PERTH (miningweekly.com) - Developer Northern Minerals has launched a fully underwritten share rights issue to raise A$26.6-million to fund the development of its Browns Range heavy rare earths project, in northern Australia.

The rights issue is part of a four-stage funding initiative announced in February, to raise a total of A$58-million.

Northern Minerals said on Monday that the rights issue component would include one new share for every two shares held, at an issue price of 20c a share, and one option for every two new shares issued, with an option exercise price of 30c a share and an expiry date of March 31, 2015.

“The share rights issue provides the opportunity for all shareholders to take part in the funding of the next phase of our development, and to further participate in the company’s long-term growth,” said MD George Bauk.

“This funding will provide a high level of certainty and security for Northern Minerals and will allow us to build upon the success we have achieved at Browns Range in the past 12 months.”

Bauk noted that over the past two months, Northern Minerals had delivered a number of key milestones at the project, including a maiden Joint Ore Reserves Committee-compliant resource of 1.44-million tons, a significant offtake memorandum of understanding, and a confirmation of Northern Mineral’s ability to produce a higher value, mixed rare-earth oxide through hydrometallurgical processing.

“Each of these milestones has significantly derisked the Browns Range project, and further increases our confidence in our pathway to production by 2016,” said Bauk.

The A$58-million funding package comprises four components, including the sale of a 16% interest in the project to Australia Conglin International Investment Group, to raise A$26-million, an offtake agreement for an additional 20% of the Browns Range production, and an 18.8-million share placement to sophisticated investors, at 20c a share, to raise a further A$3.76-million.