PERTH (miningweekly.com) – The share price of junior FYI Resources closed nearly 10% higher on Tuesday after the company announced that it was entering the rare earths sector.

FYI has inked a binding heads of agreement providing for the staged acquisition of Minhub Operations (MOPL), which is collaborating with potential suppliers of rare earths-rich mineral sands concentrate to provide a midstream processing solution via offtake of such concentrate, including from the heavy rare earth-rich Gippsland and Murray basins.

MOPL has, in turn, signed a non-binding cooperation agreement with ASX-listed Arafura Resources, under which Arafura could earn a 50% interest in the project by contributing funding towards a feasibility study, and notifying MOPL if it wishes to pursue the joint development of the facility.

Under the cooperation agreement, Arafura will have the first right of refusal to purchase xenotime and monazite from the Minhub project for further downstream processing at its Nolans project. Arafura and MOPL will also jointly investigate options for further processing of heavy rare earths sourced through the Minhub project.

“This is an exciting opportunity for FYI and demonstrates our commitment to be a key contributor to Australia’s critical minerals sector. While we continue to advance and de-risk our core high purity alumina (HPA) project, the planned acquisition of MOPL will create a great opportunity to be part of a unique integrated rare earth production strategy with Arafura that complements our production intentions as well as assists Australia’s sovereign supply objectives for critical minerals,” said FYI MD Roland Hill.

“MOPL and Arafura are exploring options for the development of the Minhub project, with a view to establishing an innovative, collaborative and potentially high return rare earths and mineral sands processing hub in Darwin, Northern Territory.

“Through FYI’s acquisition of MOPL, we can quickly move into the development and construction phases of Minhub with project partner Arafura. MOPL is well advanced in the engineering for the project and has well-developed existing relationships with the stakeholders, including upstream concentrate suppliers. FYI can leverage these assets and relationships, and its own capabilities, to create a project that will provide downstream value-add and help develop a rare earths supply chain in Australia to service local and global needs.”

Hill said on Tuesday that through working with Arafura, FYI aimed to deliver a reliable and consistent supply chain for rare earths, from Australian mineral sands producers to end-users such as wind turbine and electric vehicle manufacturers, enabling them to provide ethically sound options to their customers.

“With the acquisition of MOPL, our next step is to complete a feasibility study for the Minhub project early in the 2024 calendar year, with the goal of developing Minhub in parallel with Arafura’s Nolans project.”

Under the terms of the binding heads of agreement, FYI could acquire MOPL through a share purchase agreement, acquiring an initial 50% interest in MOPL, four-million of its own shares, and commitment to funding a minimum of A$450 000 towards the feasibility study of the processing facility.

Subject to the completion of a successful feasibility study, FYI could acquire the remaining 50% interest in MOPL for the issue of a further 15-million shares or the payment of A$2.5-million.

FYI has also agreed to co-fund up to A$1.1-million over a period of 18 months, with an additional co-funding of a provisional amount of A$500 000 for cost overruns.

The transaction is subject to an agreement being reached with Arafura in relation to the collaboration and co-funding of the feasibility study expenditure, an offtake option in relation to heavy mineral concentrates on terms agreed with key suppliers, an access agreement with the Darwin port and a binding lease over a proposed site, as well as a management contract with vendor Neil O’Loughlin, who will manage MOPL.