Madagascar/InternationalTantalus Rare Earths, the has signed a multi-year supply contract for rare earth oxides with ThyssenKrupp Metallurgical Products, the company announced in a statement on Wednesday.

Under the agreement, ThyssenKrupp will annually purchase 30% of the output (up to 3 000 t, once full production capacity is reached) of mixed rare earths oxide from the Tantalus’ project in Northern Madagascar.

ThyssenKrupp will act as Tantalus’ exclusive distributer in Germany, and one of the distributors for Europe.

The initial duration of the contract is three years from the start of commercial production at the project, with the option to extend it for a further seven years. The option for a total duration of 10 years is subject to ThyssenKrupp arranging debt funding for Tantalus covering 30% of the planned investments until annual production level of 10 000 t of mixed rare earths oxide is reached.

The pricing of the mixed rare earths oxide in this contract is linked to the content of various rare earths oxides present in the Tantalus product as well as to independently quoted market prices of such oxides.

Rare Earth Elements identified in the Tantalus ionic clay deposit include Praseodymium, Neodymium, Terbium and Dysprosium, all in high demand for fast-growing magnet applications in the automotive and renewable energy industries.

Tantalus will commence commercial production upon receipt of the necessary exploitation license, currently expected in the second half of 2016. After a ramp-up period of approximately three years, Tantalus is expected to reach its first phase full-production level of 10 000 t per annum of mixed rare earths oxide.

With the purchase agreement signed with Shenghe Resources in February 2015 and the contract signed with ThyssenKrupp, Tantalus now has agreements covering 6 000 t, or 60%, of its planned annual production. This represents an annual value of about US$ 180 million based on current market prices for rare earths. This means that production of 10 000 tpa from the Tantalus project will be worth about $300 million.

The resource estimate determined by SGS published in December 2014 indicates 560 000 t of contained total rare earth oxides as measured, indicated and inferred resources. With a production of 10 000 tpa, this represents a mine life of 50 years.

Tantalus Rare Earths CEO Thomas Hoyer comments: “This contract we have signed with ThyssenKrupp is not only a significant milestone for Tantalus but it also represents a further key endorsement of both the viability of our rare earths project in Madagascar and the robust demand for the magnet rare earth metals we will produce.

“We have now gained two globally leading companies in our sector as commercial partners, ThyssenKrupp from Germany and Shenghe Resources from China. We are now extremely well positioned to become one of the globally leading suppliers of magnetic rare earths material used in fast growing technological applications, such as electric cars and in renewable energy,” Hoyer says.

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