In a worrisome week for worldwide economies, there were still pockets of good news to be found on the Australian market – even outside of the gold sector.
Against the backdrop of a tumultuous and worrisome week for worldwide economies, what with renewed fears of a recession in the US economy (exacerbated by a looming elevated trade war with rival global powerhouse China) and no peaceful resolution in sight to the protests in Hong Kong that are about to enter their eleventh week, there were still pockets of good news to be found on the Australian bourse, even outside of the predictable gold sector uptick.
Just days after announcing to the market that it had dumped its Chinese offtake partner, heavy rare earths producer Northern Minerals (ASX: NTU) entered into an agreement with new German partner thyssenkrupp, one of the world’s leading raw material distributors, for all product out of the Perth-based company’s Browns Range heavy rare earths operation in the Kimberley.
The news sent Northern Minerals shares up about 23 per cent over the course of the week to a high of 7.5 cents, with the stock holding firm at 7.3 cents at the end of Friday’s trade.
The offtake deal has taken immediate effect and includes all currently stockpiled product at Browns Range, with the two companies to also take a close look at working together on both implementing separating technologies at the project and on potential future expansions of Browns Range.
“Importantly for Northern Minerals, the new offtake agreement doesn’t include any price caps, giving the company full exposure to increasing dysprosium and terbium prices, which are up 60 per cent and 35 per cent respectively over the year to date,” Northern Minerals chief executive George Bauk said.
“The continued shift of new car sales to electric vehicles is gaining traction, with all major carmakers introducing EV variants of existing models over the coming years.
“With this shift, both car and component makers are accelerating plans to invest further down the production chain in order to secure surety of supply.”
thyssenkrupp Materials Trading chief Wolfgang Schnittker said the German company was looking forward to a successful collaboration between it and one of the few suppliers of rare earths outside of China.
“As the exclusive marketer of these high-quality products we have the opportunity to strengthen our customer relationships long-term and expand our positioning in this field,” he said.
Meanwhile, Northern Minerals has also launched a scoping study to investigate downstream processing of mixed rare earths from Browns Range into separated rare earth oxides.
What does that mean for Northern Minerals?
If adopted, the downstream processing technology will allow the company to produce separated rare earth oxides, including dysprosium oxide and terbium oxide, for sale directly to permanent magnet makers globally, as opposed to a mixed heavy rare earth carbonate that currently requires separation in China.
As part of the study, Northern Minerals will be sending intermediate mixed rare material to a laboratory in the United States owned by K-Technologies, which has been selected to undertake the testwork and scoping study, for the bench scale separation and purification testwork.
Initial results are expected in the December quarter.
“The investigation of separation technology is a natural extension of the existing pilot plant studies,” Mr Bauk said.
“This has the potential to take increased production and convert it into a significantly more valuable and sought-after end product.”
Also during the week, Northern Minerals received a further $7.8 million under its recently launched $30 million placement, taking the total amount raised so far to $19.7 million.
The balance is expected before the end of the month.
It has also entered into a subscription agreement with Baogang Group Investment to raise a further $20 million under a private placement, with the proceeds to be used to further bolster the company’s balance sheet.