The Meteoric Resources NL (ASX: MEI) share price is catching the eye of investors on Thursday.
At the time of writing, the ASX 300 mining stock is up 7% to 23 cents.
This stretches the rare earth oxide developer's 12-month return to over 40%.
Why is this ASX 300 mining stock surging?
Investors have been bidding the company's shares higher today in response to the release of a big announcement.
According to the release, Meteoric Resources has entered into a non-binding memorandum of understanding (MOU) with Neo Performance Materials Inc. (TSX: NEO) for offtake of 3,000 metric tonnes (MT) of total rare earth oxide (TREO) per year from its Caldeira Project in Brazil.
Neo describes itself as a manufacturer of the building blocks of many modern technologies that enhance efficiency and sustainability. Its advanced industrial materials – magnetic powders and magnets, specialty chemicals, metals, and alloys – are critical to the performance of many everyday products and emerging technologies.
The release reveals that this offtake will be used by Neo to supply its magnet manufacturing plant in Estonia. Neo will also hold a right of first refusal to purchase additional material when the Caldeira Project produces more than 6,000 MT of TREO per year.
Though, it is still some time until that supply would happen. Meteoric Resources expects to obtain a construction permit by the fourth quarter of 2025 and aims to commence MREC production during the second half of 2027. It is also worth noting that MOUs are not binding and there's no guarantee that this deal will still be in place in several years.
Nevertheless, the ASX 300 mining stock's CEO, Nick Holthouse, was very pleased with the news. He said:
We are very pleased to be bringing this important agreement with Neo to market. This represents Meteoric's first step in our staged offtake strategy, and are delighted to support Neo in their aim to provide high-performance magnetics for automotive, factory automation, high-efficiency motors, residential appliances, and many other industries.
The CEO believes this demonstrates confidence in the Caldeira Project, which is still awaiting a final investment decision (FID). He adds:
Connecting and integrating into the developing alternate rare earth materials supply chain signals strong external market confidence in the Caldeira Project`s ability to progress to an FID and into production. We look forward to working with NEO and having the benefit of their technical support as we continue to pursue and develop our own downstream capabilities and progress to a binding commercial arrangement.
