Lynas signs $US325m funding deal

Lynas Corporation says it has finalised financing agreements with Japanese rare earths trading house Sojitz Corporation, which will be used as the basis of a $US325 million capital raising.

Lynas said $US250 million of the funds raised would be used to accelerate development of its Lynas rare earths project near Laverton.

The balance of the funds will be used for preliminary work on Lynas' Kangankunde deposit in Malawi, the purchase of additional equipment for Lynas' advanced materials plant and general working capital.

Under terms of the agreement, a minimum of 8,500 tonnes of rare earths produced by Lynas each year will be allocated to the Japanese market over the next ten years and a minimum of 8,500 tonnes rare earths products will be jointly marketed by Lynas and Sojitz in Japan.

Lynas also announced Sojitz would subscribe for $25 million Lynas shares at $2.12 per share.

A special purpose company established by Sojitz and the Japan, Oil, Gas and Metals National Corporation will provide Lynas with a loan for $US225 million.

And in addition to the Sojitz placement, Lynas said it would undertake a fully underwritten institutional placement and share purchase plan to raise a further $75 million.

The institutional placement will issue 26.6 million shares at $2.07 per share.

The issue price under the share purchase plan will be the lower of the price paid by institutional investors under the Institutional Placement and a 2.5 per cent discount to the volume-weighted average price of Lynas' shares on a date following the close of the offer, Lynas said.

The share purchase plan is being underwritten for an amount of $20 million by J.P. Morgan Australia.

"These landmark agreements allow Lynas to accelerate marketing to Japanese customers and enable phase two construction to be committed in April 2011 and be completed in 2012," Lynas executive chairman Nicholas Curtis said.

"The expansion in production will allow Lynas to take advantage of positive industry dynamics as the global supply of rare earths remains constrained."