RareX locks in $50m facility to advance Mrima Hill if consortium proposal succeeds

• RareX secures $50m funding facility from international investment firm GEM Global Yield – facility is contingent upon the successful acquisition of Mrima Hill
• Funds will be used to advance development of Mrima Hill if its consortium secures the project
• The facility remains discretionary for RareX, does not preclude other financing mechanisms and could also be used to advance its flagship Cummins Range project in WA

Special Report: RareX has secured a $50m funding facility to accelerate development of the Mrima Hill critical minerals project in Kenya if its application is successful.

The share subscription facility provided by international investment firm GEM Global Yield offers the company a flexible, discretionary equity funding facility in two equal tranches.

GEM will make the first $25m available to RareX (ASX:REE) if and when the consortium with Iluka is successful in procuring Mrima Hill and a further $25m extension can be sought. Funds can also be used to advance its Cumins Range rare earth, gallium, scandium and phosphate deposit in WA’s East Kimberley region.

Mrima Hill, a globally significant rare earths and niobium project with additional potential for manganese and phosphate, is the subject of a proposal submitted by the RareX-Iluka consortium, along with supporting partners, including WSP, Curtin University and Ausenco. 

Subject to a successful application, the consortium will establish a special purpose vehicle (SPV) to pursue the acquisition, de-risking and development of Mrima Hill, and negotiate the terms of a formal shareholders agreement.

REE will take the lead in de-risking the project, focusing on socio-environmental matters followed by metallurgical and value chain engineering studies while ILU will hold a 25% stake in the SPV and offtake feed from the project for its Eneabba rare earth refinery in WA.

Proceeds from the facility can also be used to advance RareX’s Cummins Range project.

“This facility provides RareX with a flexible source of development capital,” managing director James Durrant said. 

“We are excited to be partnering with GEM who bring more than just funding support, but deep US government relationships. The facility will help accelerate the development of Mrima Hill if the consortium proposal is successful.”

Share subscription facility

Under the terms of the facility, REE will be able to drawdown funds by request and agreeing to issue fully paid ordinary shares to GEM or its nominee over a three-year drawdown period.

It controls the timing of such drawdowns and has no minimum drawdown obligation.

Each drawdown will occur at a price equivalent to 90% of the average daily volume weighted average price of its shares over the drawdown pricing period.

The volume of shares in a drawdown request is limited to 700% of the average daily volume of the preceding 15 trading days with GEM being able to subscribe for between 50% and 200% of the drawdown request volume.

Mrima Hill project

Mrima Hill, ranked among the top five undeveloped rare earth deposits in the world, is in Kwale County, Kenya, just 15km from the Indian Ocean coast, next to a sealed highway and close to geothermal power grids. It is also just 85km from the city of Mombasa.

Along with rare earths, the project is also prospective for phosphate, niobium and manganese. 

Mrima Hill currently has a non-JORC NI43-101 resource of 150Mt grading just under 4% total rare earth oxides with 0.7% niobium along with other metals.

Its strategic location contrasts sharply with a lot of rare earths projects, which are typically inland and landlocked.

Should the consortium succeed in acquiring the project, it could become a very meaningful project for Kenya and represent the initiation of a critical minerals hub in Mombasa.

This is supported by the potential to provide ore feed to Iluka’s Eneabba plant, which is currently under development.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.