Hasting Technology Metals has taken a giant leap towards developing its world-class Yangibana rare earths project in Western Australia’s Gascoyne region after locking in a $100 million equity funding deal.
The eye-popping raising by Hastings (ASX: HAS) is perfectly timed amid soaring prices of neodymium and praseodymium (together, NdPr), the two key rare earths elements found in high volumes at Yangibana, and equally high investor interest in the next Australian producer to deliver high-quality concentrate into the electric vehicle market.
The price of NdPr oxide has soared from about $US70,000 a tonne a month ago to almost $US86,000t, according to analysts including at Shanghai Metals Market and London-firm SP Angel.
Australia’s only substantial producer of rare earths, Lynas Corp (ASX: LYC), released its market-pleasing half-year profit result yesterday and spoke of prices that had reached $US55,000/t two months ago – further highlighting the swift re-rating of the NdPr sector.
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Already on the up amid the post-pandemic resurgence in the electric vehicle market, the NdPr price has benefited further from concern the world’s dominant supplier, China, will curb exports.
It has prompted a flurry of investor capital to try to pinpoint where the next non-Chinese source of quality NdPr concentrate will come from, and much of the interest has zeroed in on Hastings’ Yangibana project.
Hastings had last week flagged a big raising – of $57.2 million and potentially an extra $15 million – only to surprise investors this week with news it had secured support for $100.7 million.
The massive show of capital markets support includes a significant maiden investment from top-tier fund manager L1 Capital – a successful backer of Lynas Corp – that will leave L1 as a substantial shareholder in the $300 million Perth-based Hastings.
The raising, priced at 19¢ a share, is split into two tranches with the second, of $43.5 million, to be approved by Hastings shareholders at an extraordinary meeting on March 29.
“Hastings has been overwhelmed with the strong support from Australian and international investors in our Yangibana rare earths project,” executive chairman and substantial shareholder Charles Lew said.
“Their support in the placement underscores the market’s belief that Yangibana will become Australia’s next rare earth producer.
“Yangibana is a world-class rare earths project with an exceptionally high NdPr:TREO (total rare earths oxides) ratio and is slated to start production at a time when global demand for neodymium and praseodymium is growing rapidly on the back of unprecedented demand for electric vehicles.
“Securing this quantum of equity capital at this point allows Hastings to advance the Yangibana Project towards first production with high confidence.
“We welcome new investors to the Hastings register and look forward to seeing Yangibana brought into production. The Hastings team are focused on the remaining key workstreams, including the project’s Mineral Resource upgrades to grow project life and improve financial metrics further, finalising additional offtakes and concluding debt financing.”
The company has placed a $449 million capital cost on developing Yangibana into a 13-year-long producer of 15,000 tonnes annually of mixed rare earths carbonate (MREC), featuring industry high levels of NdPr. Based on 2019 figures that are being revised pending a mineral resource upgrade, Yangibana would offer an internal rate of return of 21% and a payback of capital within 3.4 years.
The 2019 figures are being upgraded as part of an aggressive timetable set by Hastings to complete Yangibana’s mineral resource and mine study schedules alongside debt financing and offtake deals with blue-chip customers including ThyssenKrupp over the next handful of months.