Australia’s next rare earths producer Hastings Technology Metals Ltd (ASX: HAS) has received significant interest from a number of different parties, both in terms of debt and strategic equity.
Hastings is developing the world-scale Yangibana rare earths project in WA’s Gascoyne region. Yangibana hosts some of the highest grades of key battery materials neodymium and praseodymium (together, NdPr) among the next generation of rare earths projects.
A process for non-recourse project finance funding for the Yangibana project was initiated in early 2021, with the Northern Australia Infrastructure Facility, German state bank KFW IPEX-Bank and Finland’s export credit agency Finnvera Oyj being the three government agencies approached by Hastings with a view to providing a senior debt facility totalling A$400m.
In February this year, NAIF provided a board-approved loan support for A$140m subject to pre-completion conditions. KFW IPEX-Bank has provided conditional credit approval for up to US$130 million in ECA-covered and uncovered/commercial project finance debt. In addition, the company explored a fixed interest debt option and undertook a US$350 million Nordic Bond market-sounding exercise, which exceeded expectations.
However, in recent weeks, Hastings received alternative funding proposals from strategic parties that are currently being evaluated and which may substantially alter the proposed final funding and debt-equity structure for Yangibana.
With the strong projected demand growth for permanent magnets and therefore NdPr over the next decade, some of the funding discussions revolve around the opportunities emerging for Hastings to participate in downstream processing facilities in Europe.
Accordingly, the board is evaluating proposals arising out of its strategic financing discussions, which remain preliminary in nature and subject to due diligence and final documentation. There are inherent complexities in these discussions and proposals, hence there is no guarantee that any strategic financing proposal will result in a transaction acceptable to the board or which the board would be prepared to recommend to Hastings shareholders.
Hastings has appointed Barrenjoey as financial advisers and King & Wood Mallesons as its corporate legal advisers.
Hastings is working towards bringing Yangibana into production as quickly as possible. Early infrastructure work is well advanced having commenced in September 2021, with several significant earthworks milestones having already been met.
Orders for long-lead equipment items such as the acid bake kiln, off-gas scrubber and SAG mill have already been placed.
Hastings anticipates, on the closing of financing, to commence construction of the beneficiation plant in 4Q 2022 and the hydrometallurgy plant at Onslow in 1Q 2023, which will allow for commissioning to start in late 2024.
At the European Raw Materials Alliance conference in Berlin in May this year, the Europeans identified an aspirational target of 30% of NdFeB magnets to be manufactured in Europe by 2030.
Hastings’ European-centric strategy and existing agreements with Schaeffler and thyssenkrupp and other commercial prospects currently in discussions have positioned the company to be a reliable long-term source of supply of rare earth feedstock to the European permanent magnets industry.
Hastings has recently commenced early stage discussions with a number of companies around opportunities in Europe to partner on downstream processing of rare earths oxides feeding into NdFeB magnet production.
A partnership of this nature would enable Hastings to participate in the end-to-end mine to magnet value chain with feedstock from Yangibana being converted into permanent magnets in Europe. This further enables the company to play its part in the global decarbonisation and electrification thematic.
Hastings has also released an updated investor presentation.
