Shares in Astron (ASX:ATR) have jumped this morning after the company signed a non-binding memorandum of understanding (MoU) with Energy Fuels Resources (USA) to jointly develop the Donald Rare Earths and Mineral Sands Project in Victoria.
The MoU is the first step towards establishing an incorporated joint venture covering tenements MIN5532 and RL2002, which together form the Donald deposit — a reserve measuring 825 million tonnes at 4.5% heavy minerals.
According to an initial scenario outlined in the MoU, the joint venture will mine approximately 7.5 million tonnes of ore annually to produce between 200,000 and 250,000 tonnes of heavy mineral concentrate (HMC) each year, as well as 7,000 to 8,000 tonnes of rare earth element concentrate (REEC).
Those figures are expected to double after a phase one commercial production period is reached, with Astron targeting 15 million tonnes of mined ore to produce 400,000 to 500,000 tonnes of HMC and 13,000 to 14,000 tonnes of REEC each year.
Structurally, the MoU allows Energy Fuels to invest $180 million to earn a 49% interest in the joint venture, which is expected to cover most of the capital requirements for the construction of phase one.
With a 51% stake, Astron will act as the manager of the project, while certain major decisions will require approval by both parties.
Once established, the joint venture will allow Energy Fuels to enter an offtake agreement for 100% of the Donald deposit’s REEC production, based on market prices, while Astron will have the right to enter its own offtake deal for 100% of the HMC, also at market prices.
“The proposed joint venture will establish a western rare earth value chain that is aligned with the Australian Government’s Critical Minerals Strategy, whereby rare earths from the Donald deposit will be used to supply Energy Fuels’ White Mesa Mill in Utah, one of two operating rare earth processing facilities in North America,” Astron said in a statement this morning (28 December).
“The proposed joint venture will establish a western rare earth value chain that is aligned with the Australian Government’s Critical Minerals Strategy…”
The MoU allows for an exclusivity period expiring on 1 March 2024 during which Energy Fuels will have time to complete its due diligence and draw up definitive agreements in collaboration with Astron.
Those agreements are also expected to provide Energy Fuels with a first right of refusal for participation in the development of Astron’s Jackson deposit which, combined with the Donald deposit, forms the Donald Rare Earths and Mineral Sands Project.
In addition to the Donald Project, Astron runs a mineral sands trading operation in Shenyang, China, and owns and operates a zircon and titanium chemicals research facility in Yingkou, China, which includes a mineral separation and processing facility.
Shares in Astron were up 32.97% to $0.60 as of 10:15am AEDT.
Write to Oliver Gray at Mining.com.au
Images: Astron
