Ionic Rare Earths (ASX:IXR) has signed a conditional share purchase agreement with Rare Earth Elements Africa (REEA) under which it will acquire a further 34% interest in the Makuutu Rare Earths Project in Uganda.
The agreement will take Ionic’s ownership of the project to 94% once completed.
Under the agreement, Ionic will issue REEA 425 million fully paid ordinary shares and 350 million performance rights vesting on the satisfaction of the issue of the mining licence for the stage one development of Makuutu and Ionic’s volume weighted average price (VWAP) on the ASX for 30 trading days exceeding $0.05.
The conditions of the agreement include an additional 350 million performance rights vesting on the satisfaction of Ionic securing binding funding commitments to fully fund construction at Makuutu and any conditions precedent to drawdown being satisfied or waived, and the VWAP condition being satisfied.
Ionic notes that if all consideration rights vest in accordance with their terms, it will pay REEA a bonus of 135 million shares, a cash consideration of the bonus consideration shares based on the 5-day VWAP at the time, or a combination of cash and shares capped at 135 million Ionic shares.
This agreement is expected to be completed in Q1 2024.
Ionic says it expects this to be a ‘substantial’ step forward in progressing the financing and offtake discussions with multiple third parties who have expressed ‘strong’ interest in partnering with the company to access heavy rare earth products achieved through development.
Ionic Managing Director Tim Harrison says this is an ‘exciting’ time for the project as the company nears the production of its first mixed rare earth carbonate from the demonstration facility. He says by increasing its ownership of the project, it can advance and expedite discussions with investors, partners, and financiers.
“Makuutu can unlock near-term supply of heavy rare earths into the advanced manufacturing demand that far exceeds existing supply. It has immediate strategic value to these new supply chains forming.
With a dominant 71% magnet and heavy rare earth basket content, Makuutu stands tall as one of the most advanced heavy rare earth projects globally.”
“With a dominant 71% magnet and heavy rare earth basket content, Makuutu stands tall as one of the most advanced heavy rare earth projects globally”
Ionic Rare Earths is a rare earths-focused company that is set to become a miner, refiner, and recycler of sustainable and traceable magnet and heavy rare earths needed to develop net-zero carbon technologies.
As of 30 September 2023, the company had $5.693 million cash and cash equivalents at hand, according to its latest quarterly report. Post-quarter-end, the company conducted a placement to raise $5.9 million.
Write to Aaliyah Rogan at Mining.com.au
Images: Ionic Rare Earths