Northern Minerals (ASX: NTU) has entered into a sales agreement for 100% of the pilot plant production from the Browns Range Heavy Rare Earths Project with a subsidiary of the Guandong Rare Earths Group. The Agreement includes a $10 million pre-payment, receivable in early 2018, representing 15% of the expected sales revenue. The remaining 85% will be paid against delivered shipments.
- Sales Agreement executed for 100% of Browns Range heavy rare earths Pilot Plant output.
- Agreement with Lianyugang Zeyu New Materials Sales Co Ltd, a 51% owned subsidiary of Guangdong Rare Earths Group.
- Sales Agreement includes A$10 million pre-payment, receivable in early 2018 and 40 million unlisted options at $0.25 exercise price
- Upon receipt of funds, sales partner representative to join Northern Minerals’ Board.
Australian heavy rare earths developer, Northern Minerals Limited (ASX: NTU) is pleased to announce that it has entered a Sales Agreement with Lianyugang Zeyu New Materials Sales Co Ltd (JFMAG), a 51% owned subsidiary of Guangdong Rare Earths Group. Guangdong Rare Earths Group is a 100% subsidiary of Guangdong Raising Asset Management (GRAM).
Guangdong Rare Earths Group are one of the 5 major heavy rare earth companies in China which are vertically integrated producers.
The milestone Sales Agreement covers all planned production from the Browns Range Pilot Plant. The Sales Agreement terms are based off CIF Incoterms 2010 with pricing referenced from a 2-month average of quoted prices on Asian Metals and Beijing Ruidow Information Technology.
Under the Sales Agreement, prior to the first shipment of rare earth carbonates, JFMAG will make a pre-payment to Northern Minerals of A$10 million. The prepayment covers approximately 15% of the expected value of production during the Pilot Plant phase, with the remaining 85% to be paid to Northern Minerals over the course of the agreement based on volumes delivered. JFMAG or its nominated beneficiary will be issued 40 million unlisted options at $0.25 exercise price which can be converted to ordinary shares to offset the pre-payment of A$10 million.
Following execution of the Sales Agreement, Northern Minerals will issue 14 million Ordinary shares to JFMAG or its nominated beneficiary.
Mr George Bauk, Northern Minerals’ Managing Director and CEO, said: “This milestone sales agreement underpins the Browns Range Pilot Plant development. The excellent terms we have agreed provide us with a transparent pricing mechanism and guaranteed demand for our products.
“The Sales Agreement is one of the final milestones that now allows us to move towards a Final Investment Decision. We look forward to considering and announcing this decision shortly.”