On Monday, May 1, Australia's Peak Rare Earths said it had locked in A $27.5 million (US $18 million) from high net worth and offshore institutional investors to advance its Ngualla project in Tanzania, according to reports.
The company said it would issue about 55 million new shares at A $0.50 each in a two-part institutional placement. The first tranche of shares will be placed on May 5, raising $14.3 million.
Peak's largest shareholder, Sheng He Resources, has pledged to increase its stake from 19.8 per cent to 19.9 per cent through a placement.
Given that Sheng He Resources currently holds more than 10 per cent of Peak's issued share capital and has a nominated director on Peak's board, its participation in the second tranche of the placement will be subject to shareholder approval.
The placement marks another step in the development of the Ngualla rare Earth project.
This comes after Peak signed a binding framework agreement with the Tanzanian government last month after a five-year wait.
A recently updated Bank feasibility study (BFS) estimated that Ngualla would need a capital investment of $321 million a year to produce 16,200 tonnes of concentrate for sale to third-party processors.
The Ngualla rare earth mine is expected to have a production life of 24 years and annual operating costs of $93m, with a final investment decision expected by the end of September.
Rare earths are a group of 17 minerals, along with other key minerals including lithium, copper, cobalt and nickel, used to make a range of products critical to national security and the fight against climate change, including solar panels, electric vehicles, consumer electronics and military equipment.
China is not only the world's largest producer of rare earths, but also a major consumer.
Western companies have been trying to reduce their reliance on China for rare earths amid fears of souring trade relations between countries, with mining companies and governments looking for deposits to be developed elsewhere.
By 2022, China will account for about 60 percent of the world's supply of lithium chemicals and three-quarters of the world's lithium-ion battery production, according to the International Energy Agency.
Chinese companies also have a tight grip on global cobalt supplies through their mining operations in the Democratic Republic of Congo.
