Peak Rare Earths Limited (ASX: PEK) has announced it has signed a non-binding term sheet with Shenghe Resources Holding Co., Ltd. covering an investment, funding, and development solution for the Ngualla Rare Earth Project.
Shenghe is to provide a fully funded solution with no requirement for Peak to contribute further equity funding towards the development of the Ngualla Project.
Dr. Russell Scrimshaw, executive chairman of Peak, commented, “This marks another major milestone for Peak, Mamba Minerals, and the Ngualla Project. With the benefit of strong support from our partners, Shenghe, and the Government of Tanzania, the Ngualla Project is positioned to become the world’s next rare earth operation. Importantly, the Ngualla Project will benefit from a fully funded solution, which will avoid the need for further equity funding from Peak shareholders.”
Key elements of the term sheet include:
- Shenghe to subscribe for a 50% interest in Ngualla Group UK Limited, which holds an 84% interest in the Ngualla Project, for ~A$96M
- Implied Peak valuation on a post-transaction basis of ~A$0.36/share, representing a +100% premium to the current share price
- Balance of Ngualla Project capital costs to be met by a Shenghe arranged debt facility with no requirement for Peak to contribute development equity funding
- Opportunity to leverage Shenghe’s proven rare earth experience and development expertise
- Peak and Shenghe to each hold a 50% interest in NGUK and have equal board representation with Peak retaining a casting vote
- Shenghe EPC, EPCM, or EPS agreement to include incentive / penalty mechanisms to strongly incentivize Shenghe to deliver material capital cost savings
- Target Final Investment Decision of 31 December 2024
Additionally, the company has stated that the signing further strengthens the Ngualla Project’s position as one of the most attractive and advanced rare earths projects in the world.
To find out more, please visit www.peakrareearths.com
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