RareX (ASX: REE) has entered into a $50 million financing agreement with alternative investment firm GEM Global Yield to develop the Mrima Hill rare earths and phosphate mine and processing facility in Kenya.
The parties will conduct the US-aligned share subscription facility (SSF) in two equal tranches, contingent upon a consortium comprised of RareX and Iluka Resources (ASX: ILU) winning the project, which is currently under review by the National Mining Corporation of Kenya.
The facility will provide flexible, discretionary equity funding over a 36-month period, sufficient to fully fund a proposed three-year development program for Mrima Hill, and RareX will also apply some of the funds to advance its flagship Cummins Range large-scale rare earths project in Western Australia.
Shares-for-Funds Draw Down
Under the terms of the SSF, RareX will be able to draw down funds by agreeing to issue fully paid ordinary shares to GEM or its nominee over a three-year period.
GEM may subscribe for between 50% and 200% of each request volume, with each drawdown limited to 700% of the average ASX daily volume of the preceding 15 trading days.
In consideration for entering into the initial SSF tranche, RareX will issue GEM with 30 million unquoted options with an exercise price of $0.025, expiring three years from the date of issue.
A total 15 million options will vest upon the granting of a prospecting licence for Mrima Hill, with the balance immediately exercisable.
Emerging Markets Investment
GEM is a $3.4 billion, alternative investment group that manages a diverse set of investment vehicles focused on emerging markets.
The company has completed more than 570 transactions in 70 countries, each with a different degree of operational control, risk-adjusted return, and liquidity profile.
“We are excited to be partnering with GEM which brings funding support and deep US government relationships,” RareX chief executive officer James Durrant said.
“This facility will help accelerate the development of Mrima Hill in the event that our consortium proposal is successful.”
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