PERTH (miningweekly.com) – Rare earths developer Northern Minerals has entered into a sales agreement with China’s Lianyugang Zeyu New Materials Sales Co (JFMAG) for all planned production from the Browns Range pilot plant, in Western Australia.

The proposed pilot plant is a tenth of the scale of the full operation and has a 60 000 t/y crushing beneficiation circuit and a 3 200 t/y hydrometallurgical plant, which will produce 590 t of total rare earth oxides in mixed rare earth carbonates.

The pilot plant is scheduled to operate for three years, during which time Northern Minerals will take a decision on whether or not to commit to the full-scale operation.

Under the terms of the sales agreement, and prior to the first shipment of rare earth carbonates, JFMAG will make a pre-payment of A$10-million, which will cover some 15% of the expected value of production during the pilot plant phase.

The remaining 85% will be paid over the course of the agreement, based on volumes delivered.

Further, JFMAG or its nominated beneficiary, will be issued with 40-million unlisted options in Northern Minerals, priced at 25c each, which can be converted into ordinary shares to offset the pre-payment of the A$10-million.

Following the execution of the sales agreement, Northern Minerals will issue 14-million shares to JFMAG or its nominated beneficiary.

Northern Minerals MD George Bauk said on Thursday that the milestone sales agreement underpinned the Browns Range pilot plant development.

“The excellent terms we have agreed provide us with a transparent pricing mechanism and guaranteed demand for our product. The sales agreement is one of the final milestones that now allows us to move towards a final investment decision,” he said.

JFMAG is 51% held by Guandong Rare Earths Group, which, in turn, is a subsidiary of Guandong Raising Asset Management.