Iluka Resources Ltd (ASX: ILU) shares were trading higher after the company announced a major funding development as well as a new deal to supply rare earths to a global automotive company.
Project funding secured
The company said in a statement to the ASX that Export Finance Australia (EFA) had confirmed that Iluka would have full access to a $1.65 billion non-recourse loan to build its Eneabba rare earths refinery in Western Australia.
Iluka also said that Civmec Ltd (ASX: CVL) had been awarded the contract for the structural, mechanical, piping, electrical, and instrumentation works to complete the refinery’s construction.
The company said regarding the financing:
Iluka anticipates Tranche 1 of this funding, comprising $1.25 billion, will be fully drawn at the end of 2026, at which point the refinery is expected to be 75% complete. EFA has confirmed availability of the remaining $400m to complete Eneabba’s construction. Commissioning of the refinery is scheduled for mid 2027.
Regarding the offtake agreement, Iluka said it had struck a multi-year agreement to supply magnet rare earth oxides (neodymium, praseodymium, dysprosium, and terbium) to the global automotive company.
Iluka said further:
The offtake agreement is take-or-pay; commences in 2028 for an initial term of four years; and represents approximately 10% of Iluka’s planned production over that period, being 1,200t of magnet rare earth oxides (Nd, Pr, Dy and Tb). Offtake volumes are in line with the commissioning (2027) and ramp up timeline for the Eneabba refinery. The agreement sets pricing at the higher of minimum and market-linked prices for each product to balance the dual risks of downside price volatility and security of supply. Iluka’s minimum revenue over the contract period is US$155 million.3 Assuming industry forecast pricing, Iluka’s revenue over the contract period would be US$172 million.
Iluka said the identity of the automotive company was commercial in confidence.
Managing Director Tom O’Leary said the offtake agreement was a particularly important milestone for the company’s rare earths business.
He added:
Our first rare earths customer is a globally recognised automotive company and I am delighted that Iluka has been entrusted to deliver refined critical minerals as part of its supply chain. We look forward to a collaborative and successful partnership. Beyond being Iluka’s first, the agreement is significant in that it encompasses the full suite of light and heavy magnet rare earth oxides and contains minimum prices agreed between commercial parties that are independent of those backed by governments.
Mr O’Leary said the deal “demonstrates increasing recognition of Iluka’s position as a credible, vertically integrated supplier, with diverse feedstock sources spanning internal operations and third-parties. Discussions with other prospective customers are ongoing”.
Shares trading higher
Iluka shares were 2.2% higher at $8.31 in early trade. Civmec shares were steady at $1.98.
The post Which rare earths miner has locked in a $1.65 billion funding deal? appeared first on The Motley Fool Australia.
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