Toyota-Lofdal deal delayed

Namibia Critical Metals has extended the timetable for transferring a 50% interest in its Lofdal heavy rare earth project to Japanese investors by another 30 days, with shareholder agreements and regulatory approvals still outstanding.

The Canadian-listed company said on Tuesday it was continuing discussions with the Japan Organization for Metals and Energy Security (JOGMEC) and Toyota Tsusho Corporation to finalise arrangements for the proposed joint venture.

The latest update follows announcements on 30 July and 31 August concerning the restructuring of ownership at Lofdal, one of Namibia’s advanced heavy rare earth projects.

JOGMEC and Toyota Tsusho have met the C$23 million expenditure requirement to earn a 50% interest, but the transfer remains incomplete pending final shareholder arrangements and regulatory consent.

“The Company expects the shareholder and applicable regulatory consent process to continue up to another 30 days,” Namibia Critical Metals said.

The transaction involves transferring the stake to TJNREC, the entity designated to hold the Japanese partners’ interest under the proposed joint venture.

Under the original earn-in agreement, JOGMEC was required to spend C$3 million in the first phase and C$7 million in the second to earn a 40% interest. A further C$13 million in the third phase secured an additional 10%, bringing the total to 50%.

The next steps

The remaining steps concern formalising the ownership structure rather than meeting further expenditure requirements.

Namibia Critical Metals currently holds a 95% interest in Lofdal, while 5% is held for the benefit of historically disadvantaged Namibians. The latest announcement does not detail how the remaining ownership will be allocated following completion of the proposed transaction.

The agreement also sets out future financing and dilution provisions as the project advances towards development.

JOGMEC has an option to acquire an additional 1% interest for C$5 million and a first right of refusal to finance the project through to commercial production. It also has the right to purchase all project production at market prices, potentially securing a future supply of heavy rare earth materials for Japanese industry.

Namibia Critical Metals can maintain a minimum 21% interest by paying JOGMEC C$5 million under the agreement’s dilution-protection provisions. It may also contribute its proportional share of future financing after a final investment decision to preserve a larger stake.

Failure to meet future funding commitments could trigger accelerated dilution. Under specified circumstances, the company’s interest could convert into a 1% net smelter return royalty if its ownership falls below 10%.

The 5% carried working interest held for historically disadvantaged Namibians is protected against dilution under the conditions of the project’s mining licence.

Lofdal is a potential source of dysprosium, terbium and yttrium, rare earth elements used in electric vehicles, renewable energy technologies and defence applications. Dysprosium and terbium are particularly important in high-performance permanent magnets used in electric motors and other technologies requiring strong magnetic performance at high temperatures.

JOGMEC is a Japanese government agency supporting secure resource supplies, while Toyota Tsusho is the trading and business development arm of the Toyota Group.