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Astron Corporation, Energy Fuels on cusp of $206m Victorian zircon deal

Trial pit mining at Astron Corporation’s Donald rare earths and mineral sands project in Victoria.

United States-listed Energy Fuels Resources is closing in on a decision on whether to plunge $206 million into Astron Corporation’s (ASX: ATR) massive Donald project in Victoria that boasts the biggest zircon deposit on the planet.

Astron says talks between the two companies are in their “final stages” in relation to the project that boasts an impressive 825-million-tonne resource going 4.5 per cent heavy-mineral sands, with 17.8 per cent zircon, 7.2 per cent rutile, 28.4 per cent ilmenite, 21.1 per cent leucoxene and 1.7 per cent monazite. An exclusivity agreement between the pair has today been extended to May 19.

It comes amid an aggressive global expansion push by Energy Fuels, which just a fortnight ago agreed to acquire Base Resources and its Toliara mineral sands project in Madagascar in a deal worth $375 million. Monazite ore from the project is set to form the cornerstone feedstock for Energy Fuels’ mammoth White Mesa mill in Utah.

Energy Fuels, the owner of the only conventional operating uranium mine in the US, is offering Astron a mix of cash and shares in its tilt at obtaining a 49 per cent share in the Donald operation that also has a serious side-dish of both light and heavy rare earths. The proposed joint venture (JV) would also provide Energy Fuels with rights to all the rare earths from the project, while Astron would maintain 51 per cent ownership and the rights to the heavy minerals (HM) concentrate.

The impressive project that sits about 250km north-west of Melbourne in Victoria’s Murray-Darling Basin, is expected to churn out $3.87 billion in free cash during its estimated 41.5 year mine-life. The offer consists of $180 million in cash and $26 million of Energy Fuels shares, providing Astron with exposure to uranium – one of the world’s hottest commodities right now.

All mining approvals for Donald have been secured and Astron’s recent definitive feasibility study (DFS) for the first phase of the operation shows an after-tax net present value (NPV) of an enticing $852 million.

Phase one of the project shows stellar margins, with the first five-year average annual revenue figure coming in at $348 million a year against impressive earnings before interest, tax depreciation and amortisation (EBITDA) of $154 million a year. That margin provides a significant buffer against unexpected product price fluctuations.

Astron says the percentage revenue split between rare earths and mineral sands during phase one of the project will be 58-42 in favour of the former. As part of phase one, the proposed JV will mine 7.5 million tonnes of ore per year to produce about 200,000 to 250,000 tonnes per year of HM concentrate and about 7000 to 8000 tonnes per year of rare earths concentrate for 41.5 years.

Once the company’s phase one production is operating efficiently, the JV will look to double down on its ore production to mine 15 million tonnes per year and pump out about 400,000 to 500,000 tonnes of HM concentrate annually, in addition to 13,000 to 14,000 tonnes per year of rare earths concentrate.

Astron says the rare earths will be processed at Energy Fuels’ White Mesa facility, in what the company calls a “western rare earths supply chain”, which aligns with the Australian Government’s Critical Minerals Strategy and the US Inflation Reduction Act. The company is pushing towards a final investment decision for the first phase at Donald and management has indicated that it expects to tick that box in September.

The Donald project contains both the more traditional electric vehicle (EV) “light” rare earths of neodymium and praseodymium and the even more lucrative “heavy” rare earths, dysprosium and terbium that are a key part of the industrial magnets required for an EV engine.

Having a hulking JV partner such as the US$900 million (AU$1.36 billion) market-capped Energy Fuels in its corner may just provide Astron with the best opportunity to kick some really big goals at its Donald project.

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