GOVT BLOCKS CHINESE INVESTMENT
Northern Minerals is seeking alternate funding after the Australian Government prohibited a $20m share placement to China’s Baogang Group Investments, which would have given the entity a 13pc share in the miner.
The agreement would have resulted in Northern Minerals issuing Baogang more than 322.5m shares.
The Australian company has now entered into a number of subscription agreements with “sophisticated investors” to raise $22m at 2c per share.
The new share placement would be undertaken over four tranches, with the first raising $9m, the second $4.2m, the third $3.4m and the fourth $5.4m.
The first tranche placement, consisting of 450m shares, would be done under the company’s existing placement capacity, while the remaining tranches will be subject to shareholder approval.
Baogang is a subsidiary of a Chinese state-owned corporation with operations including the vast Baotou rare earth mine based in Inner Mongolia, China’s largest rare earth producer.
Analysts believe the Federal Government move signals that Australia is serious about its intention to work closely with the US to help Washington source new supplies of critical metals and reduce American dependence on China.
The US military recently granted funds to Australian company Lynas Corporation to build a rare earths facility (see separate story).
Northern Minerals operates the Browns Range mine located near Halls Creek in the east Kimberley.
The project has a pilot plant, currently on care and maintenance due to COVID-19, that has been separating rare earths and produced small quantities of dysprosium, which is essential for magnets used in electric vehicles.