Hastings Technology Metals has signed a term sheet with China-based Baotou Sky Rock Rare Earth New Material (Baotou Sky Rock) to supply rare earth concentrate from its Yangibana project.
The term sheet facilitates integrated tolling and offtake arrangement for rare earth concentrate by Baotou Sky Rock, to improve economics for Stage 1 of the Yangibana Project.
Under the arrangement, Hastings will receive payment for rare earth oxides, less a capped multi-stage toll treatment fee, increasing its revenue and cash flows compared to the previous profit-sharing model.
Baotou Sky Rock can offtake a minimum of 10,000tpa of concentrate for seven years from the execution of the binding Term Sheet, with an option to extend for another five years.
The term sheet with Baotou Sky Rock enhances the existing offtake contract with Thyssenkrupp Materials Trading for two-thirds of annual production from the Yangibana project.
Hastings is currently in talks with other potential customers to close offtake arrangements for the remaining volumes of the Yangibana project within the offtake contract with Thyssenkrupp.
The term sheet and resulting improved economics and financial model will support the Yangibana project funding process, which is now in an advanced stage of due diligence.
Hastings chief executive officer Paul Brown said: “In line with our strategy to maximise value from the Yangibana Project, we have continued to evaluate ways to both de-risk and optimise Stage 1 of the Yangibana Project.
“We have identified the opportunity to utilise excess downstream rare earth processing capacity available in China by partnering with privately-owned rare earth processing and magnet manufacturers which are seeking to secure a long-term and steady supply of concentrate feedstock.
The Yangibana project is located around 250km northeast of Carnarvon in Western Australia, covering a total area of 650km2 in Thiin-Mah, Warriyangka, Tharrkari and Jiwarli country.
In May last year, the company announced a staged development study, which will focus on the construction of the mine and beneficiation plant at the project.
Since then, Hastings has been trying to increase cash flows and get higher prices for the rare earth concentrate from the Yangibana project.
In November 2018, Hastings signed an offtake contract with Baotou Sky Rock for the sale of mixed rare earth carbonate (MREC), which lapsed in November last year.
Building on its relationship with Baotou Sky Rock and its network in the rare earth industry, the company negotiated the Term Sheet for a new toll treatment and offtake arrangement.
Established in 2006, Baotou Sky Rock is a China-based privately-owned high-tech enterprise specialising in the production of rare earth metals and permanent magnet materials.
Brown added: “The integrated arrangement under the binding Term Sheet with Baotou Sky Rock will facilitate Hastings extracting greater value from our concentrate under a multi-stage toll treatment arrangement and combined with our optimised mine plan delivers a more attractive project.
“The ability to secure this innovative tolling and offtake arrangement demonstrates the strong demand for the Yangibana Project’s NdPr-rich concentrates and gives us confidence in the outlook.”
