The Foreign Investment Review Board (FIRB) has given Astron Corporation (ASX: ATR) and United States-listed Energy Fuels Resources the green light to develop their huge Donald rare earths and mineral sands joint venture (JV) project in Victoria’s Woomera region.
The two firms will now work together to develop the project into a long-life bulk-scale mine after the FIRB confirmed it had no objection to the US$700 million (AU$1.03 billion) market-capped Energy Fuels entering a binding farm-in and JV arrangement with Astron, which says Donald boasts the world’s biggest zircon deposit.
The project contains more than a whopping 2.6 billion tonnes of mineral resources at a grade of 4.4 per cent heavy minerals (HM) and consists of the Donald and Jackson deposits. The primary focus of the JV is to develop the Donald deposit, which features an impressive 825 million-tonne resource going 4.5 per cent HM 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.
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 comes with a serious mix of both light and heavy rare earths. The offer consists of $183 million in cash towards the phase-one development and US$17.5 million (AU$25.8 million) in Energy Fuels shares, providing Astron with timely exposure to uranium – a commodity expected to be in strong demand globally in the decades ahead.
As a result of the JV, the US entity will obtain all rights to Donald’s rare earths and plans to process the material at its White Mesa facility in Utah, in what the company calls a “western rare earths supply chain”. The indisputable need for the “west” to develop its own source of reliable supply aligns with the Australian Government’s Critical Minerals Strategy and the US Inflation Reduction Act.
Astron will maintain 51 per cent ownership and the rights to the HM concentrate as part of the deal. It will have the right to enter into an offtake agreement for 100 per cent of the project’s HM concentrate for processing at its mineral separation plant in Yingkou, or to enter into offtake agreements with third parties.
The company recently fired up its China-based Yingkou separation plant, raking in a cool $6.9 million by processing a bulk delivery of raw material from a potential customer. If the trial processing is considered successful, it could lead to further revenue opportunities from the operation of the Yingkou plant.
Management says the imposing project is expected to churn out a stunning $3.87 billion in free cash during its estimated 41.5-year mine-life. Its 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 a solid EBITDA of $154 million annually. That margin provides a significant buffer against unexpected product price fluctuations.
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 of HM concentrate and about 7000 to 8000 tonnes of rare earths concentrate for the anticipated mine life.
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. All mining approvals for Donald have been secured and Astron is pushing towards a final investment decision (FID) for the first phase at the project.
Once mining is underway, the supply of rare earths will consist of the more traditional electric vehicle (EV) light rare earths of neodymium and praseodymium and the more lucrative heavy rare earths, dysprosium and terbium, which are a key part of the industrial magnets required for an EV engine.
Astron and Energy Fuels are on the cusp of developing a monster of a project at a time when rare earths and heavy mineral sands are expected to venture squarely into the spotlight due to the heavy global demand anticipated for the coming decades.
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