London-listed Kendrick Resources Plc (LSE: KEN) has secured a 70% interest in two rare earth exploration licences near Lüderitz, marking a significant expansion of its mineral exploration portfolio in Namibia.
The mineral exploration and development company announced that it has exercised its option and entered into a definitive agreement with Bonya Exploration (Pty) Ltd Namibia, the holder of Exclusive Prospecting Licences (EPL) 4458 and 6691. The agreement also involves Bonya shareholder and Namibian businessman Wilhelm Shali.
Under the terms of the agreement, Kendrick will pay an initial consideration of N$4.83 million (US$300,000) in cash and issue 22 million new ordinary shares to the partners. The shares will be subject to a six-month lock-in period, followed by a further six months under orderly market conditions.
A further N$8.05 million (US$500,000) in cash and an additional three million shares will become payable once the licences are granted an extension of at least 18 months.
Executive Chairman Colin Bird said the company’s technical due diligence confirmed strong potential at the projects.
“We are pleased to announce that we have exercised our option on the two rare earth licences close to Lüderitz in Namibia. Our technical due diligence has been most satisfactory, demonstrating that the projects have very high potential relative to other global rare earth projects. We are particularly pleased with the substantial amount of data that we will inherit, including drill holes, unassayed core, numerous trenches and geophysical surveys together with basic metallurgical test work,” Bird said.
Kendrick will undertake and fund all work required to advance the project to a Preliminary Economic Feasibility Study (PEFS). Upon completion of the PEFS, or earlier by mutual agreement, Bonya will establish a special purpose vehicle (SPV), fully owned by Bonya. The parties will then enter into a joint venture and shareholders’ agreement, with the SPV responsible for project development and raising funding to move the asset from feasibility into production.
Bonya and its partners will retain a 30% carried interest covering exploration, development and production expenditure. Upon commencement of commercial production, a 2% net smelter royalty will apply. Kendrick will retain 60% of cash flows until it has fully recovered funds advanced, with the remaining 40% distributed according to equity interests.
Bird said the company intends to fast-track exploration activities.
“We are wasting no time in commencing our drill programme, conducting further metallurgical test work and progressing the project with a fast-track approach. Initial observations suggest the elements are concentrated within magnetic property groupings used to manufacture powerful permanent magnets found in electric vehicles, wind turbines and smartphones,” he said.
He added that the rare earth elements play a critical role in renewable energy systems and advanced defence technologies, positioning the project within a highly sought-after global market.
Under the agreement, Kendrick will also be entitled to 50% of proceeds in the event of a sale of the licences, the project, or any Bonya shares resulting in a change of ownership.
Subject to regulatory approvals, Wilhelm Shali is expected to join Kendrick’s board as a non-executive director. The company said it looks forward to his contribution to the development of the project.
