Northern Minerals negotiates important EPC contract
Emerging heavy rare earths play, Northern Minerals (ASX: NTU) has followed up the Memorandum of Understanding announced on November 23 with the negotiation of an engineering, procurement and construction (EPC) contract with Sinosteel Equipment and Engineering (MECC) for the delivery of the Browns Range pilot plant.
NTU is an early stage exploration company and investors considering this stock should seek independent financial advice.
By way of background, NTU is focused on the delivery of heavy rare earth (HRE) element dysprosium as it moves to develop a large landholding in Western Australia and the Northern Territory that is highly prospective for this element.
Through the development of its Browns Range project, NTU is to be the first significant world producer of dysprosium outside of China. Dysprosium is an essential ingredient in the production of dysprosium neodymium iron-boron magnets used in clean energy and high technology solutions.
Contract terms provide financial flexibility
With regard to the contract negotiation, NTU’s Managing Director, George Bauk said, “The execution of the EPC contract is an important step with regards to securing financing for the Browns Range pilot plant and we are committed and focused towards the FID in mid-Q1 2017.
Under the contract, Sinosteel MECC has agreed to defer payments representing 20% of the contract value for a period of 24 months. Alternatively, Sinosteel MECC has the right within nine months of practical completion to convert the deferred payment amount into ordinary Northern Minerals shares at a conversion price of the lower of 15 cents per share or the 20 day value weighted average price prior to election.
Potential investors should note that the EPC contract is subject to finance and the final investment decision (FID) by the NTU Board which is expected in the first quarter of 2017.
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