Tanzania’s Ngualla Rare Earth Project Secures Agreement to Sell 100% of Concentrate Production

Peak Rare Earths Limited (ASX: PEK) has finalized a binding Offtake Agreement with Shenghe Resources (Singapore) Pte Ltd, a subsidiary of Shenghe Resources Holding Co., Ltd., to sell 100% of the rare earth concentrate produced at its Ngualla Rare Earth Project in Tanzania.

The Offtake Agreement, approved by the Tanzanian Mining Commission and Peak’s shareholders, stipulates that Shenghe Resources will purchase 100% of the rare earth concentrate produced by Peak.

Additionally, there is an option for Shenghe to acquire up to 50% of intermediate or final rare earth products in the future, contingent upon further agreements.

Key terms of the agreement include:

• Products Covered: Shenghe will purchase 100% of rare earth concentrate and potentially up to 50% of intermediate or final rare earth products.
• Pricing: The pricing will be determined by a market-based formula based on the value of contained rare earth oxides, adjusted for VAT, trading fees, refining recoveries, and other applicable charges.
• Term: The initial term of the agreement is 7 years, with provisions for extension by mutual agreement.

A take-or-pay clause obligates Shenghe Resources to purchase and pay for all agreed products, ensuring a guaranteed market for Peak’s rare earth minerals. The pricing mechanism reflects current market conditions and allows for adjustments to ensure competitiveness and profitability.

Bardin Davis, CEO of Peak Rare Earths, emphasized the strategic significance of the agreement, stating, “This milestone further enhances Ngualla’s position as a leading rare earth project globally.” He underscored the agreement’s role in mitigating project risks and bolstering its financial viability.

In conjunction with the Offtake Agreement, Peak Rare Earths and Shenghe Resources are exploring potential investments to optimize operations at the Ngualla Rare Earth Project.

Recent expansions of the project’s Special Mining Licence area, from approximately 18km² to 51km², present opportunities for cost-effective reconfigurations and operational enhancements.

Optimization strategies include reconfiguring project layouts to minimize earthworks, relocating infrastructure to flatter areas within the expanded licence area, and optimizing contract packages to reduce unit costs across earthworks, civils, quarry operations, tailings storage facilities, and mining activities.