Shenghe Resources is set to acquire a 50% stake in Ngualla Group UK, which holds an 84% interest in the Ngualla rare earth project, through a non-binding term sheet agreement with Peak Rare Earths. Shenghe Resources, already a stakeholder in Peak with a 19.9% ownership since December 2022, is bolstering its involvement in the project.
This announcement follows a recent binding offtake agreement between Peak and Shenghe Resources (Singapore), which was approved by Peak’s shareholders last month. The new term sheet specifies Shenghe’s acquisition of a 50% stake in Ngualla Group UK, marking a significant step in the development of the Ngualla Project.
Under the terms, Shenghe will invest approximately AUD 96 million (USD 63.57 million) in new shares. This substantial investment will cover the full development costs of the Ngualla Project, eliminating the need for Peak to secure additional equity funding. Shenghe’s contribution will also include a debt facility, covering the entire development expenditure, and it will participate in both the profits and losses once commercial production begins.
The completion of this investment hinges on several conditions, including Shenghe securing a contract for the project’s development, arranging a viable funding solution, and obtaining necessary approvals from Chinese regulators and both companies’ shareholders.
The timeline for finalizing the transaction includes completing documentation by September 2024, obtaining shareholder approval by October 2024, and making a final investment decision by December 31, 2024.
Russell Scrimshaw, Peak’s executive chairman, highlighted the significance of the agreement: “This represents a major milestone for Peak, Mamba Minerals, and the Ngualla Project. With strong backing from our partners, Shenghe and the Government of Tanzania, the Ngualla Project is well-positioned to emerge as the next major rare earth operation globally. Crucially, the project will benefit from a fully funded development solution, reducing the need for further equity funding from Peak shareholders.”
Huang Ping, deputy executive chairman of Shenghe, expressed confidence in the project’s potential: “We firmly believe that the Ngualla Project is the premier undeveloped rare earth project worldwide. This term sheet reflects our commitment to collaborating with Peak and Mamba Minerals to optimize the Ngualla Project and accelerate its development and funding.”
