Peak Rare Earths Secures Offtake Deal Approval with Shenghe Resources for Ngualla Project in Tanzania
In a significant development for the mining industry, the Tanzanian Mining Commission has granted approval for an offtake agreement between Peak Rare Earths (ASX: PEK) and Shenghe Resources (SSE:600392) that covers 100% of rare earths concentrate production from the Ngualla Project in Tanzania.
The binding agreement, with an initial seven-year term, mandates Shenghe to pay for and take delivery of all agreed products, including rare earths and a minimum of 50% of any immediate rare earths or final separated oxides.
Peak Rare Earths, a company with a market capitalisation of $57.17 million, highlights that the pricing formula is market-based and revolves around the value of contained rare earth oxides, with freight to designated Chinese ports.
CEO Bardin Davis expresses optimism, stating, “This marks yet another de-risking milestone and further strengthens Ngualla’s position as one of the world’s most attractive and advanced rare earth projects.”
Further progress for Peak Rare Earths comes from expanding its special mining licence area from 18km2 to 51km2, allowing for the reconfiguration of the Ngualla Project’s layout, cost reduction, and optimization of operational processes.
Wood Group has been enlisted to explore these optimization opportunities, with a targeted final investment decision in December 2024. Discussions regarding an equity funding solution for Ngualla are also underway, with the potential for Shenghe to acquire a 50% interest in Ngualla Group.
Shenghe Resources, valued at US$2.2 billion ($3.3 billion), operates across multiple facets of the rare earth industry and has a 19.89% stake in Peak Rare Earths. The partnership signals a positive step forward for the rare earth sector and sets the stage for further collaboration and growth in the coming years.
