RareX–Iluka Resources consortium seeks Mrima Hill project rights in Kenyan rare earths push

A consortium comprising RareX (ASX: REE) and Iluka Resources (ASX: ILU) has applied to Kenya’s National Mining Corporation (NAMICO) for prospecting rights to the Mrima Hill rare earth–niobium–phosphate–manganese project.

The partners have also applied to form a special purpose vehicle (SPV) that will see RareX take the lead in socio-environmental, resource definition and engineering studies for the development.

The company will call on its experience at Cummins Range in Western Australia,, which remains Australia’s largest undeveloped rare earths deposit and appears to be of a similar geological nature to Mrima Hill.

Equity stake

Iluka has proposed a 25% equity stake in the SPV for at least a 20% economic interest in Mrima Hill throughout the prospecting licence phase.

Iluka is also pursuing heavy mineral and rare earth offtake terms to potentially provide feed to its Eneabba refinery, which is currently under construction approximately 300 kilometres north of Perth.

RareX will fund all costs incurred by the consortium until the mining licence is granted, at which time Iluka will have the right to preserve its participation in the SPV through a US$10 million payment.

Offtake term sheet

The consortium agreement includes a binding offtake term sheet that Iluka and the joint venture will convert into a long-form offtake agreement.

Offtake will be on a right-of-first-refusal basis over all rare earth and mineral sands produced from Mrima Hill and include a performance bonus equivalent to a 10% price discount in return for technical support to the joint venture.

Iluka’s offtake will be limited to rare earth and mineral sands products, allowing other metals such as niobium, phosphate and manganese to be developed and sold separately, including into domestic Kenyan markets.

Local value chains

RareX managing director James Durrant said the company planned to work with Iluka to enable it to process rare earths from Mrima Hill at Eneabba while promoting local value chains for associated commodities.

“We believe this partnership will enable us to leverage Iluka’s expertise and resources as we work toward creating a major, multi-commodity project in Kenya where the rare earths component is integrated with an Australian government-backed value chain,” he said.

“Our proposal will allow Australia to provide the complex rare earth value-add in a critical metals value chain, while providing Kenya with a major mining project and a domestic supply of manganese, niobium and phosphate for its local steel and agricultural sectors.”

Current ownership

Kenya’s Ministry of Mining, Blue Economy and Maritime Affairs currently owns the Mrima Hill project and any de-risking and development applications will be subject to a joint venture with NAMICO.

NAMICO has confirmed receipt of the consortium’s application and is currently reviewing the proposal in parallel with the State Department for Mining.

“This project could become part of a unique and independent mine-to-rare-earth-metal solution backed by allied governments and contribute to deeper diplomatic relations between two Commonwealth countries,” Mr Durrant said.