JOHANNESBURG (miningweekly.com) – Aim-listed African Consolidated Resources (ACR) has signed a joint-venture (JV) agreement with an Australian-based exploration company Rare Earth International (REI) to explore ACR’s Nkombwa Hill rare-earths and phosphate project, in Zambia.

The 720-km2 exploration project was expected to contain a large potential phosphate resource, as well as light rare-earth elements (REEs).

REI would, in terms of the agreement, spend at least $750 000 over the next two years to define an inferred resource to a Joint Ore Reserve Committee- (Jorc-) compliant standard for the project, in order to earn a 30% stake.

It would then spend a further $600 000 over an 18-month period to define an indicated resource to Jorc-compliant standard, the completion of which would lead to an increase in its stake to 50%.

ACR would then have the option to cofund the completion of a prefeasibility study and a bankable feasibility study, with each party maintaining a 50% interest in the project.

However, if it decided not to provide cofunding for the feasibility studies, REI would eventually boost its stake in the project to 75% by providing all the funding.

Corporate finance services provider Ambrian Capital said in a research note that the signing of the JV partnership was a “savvy” move, as it would allow the company to diversify out of its primary country of operation, Zimbabwe.

Further, Ambrian pointed out that while the project’s focus would be phosphate, for which there was plenty of demand in Africa, it would also bring in more experienced partners to focus on the development of the more lucrative REEs.

“There is currently a significant focus on REEs following recent moves by China, the world’s largest supplier or REEs, to restrict exports,” it added.

China plans to allow only a few State-owned enterprises to mine rare-earth metals, as part of a campaign to combat illegal mining and to consolidate its reserves.

Worldwide demand for REEs, which are used in the manufacturing of hybrid cars, superalloys used in the defence industry, cellphones, large wind turbines, missiles and computer monitors, is on the increase, but the majority of the world’s supply, 95%, was still produced by China.

Global demand for REEs was expected to exceed 200 000 t/y by 2014, while a global shortfall of 40 000 t/y was expected by 2015, the US-based Institute for the Analysis of Global Security pointed out in a March report.

This has led to companies relooking at old dormant REEs projects.

Australia’s Lynas Corporation was developing one of the largest REE projects outside China, namely the Mount Weld carbonatite in Western Australia, while US-based Molycorp Minerals had an interest in another large REE resource.

TSX Venture Exchange-listed Great Western Minerals Group also announced earlier this month that it had been granted new-order mining rights for the Steemkampskraal monazite project, in South Africa’s Western Cape province.