Lynas has signed a 10-year extension for the Japan Australian Rare Earths (JARE) loan facility, reaffirming Japan as a priority for the company’s rare earths supply.
The new agreement reduces principal repayments to nominal levels up to 2025, allowing Lynas to accumulate substantial cash flow from its operations.
The company said it would be using this to fund the significant capital investment required for the execution of the Lynas 2025 project.
As a result, the company expects it will be able to self-fund its growth plan.
Key amendments to the agreement include the maturity date of the JARE facility, which is extended to June 30 2030 and a reduction in interest rates on the facility to 2.5 per cent per annum.
There is also a revised principal repayment schedule, with minimal principal repayments until December 31 2024, while voluntary repayments can be made at any time without penalty.
The cash sweep mechanism as part of the deal has been removed alongside the restriction on dividend payments once the principal amount outstanding is reduced to $US60 million ($85.6 million) or less.
Lynas chairman Mike Harding said: “the relationship between Lynas and the Japanese Rare Earths industry is significant for the global Rare Earths industry, and the JARE loan facility is a key component of that relationship.”
JARE is a special purpose company established by the Japan, Oil, Gas and Metals National Corporation (JOGMEC) and Sojitz Corporation, and has allowed Japan to prepare for the growth of the electric vehicle market.
The relationship between Lynas and JARE began in 2011 and has been a staunch supporter of Lynas’ growth.
“We thank JARE for these extended loan terms, which position us well for the next phase of our growth,” Harding concluded.