Rare earths miner Lynas on Tuesday announced that Japan Australia Rare Earths (JARE), a special purpose vehicle established by Japan Organization for Metals and Energy Security (JOGMEC) and Sojitz Corporation, would invest some A$200-million into Lynas’ growth plans.
JARE, which is party to a long-term senior loan facility with Lynas, will also forego the historic $11.5-million interest due under the loan facility for a period from January 2016 until the end of December 2016, which was previously deferred by JARE.
JARE’s contribution will be made through a subscription for ordinary shares in Lynas at a subscription price which will be the higher of the five-day volume-weighted average price (VWAP) in the period immediately following this announcement and the five-day VWAP for the five day trading period immediately prior to this announcement.
Lynas told shareholders on Tuesday that JARE’s contribution will support the company’s ambitious growth agenda, and may include current and planned projects designed to increase production of light rare earth and heavy rare earth materials. As market demand increases, this funding will assist Lynas to meet its objective to grow with the market.
“Lynas has a huge appetite for growth and a large capital investment plan. This A$200-million capital investment from the Japanese government, through JARE, will boost our balance sheet and assist in assuring the delivery of our major growth projects,” said Lynas CEO Amanda Lacaze.
“JARE has been a valued and strategic partner to Lynas since 2011 and we welcome these new agreements which better reflect demand forecasts from the Japanese rare earths market. We also thank JARE for agreeing to forgo the historic interest payment of $11.5-million from 2016.”
Under the new agreements with JARE, in the event of competing demands with other markets, the Japanese market will receive the following priority supply rights over Lynas’ growth capacity until 2038.
Where Lynas’ annual production is less than 9 600 t/y neodymium-praseodymium (NdPr), priority supply up to 7 200 t/y would go towards Japan, to the extent that Lynas will not have any opportunity loss.
Once Lynas’ annual production exceeds 9 600 t/y NdPr and the forecast annual demand for NdPr from the Japanese market exceeds 7 200 t/y, Lynas and JARE will negotiate in good faith to agree the terms of the availability for the Japanese market.
Japan will also receive priority of supply of up to 65% of the dysprosium and terbium produced from Mt Weld feedstock, subject to any agreement with the US government and to the extent that no opportunity loss will be suffered by Lynas.
Lynas will further consider in good faith priority supply to the Japanese market of the remaining 35% of heavy rare earths from Mt Weld feedstock, subject to any agreement with the US government and to the extent there is no opportunity loss to Lynas.
