Australian companies RareX Limited and Iluka Resources Limited have formed a consortium to apply for the Mrima Hill rare earth-niobium-phosphate-manganese project licence in Kenya. The consortium has submitted a formal application to the National Mining Corporation of Kenya (NAMICO), which has been officially acknowledged.
If the application is successful, the parties will establish a Special Purpose Vehicle (SPV) to manage the acquisition, de-risking, and development of the Mrima Hill Project and negotiate a formal shareholders’ agreement. The Consortium Agreement stipulates that Iluka will hold a 25% equity stake in the SPV and outlines terms for rare earth and heavy mineral offtake to potentially supply Iluka’s Eneabba rare earth refinery.
The Consortium Agreement assigns RareX the lead role in de-risking the project, with an initial focus on socio-environmental issues, followed by metallurgical and value chain engineering studies, including the establishment of local laboratory and pilot plant facilities in the short to medium term.
The Mrima Hill Project is currently owned by the Ministry of Mining, Blue Economy and Maritime Affairs. Under Kenyan law, its de-risking and future development require a joint venture with NAMICO. The consortium’s application seeks approval to form a strategic partnership with NAMICO via a joint venture company (JVco), into which the Prospecting Licence will be transferred. NAMICO has confirmed receipt of the application and is reviewing it alongside the State Department for Mining. There is no guarantee that the application will be approved or that the consortium will be invited to negotiate terms for the Prospecting Licence, which remains subject to NAMICO’s and the Cabinet Secretary’s discretion. Investors are cautioned not to rely on the licence being granted. RareX will provide updates on the application’s progress in accordance with Listing Rule 3.1.
Should the proposal be accepted, the RareX-Iluka SPV will be formed and act as NAMICO’s counterpart in the JVco. This process aligns with the Kenya Mining Act. If the project licence is granted to the JVco, RareX will lead socio-environmental assessments, resource definition, and engineering studies, which are prerequisites for a Mining Licence to enable construction and operations.
RareX and Iluka have signed a binding offtake term sheet outlining terms for a long-form offtake agreement. The sale and purchase of materials under the term sheet (but not the term sheet itself) are subject to conditions precedent, including the grant of a Mining Licence, commencement of commercial production, Iluka board approval for the definitive agreement, and regulatory and financing approvals.
If the Prospecting Licence is issued to the JVco, RareX will prioritise community engagement and environmental assessments to secure a social licence to operate. To achieve this, RareX plans to build local teams, supported by experienced firms specialising in community development, and employ relevant personnel from the Kwale Mineral Sands Operation, previously owned by Australian company Base Resources Limited, which is near the Mrima Hill Project and has entered its closure phase.
As the intended future operator, RareX aims to collaborate with Iluka to process rare earths at Iluka’s Eneabba facility while developing local value chains for manganese, phosphate, and niobium to support Kenya’s domestic industries.
RareX is in preliminary discussions with GEM – Global Emerging Markets – regarding a potential facility to fund the project’s working capital requirements. The terms, including the facility’s amount, are not yet agreed upon, and there is no assurance that the facility will be secured. RareX may explore other funding options.
RareX’s Managing Director, James Durrant, said: “We are delighted to partner with Iluka for the application and potential development of the Mrima Hill Project. Their 25% stake in the Special Purpose Vehicle reflects the deposit’s significant potential. This collaboration will allow RareX to leverage Iluka’s expertise as we work towards creating a major multi-commodity project in Kenya, integrating rare earths into an Australian, government-backed value chain.
“If successful, the project could form part of a unique mine-to-metal solution, supported by allied governments, fostering deeper diplomatic ties between two Commonwealth nations, both non-NATO strategic allies of the US and members of the Indian Ocean Rim Association.
“Our proposal enables Australia to add value to a critical metals supply chain while providing Kenya with a major mining project and domestic supplies of manganese, niobium, and phosphate for its steel and agricultural sectors,” he added.
“We are excited about the next steps and confident that this partnership will drive the successful development of Mrima Hill for all stakeholders.”
Key terms of the Consortium Agreement and Offtake Term Sheet:
- The Consortium Agreement is a binding bidding agreement for the proposal to NAMICO, governing the consortium’s relationship until the proposal’s acceptance and execution of a formal shareholders’ agreement.
- If the proposal is accepted, a RareX-Iluka SPV will be formed on a 75–25% basis, respectively.
- RareX will cover the consortium’s costs until a Mining Licence is granted. Upon the licence’s issuance, Iluka may preserve its SPV participation by contributing USD$10 million, after which standard dilution clauses apply.
- The Consortium Agreement includes a binding Offtake Term Sheet to be converted into a long-form Offtake agreement between Iluka and JVco.
- Offtake is on a right-of-first-refusal basis for all rare earth and mineral sand products from Mrima Hill, with a 10% price discount as a performance bonus for technical support to the JVco.
- The offtake is limited to rare earth and mineral sands products, allowing niobium, phosphate, and manganese to be developed and sold separately, including to Kenya’s domestic markets.
