Funding and Market Risks Loom as Northern Minerals Advances Heavy Rare Earths Mine

Strategic Capital Raise to Propel Browns Range

Northern Minerals Limited (ASX, NTU) has announced a $60.5 million equity placement priced at $0.051 per share, aimed at advancing the Browns Range Heavy Rare Earths Project in Western Australia's East Kimberley region. This capital raise is a critical step in de-risking the project’s delivery and positioning Northern Minerals to capitalize on the growing global demand for heavy rare earth elements, particularly dysprosium (Dy) and terbium (Tb), which are vital for permanent magnets used in electric vehicles, renewable energy, and defense technologies.

Robust Project Fundamentals Underpin Confidence

The Browns Range project boasts one of the highest grade Dy/Tb deposits outside China, with a Definitive Feasibility Study (DFS) confirming an 11-year mine life targeting up to 181,000 tonnes of total rare earth oxides (TREO) in concentrate. The DFS outlines a capital expenditure of approximately A$592 million and forecasts a pre-tax net present value (NPV) of A$187 million under the base case, rising to A$705 million under a divergence case reflecting higher non-China prices. Operating costs are projected at A$44.70 per kilogram of TREO, supported by proven conventional mining methods and a validated processing flowsheet achieving over 80% TREO recovery.

Strategic Partnerships and Government Support

Northern Minerals has secured a strategic supply agreement with Iluka Resources Limited, under which Browns Range concentrate will feed Iluka’s Eneabba refinery, establishing a domestic heavy rare earth supply chain aligned with Australian government critical minerals policy. Additionally, Export Finance Australia and the US Export-Import Bank have issued coordinated, conditional letters of support for potential debt funding up to US$230 million, reflecting the project's geopolitical and strategic significance amid global supply chain vulnerabilities and China’s export restrictions on heavy rare earths.

Use of Proceeds and Project Execution

Proceeds from the placement will support front-end engineering design (FEED) programs, contract negotiations, repayment of convertible notes, exploration drilling to extend mine life, site access and facility upgrades, enhanced staffing including key hires, and legal and advisory costs related to project funding. The company aims to maintain its development schedule, targeting first concentrate production by 2028, with all key approvals and native title agreements in place to facilitate rapid mobilisation.

Risks and Market Context

While the project is well-positioned, Northern Minerals faces risks typical of mining ventures, including securing final project funding, price volatility in rare earth markets, regulatory approvals, and operational execution challenges. The rare earth market remains volatile, influenced by geopolitical tensions and supply-demand imbalances, with Browns Range poised to address a forecasted supply deficit in Dy/Tb driven by accelerating demand for permanent magnets globally.