PERTH (miningweekly.com) – Rare earths developer Northern Minerals has announced a range of cost-cutting measures, including a reduction in staff numbers and directors' fees.

Chairperson Conglin Yue said on Monday that the measures were introduced following a board review of resources and project requirements in the short term.

“We are in a position where we have a good funding pipeline in place, but the board believes it is prudent in the current environment to review our operating structure and, where possible, introduce mechanisms to optimise it,” he added.

Northern Minerals had introduced a stand-down period for the majority of its employees until the completion of a transaction with Jien Mining, under which Jien would invest some A$49.5-million to advance the Browns Range project.

Staff numbers would also be reduced immediately, with redundancies taking place at both the Browns Range project and at head office level.

In addition to the redundancies, Northern Minerals would also reset its MD and CEO employment contracts, reducing salaries by an effective 50% from November 1, while director fees would also reduce by 50%.

Executive employment contracts would also be reset, with salaries reducing by 50%, effective from November 1.

Upon the completion of the Jien transaction, or Northern Minerals obtaining at least A$10-million within the next six months, MD, CEO and director salaries would be increased to 80% of the current fee structure, while remaining staff contracts would be reset with a 20% reduction in remuneration for all positions.

Northern Minerals MD George Bauk said on Monday that the measures would ultimately support the development of the Browns Range project as one of the world’s leading suppliers of dysprosium.

“These measures have included some difficult decisions, but they reflect the current environment and strike the best balance for the future of the company. Our focus remains on the end game and about ensuring we are in the best position possible to capitalise on Browns Range, to the benefit of all our stakeholders.”

Jien Mining would initially invest in Northern Minerals through a A$5-million convertible note facility, which would provide immediate capital to Northern Minerals, and following a due diligence, would invest through share and option placement.

The convertible note facility would be based on the provision of 25-million shares, at 20c each, while Jien Mining would be issued a further 110-million shares, at 20c each under the placement, to raise a further A$17-million, and an additional 110-million options, with an exercise price of 25c each, to raise a further A$27.5-million, if and when exercised.

Northern Minerals was hoping for a 2017 production start at Browns Range, after a 2014 prefeasibility study estimated that the project would have a net present value of A$446-million. The study was based on a conventional mining operation involving both opencut and underground operations, with Browns Range expected to deliver about 279 000 kg/y of dysprosium, over a mine life of ten years.