Nick Curtis strikes first big deal of rare earths comeback in Northern Minerals tie-up with Iluka
Former Lynas boss Nick Curtis has struck the first major deal in his rare earths comeback, with Iluka Resources and Northern Minerals agreeing an offtake deal.
Lynas founder Nick Curtis has struck his first major deal since returning to the rare earth sector, with Northern Minerals cutting an agreement that could help underpin Iluka Resources entry into the rare earth market.
Iluka and Northern Minerals announced the deal on Wednesday, with Iluka to initially pump in up to $20m to the struggling explorer to help complete feasibility studies on Northern Minerals’ Browns Range deposit.
In turn, Iluka will get the right to buy the first 30,500 tonnes of rare earth oxides produced from the project, if it proves to be economically feasible.
The deal puts Northern Minerals back on track towards the development of the Kimberley deposit, and hands Iluka access to a key selling point for the $1.25bn rare earth refinery it plans to build in Western Australia.
China’s dominance of rare earth mineral refining has been a point of strategic as well as economic concern as tensions have mounted over recent years.
But while China controls about 80-85 per cent of the total rare earth market, with Lynas its only real external competitor, its dominance of the production of so-called “heavy” rare earths – such as dysprosium and terbium – is almost total. Dysprosium and terbium are critical ingredients in the powerful “permanent” magnets needed to run wind turbines and electric vehicles.
Northern Minerals has long boasted that Browns Range is rich in the two minerals and Iluka boss Tom O’Leary said on Wednesday that concentrate from the project, when added to Iluka’s existing production plans from tailings at its Eneabba mineral sands hub, offered the company a competitive advantage in the rare earth space.
“Just as Iluka’s leading position in zircon has underpinned our competitive advantage in mineral sands over the past decade, the production of high-value heavy REOs in Australia will be an important differentiator for our rare earths business in the decades to come,” he said. Iluka will take $5m worth of Northern Minerals stock at 4c a share, and offer the struggling junior a $15m loan through a convertible note to complete the first part of the transaction.
The mineral sands major could pump as much a $73m into Northern Minerals as Browns Range edges closer to production.
The deal is Mr Curtis’s first major move since joining Northern Minerals in June. The Sydney-based businessman is credited with establishing Lynas as the world’s only major source of refined rare earth oxides outside of China. He joined the company in 2001 and drove construction of Lynas Mt Weld mine in WA, as well as its Malaysian refinery.
Even before it entered production Lynas was once worth as much as $3.5bn as China cracked down on rare earth exports in 2011. But Lynas plans fell afoul of protests in Malaysia and then China’s decision – as Lynas finally entered the market – to remove export restrictions and push down global pricing. Mr Curtis stepped down as Lynas chairman in 2014 as part of a reset following an emergency raising that year.
The Northern Minerals and Iluka deal was not the only movement in the rare earth space on Wednesday, with exploration minnow WA1 resources up an extraordinary 418 per cent on the back of a new discovery in WA.
WA1 shares closed up 56.5c to 70c after announcing a potentially significant high-grade rare earth and niobium discovery in the northeast of WA. Iluka shares closed up 15c to $9.35, with Northern Minerals up 0.2c to 4.3c.
