RareX Lands A$50M Share Subscription Facility to Fund Mrima Hill Development
RareX has locked in a A$50 million equity funding facility with GEM Global Yield to back its Mrima Hill rare earths project in Kenya, contingent on project approval. This deal strengthens RareX’s international partnerships and provides flexible capital to advance its development plans.
- A$50 million Share Subscription Facility secured with GEM Global Yield
- Funding split into two A$25 million tranches, contingent on Mrima Hill project approval
- Facility supports Year 1-3 work program including pilot plant development
- RareX retains discretion over drawdown timing and volume
- Partnership enhances RareX’s trilateral ties across Kenya, Australia, and the US
Strategic Funding Milestone
RareX Limited (ASX – REE) has taken a significant step forward in financing its flagship Mrima Hill rare earths project in Kenya by securing a flexible A$50 million Share Subscription Facility (SSF) with international investment firm GEM Global Yield LLC SCS. The facility is structured in two equal tranches of A$25 million each, with the second tranche available upon request and subject to conditions, notably the granting of the Mrima Hill project to the RareX-Iluka consortium.
This arrangement not only provides RareX with a substantial capital injection but also reinforces its growing trilateral partnerships spanning Kenya, Australia, and the United States. GEM’s involvement brings more than just funding; it offers strategic connections, particularly deep US government relationships, which could prove invaluable as RareX advances its rare earths ambitions.
Flexible Capital Deployment
The SSF grants RareX considerable flexibility, allowing the company to draw down funds at its discretion over a 36-month period. This means RareX can tailor its capital raising to project milestones and market conditions, avoiding the pressure of fixed repayment schedules. The proceeds are earmarked primarily for the consortium’s Year 1-3 work program at Mrima Hill, including the construction of a pilot plant, as well as supporting RareX’s Cummins Range project and general working capital needs.
However, the facility’s activation hinges on the approval of the Mrima Hill project by Kenya’s National Mining Corporation (NAMICO), which is currently reviewing the RareX-Iluka proposal. Until this approval is secured, the funding remains contingent, introducing an element of uncertainty to the timeline.
Terms and Strategic Implications
Under the SSF, RareX will issue fully paid ordinary shares to GEM upon drawdown, priced at a 10% discount to the volume-weighted average price over a 15-day pricing period. The company also issued 30 million unquoted options to GEM as part of the initial tranche, with half vesting upon project approval. Additionally, RareX will pay facility fees and may issue further options if it seeks to extend the facility.
These terms imply some dilution risk for existing shareholders but provide RareX with a non-debt funding mechanism that aligns investor interests with project success. The partnership with GEM, a $3.4 billion alternative investment group with global reach, signals RareX’s intent to position itself as a serious player in the critical minerals sector, leveraging international capital and expertise.
Looking Ahead
RareX’s ability to fully utilise the facility will depend on sufficient liquidity in its shares to meet drawdown requests, which is not guaranteed. Investors will be watching closely for NAMICO’s decision on Mrima Hill, as well as market conditions affecting RareX’s share trading volumes. The successful deployment of this funding could accelerate RareX’s development timeline and enhance its standing in the rare earths market, which is increasingly critical for global clean energy and technology supply chains.
Bottom Line?
RareX’s new funding deal sets the stage for a pivotal phase; pending project approval, the company is poised to accelerate its rare earths ambitions with global backing.
Questions in the middle?
- When will Kenya’s NAMICO announce its decision on the Mrima Hill project?
- How will RareX manage potential dilution from share issuances under the facility?
- What impact will GEM’s US government connections have on RareX’s strategic positioning?
