A joint venture (JV) between Astron Corporation (ASX: ATR) and New York Stock Exchange-listed Energy Fuels Resources has officially been launched, with the two companies now focused on developing the huge Donald rare earths and mineral sands play in central Victoria.
The partnership has today declared the JV is signed, sealed and delivered and as part of the deal, Astron has been allocated its first parcel of shares in Energy Fuels to the tune of US$3.5 million (AU$5.1 million). The United States-based firm’s interest-free loan for $8.6 million to fund part of the development costs for the project has to date earned it an almost 3.2 per cent equity interest in the JV company in lieu of receiving interest payments.
Astron currently retains the remaining 96.8 per cent equity interest in the JV vehicle known as the Donald Project.
Energy Fuels, the owner of the only conventional operating uranium mine in the US, now has an effective offtake agreement for 100 per cent of the rare earths concentrate (REC) for the life of the project. It plans to process the material at its White Mesa facility in Utah, in what the company calls a “western rare earths supply chain”.
As the deal progresses, Astron will maintain a 51 per cent ownership slice and the rights to the heavy mineral (HM) sands concentrate. It will also have the right to enter into an offtake agreement for 100 per cent of the project’s HM concentrate for processing at the company’s mineral separation plant in Yingkou, or to enter into offtake agreements with third parties.
Energy Fuels is providing Astron a mix of cash and shares for it to ultimately obtain a 49 per cent share in the Donald operation that comes with a compelling mix of both light and heavy rare earths. The offer consists of AU$183 million in cash towards the phase-one development and US$17.5 million (AU$25.8 million) worth of Energy Fuels shares, providing Astron with timely exposure to uranium – a commodity expected to be in strong demand globally in the decades ahead.
The $183 million staged-funding is expected to comprise the majority of the equity required to enable the completion of the phase-one development.
Astron says the formalising of the JV is a significant step towards bringing the global-scale project into development and ultimately production, potentially towards the end of 2026. It notes the two parties are laser-focused on moving the project towards a positive final investment decision (FID) early next year.
Last week, the Foreign Investment Review Board (FIRB) provided Astron and Energy Fuels with the “go-ahead” to develop the project, confirming it had no objection to the US$700 million (AU$1.03 billion) market-capped US uranium entity entering a binding farm-in and JV arrangement.
The Donald project contains an “eye-popping” 2.6 billion tonnes of mineral resources at a grade of 4.4 per cent HM, which management says includes the world’s biggest zircon deposit.
The primary focus of the JV is to develop the huge Donald prospect, which features an impressive 825 million-tonne resource going 4.5 per cent HM 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.
The company notes the monster 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 also shows an after-tax net present value (NPV) of an appealing $852 million.
Some recent positive steps for the project include global engineering group Sedgman completing early-stage process plant works, obtaining approval for the accommodation village to be based in the local town of Minyip that sits about 15km west from the site. It has also begun short-listing contractors for mining services, transport and logistics contracts.
Both rare earths and heavy mineral sands are expected to be subject to heavy demand from industry in the coming decades due to their use in many of today’s products. So, the two companies will be aiming to benefit from their savvy decision to develop the huge Donald project at a time when pricing for each of the commodities is still subdued.
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