RareX retains exposure to upside in NSW copper-gold project via part sale
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Special Report: RareX is selling a majority stake in its NSW copper-gold tenements to focus on its rare earth projects.
With its focus on the Cummins Range rare earth project in Western Australia’s Kimberley region, it was only a matter of time before RareX (ASX:REE) moved to reduce its interest or divest its non-core assets.
And it couldn’t have struck a better deal, allowing it to retain exposure to the upside of the NSW projects while at the same time giving it more cash and freedom to focus on its flagship rare earths project.
RareX has reached an agreement to sell a 65 per cent interest in its NSW copper-gold tenements to Canadian explorer Kincora Copper.
Under the binding memorandum of understanding, Kincora has paid the company a non-refundable payment of $C25,000 ($27,650) in exchange for a six-week exclusive option to buy the project.
On exercise of the option, Kincora will pay RareX a further $C150,000 in cash and 14.95 million Kincora shares priced at 6.5 Canadian cents each.
Kincora has projects in Mongolia and the Lachlan Fold Belt in NSW and is well supported by global funds LIM Advisors and New Prospect Capital.
“After strong 3rd party interest we chose Kincora due to its focus on the region and proven track record of the team including the discovery of the giant Cadia Copper Gold Deposit,” RareX executive director Jeremy Robinson told Stockhead.
“This will allow RareX to focus on its rare earth projects and retain significant upside to any exploration success by Kincora.”
“The injection of cash into the company will allow us to accelerate or efforts at Cummins Range in what is set to be a year of increasing demand for rare earth magnets primarily in the use on the EV’s and wind turbines”
The Cummins Range project currently hosts Australia’s fourth largest rare earth resource of 13 million tonnes grading 1.13 per cent total rare earths oxide (TREO), or about 147 million kg of TREO.
More importantly though, a significant percentage of this resource is believed to consist of neodymium and praseodymium – high-value, critical elements that are used in the permanent magnets which are essential for electric vehicles and wind turbines.
RareX has previously flagged plans to produce a monazite concentrate, which is a rare earths-rich mineral that grades 30 to 60 per cent TREO.
This would be upgraded through gravity and flotation before being sold to pre-existing downstream processing plants.
Not only is this a proven business model, it also allows the company to avoid the prohibitively expensive, plus-billion dollar development route paved by producer Lynas (ASX:LYC).