Shares in Astron Ltd (ASX: ATR) piled on double-digit gains in early trade on Tuesday after the company said it had won Australian Government support for its Donald Rare Earth and Minerals Sands Project.
Shares in a swathe of rare earths companies surged higher on Tuesday after the Australian and US Governments announced a new bilateral framework on critical minerals, which will pump at least US$1 billion from each country into the critical resources sector over the next six months.
Projects under development by Arafura Rare Earths Ltd (ASX: ARU) and Alcoa Corporation (ASX: AAI) were singled out for special treatment, including equity investments and supportive financing arrangements, while other companies, including Astron, also received encouraging signs of support.
Image source: Getty Images
Debt financing to back the project
Astron said in a statement to the ASX on Tuesday that government agency Export Finance Australia had given it a non-binding and conditional letter of support for up to $80 million in senior debt financing for the development of the Donald project, 300km northwest of Melbourne.
The Donald project is a joint venture with US company Energy Fuels Inc (NYSE: UUUU), with the latter company committed to buying all of the rare earth element concentrates the mine produces.
Astron said the total development cost for the project was $520 million, with the joint venture targeting a 50:50 debt to equity financing scenario.
The company said it was also working with other export credit agencies and senior lenders, which would provide the financing facilities.
They company added the project was well-advanced:
The shovel-ready Donald Project is one of Australia's most advanced critical mineral projects, targeting the production of rare earth elements, which are expected to be shipped to Energy Fuels' mineral processing facility in the U.S. for production of advanced rare earth element materials, and zircon-rich heavy mineral concentrates for global supply chains. Production is planned to commence as early as the second half of 2027, subject to securing project financing and completion of a positive final investment decision for the project.
The Donald project is expected to produce 7200 tonnes of rare earth element concentrates per year, which would be key to the US government's ambition to diversify its supply chain, the company said.
Notably, the heavy rare earths expected to be produced from Donald Phase 1 would satisfy approximately one third of U.S. demand for dysprosium and a quarter of U.S. demand for terbium, elements that are critical to the clean energy, defence and advanced manufacturing industries.
Astron shares were trading 12.1% higher on Tuesday to be changing hands for 78.5 cents, after hitting an early high of 80 cents.
Astron was valued at $293.4 million at the close of trade on Monday.
