Iluka Resources Ltd (ASX:ILU) has entered into a long-term feedstock agreement with Lindian Resources Ltd (ASX:LIN, OTC:LINIF) to secure 6,000 tonnes per annum of rare earth concentrate for 15 years. The concentrate will be sourced from Lindian’s Kangankunde project in Malawi and will supply Iluka’s Eneabba rare earths refinery, currently under construction in Western Australia.
This agreement is expected to provide around 10% of Eneabba’s total feedstock capacity and supports Iluka’s strategic objective of securing both domestic and international third-party supply. Iluka is also providing a US$20 million loan facility to assist in developing the Kangankunde project, subject to due diligence and other conditions.
Managing Director Tom O’Leary said the agreement “is an example of Iluka catalysing a new mine into production as its Australian refining customer”, contributing to a sustainable rare earths industry through international cooperation and long-term offtake partnerships.
Details of the feedstock supply agreement
Under the agreement, Lindian will deliver 6,000 dry metric tonnes (dmt) of monazite concentrate annually (+/-5%) over 15 years, totalling 90,000 dmt. The concentrate must meet agreed specifications and will contain approximately 9,600 dmt of neodymium-praseodymium (NdPr) content.
Pricing is linked to Iluka’s realised prices for Nd, Pr, and NdPr oxides sold from Eneabba, ensuring alignment with Iluka’s broader pricing strategy. The formula includes a floor price and provision for payment for dysprosium and terbium, where thresholds are met.
Iluka retains the right to suspend purchases if rare earth oxide prices fall below a set threshold for two consecutive quarters. The agreement supports the Eneabba refinery’s role as Australia’s first fully integrated producer of separated light and heavy rare earth oxides.
Kangankunde development support and loan facility terms
To support Lindian’s development of the Kangankunde project, Iluka has agreed to provide a US$20 million loan facility. The loan has a five-year term and carries an interest rate of Term SOFR + 11% per annum, with capitalised interest for two years during construction. A 4.4% commitment fee applies on undrawn funds.
The loan is conditional on due diligence, execution of full loan documentation, full project funding, and confirmation from an independent technical expert that Kangankunde meets cost and schedule targets. Lindian must also have spent all required equity prior to drawing on the loan.
Security for the loan includes a mining mortgage and full asset security over Lindian entities, with Lindian providing an unsecured guarantee until the project is complete.
Expansion and future supply options
The agreement provides Iluka with rights of first refusal on a range of potential future supply opportunities from Kangankunde. These include:
- The option to extend the current 6,000 dmt annual supply for another 15 years post-contract.
- The right to acquire up to 80% of incremental supply from future capacity expansions, up to 31,000 dmt per annum, contingent on Iluka co-funding 50% of the expansion capital.
- Preferential terms for purchasing commissioning-phase or off-specification product.
- The opportunity to match less favourable third-party terms offered by Lindian to other buyers.
These rights reinforce Iluka’s strategy of building a resilient and diversified feedstock base for Eneabba, leveraging its partnerships to anchor new rare earth supply chains both in Australia and internationally.