Lynas Corporation Ltd (ASX: LYC) has just announced a 10-year extension to its JARE loan facility, sending the Lynas share price up 0.6%.
What is JARE?
If you aren't aware, JARE is a special purpose company established by Japan Oil, Gas and Metals National Corporation and Sojitz Corporation.
Why Japan?
Lynas has reaffirmed its commitment to prioritise supply to the Japanese industry, it has been working closely with its rare earth customers for technological markets in Japan since 2011.
The rare earths miner expects to continue to meet growing demand from the Japanese industry with rare earths needed in many of the advanced tech items that we use today (and even more so in the future).
The new Lynas JARE Facility
The maturity date of the JARE facility has been extended to 30 June 2030, the interest rate on the JARE facility has been reduced to 2.5% per annum, the cash sweep mechanism has been removed, principal repayments has been reduced to nominal levels up to 2025 and the restriction on dividend payments is removed once the principal amount outstanding is reduced to US$60 million or less.
This facility is important for Lynas' 2025 project growth plans and to support it as the world's second largest producer of rare earths.
Chairman of Lynas, Mike Harding, said "The relationship between Lynas and the Japanese Rare Earths Industry is significant for the global Rare Earths industry, and the JARE loan facility is a key component of that relationship."
According to the company, the agreement will allow Lynas to accumulate substantial cash flow from operations to fund the required capital investments.
