Neo intends to explore and develop the Sarfartoq project, through a special purpose entity (SPE), and plans to explore and develop the Sarfartoq project to feed its rare earth separation facility in Estonia
Neo Performance Materials has executed a binding agreement with Hudson Resources to acquire the latter’s exploration license for the Sarfartoq carbonatite complex in Greenland.
The Canadian industrial materials company intends to explore and develop the Sarfartoq project, through a special purpose entity (SPE).
Also, it intends to explore and develop the Sarfartoq project to further diversify its global sourcing of rare earth ore to feed its rare earth separation facility in Estonia.
Under the terms of the agreement, Hudson is expected to receive a non-refundable initial cash payment of $250,000 upon agreement signing, and an additional $3.2m upon closing.
In exchange, the company will transfer the Sarfartoq exploration license to Neo or the SPE, after receipt of approval from the Greenland government.
The license covers the Sarfartoq carbonatite complex, which hosts Hudson’s ST1 REE project and the Nukittooq Niobium-Tantalum project.
Hudson president Jim Cambon said: “We are very pleased to have signed this agreement with a global leader in the production of advanced materials.
“As the world faces critical shortages of rare earth elements outside of China, we are pleased to help bring the Sarfartoq project a step closer to commercial reality.
“This deal provides a significant cash injection to the company and importantly, also gives Hudson shareholders potential significant upside in the future value of the Sarfartoq projects through equity or additional consideration.”
The Sarfartoq project is located 60kms from the international airport in Kangerlussuaq.
It hosts a mineral deposit enriched in neodymium and praseodymium, which form essential components of rare earth permanent magnets.
The permanent magnets are used in electric vehicles, wind turbines, and high-efficiency electric motors and pumps that help reduce greenhouse gas emissions.
Neo aims to start construction on a greenfield rare earth permanent magnet manufacturing plant in Estonia, to address the European manufacturers’ permanent magnets need.
Together with SPE, the company plans to conduct additional exploratory drilling and other work to advance the project to commercial operation.
Furthermore, Neo also intends to enter into an offtake agreement with the SPE to purchase 60% of the ore or mineral concentrate produced from the project.
Neo president and chief executive officer Constantine Karayannopoulos said: “Neo continuously pursues supply chain optionality in order to ensure that our customers have a dependable supply of engineered rare earth products.
“Once in production, this project will significantly increase the diversity of global rare earth supply for our processing facilities around the world.
“We are looking forward to working with Greenland to responsibly develop this resource into a producing mine, of which Neo would be the primary customer.”