Rare earths strategy: Cadoux acquires 50% stake in Minhub Operations (MOPL)

In the first stage of a two-stage share purchase agreement, Cadoux Limited (ASX: CCM; FRA: SDL0) is acquiring a 50% interest in private emerging rare earths producer, Minhub Operations Pty Ltd (“MOPL”). The purchase follows the terms of the binding Heads of Agreement (HOA) between Cadoux and MOPL, which was published one year ago, on May 9, 2023. In this, the partners agreed to jointly develop a mineral sands processing facility in Darwin called Minhub. Cadoux’s purchase of 50% of the issued shares in MOPL follows a due diligence process and the fulfillment of several key conditions precedent. Cadoux will issue 4,000,000 shares as consideration for the first phase of the acquisition. Cadoux and MOPL will continue to work together to achieve the project milestones for the 100% acquisition of MOPL in phase two.

A unique opportunity

MOPL is developing the Minhub third party heavy mineral sands and rare earths production facility in Darwin in partnership with Arafura Rare Earth Limited (ASX: ARU), with Arafura having the right to own up to 50% via a pro-rata funding arrangement with Cadoux.

Roland Hill, Managing Director of Cadoux, commented: “Cadoux has a clear objective for the development of critical minerals. Although HPA is our primary focus, we see a unique opportunity and a clear market advantage for Minhub’s development and long-term production strategy for heavy rare earths. We have been working closely with MOPL since May last year and are encouraged by the progress of the project and the market potential of the various rare earths produced. We will continue to work with MOPL to achieve the outcomes set out in our HOA. The Minhub project is an innovative concept and a very exciting project considering the potential commercial benefits the project offers.”

Conclusion: Cadoux remains committed to its goal of producing critical minerals in Australia using innovative processes. The investment in MOPL gives Cadoux the option to acquire a long-term interest in an upcoming strategically important heavy rare earths production facility. As a future midstream producer, MOPL has a distinctive, risk-minimized business model. MOPL does not intend to operate its own mining operations, but rather process the mineral sand, which is extracted by several mineral sand companies and delivered to the port of Darwin, in such a way that the heavy rare earths contained therein are extracted in addition to the purified sand for export. The valuable concentrate obtained in this way could then be processed by Arafura in the final stage, whereby Arafura also has the corresponding distribution channels. For more details on the Minhub project, we recommend visiting the www.minhub.com.au website.