in a key, globally significant market in Asia,” Mr Kowalick said.
“Furthermore, the group has agreed to work with Arafura to pursue project funding, which will be a key component of our overall project financing plan.”
The companies are also aiming to formalise a rare earths sales and purchase agreement, determine a plan for the development of processing facilities in Australia and Korean, and develop a technology-sharing strategy.
Mr Kowalick said the agreement was a ringing endorsement of the company and the Nolans project.
“Execution of an MOU with this key strategic customer confirms both parties’ intention to work together to develop a strong, long-term relationship in rare earths,” Mr Kowalick.
Arafura said a potential commercial agreement would cover a minimum of 3,000 tonnes per year of rare earth products from the Nolans project.
Today’s announcement is the latest in a series of moves by Arafura to obtain funding for Nolans, which is considered to be one of the world’s largest undeveloped rare earths deposits.
The Perth-based miner announced in March that it expected to ink a rare earths sales deal with Germany’s ThyssenKrupp , which would account for 15 per cent of its planned 20,000 tonnes of annual rare earths production from Nolans.
A $74 million rights issue priced at 60 cents per share was abandoned in November last year, when the company's share price fell below the offer price.
A share purchase plan completed in March priced at 29.4 cents per share raised $8.2 million.
At 12:45PM, WST, Arafura stocks were steady at 25 cents.