ASMH is the holding company for the Dubbo project. Credit: Peggy Greb, US department of agriculture on Wikimedia.

A consortium of South Korean investors has signed an agreement with Australian Strategic Materials (ASM) to acquire a 20% stake in the Dubbo rare earths project for $250m.

ASM’s wholly-owned subsidiary Australian Strategic Materials Holdings (ASMH) is the holding company for the Dubbo project, a polymetallic resource of rare earths, zirconium, niobium, hafnium, tantalum and yttrium.

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ASM managing director David Woodall said: “In opening a financing pathway for the Dubbo Project, this agreement heralds an exciting new phase in ASM’s growth and puts us one step closer to executing our ‘mine to metal’ strategy.

“We are delighted our new South Korean partners have recognised the mutual value of the strategic investment opportunity represented by our integrated manufacturing capability that offers a new, cleaner source of critical metals and alloys to a rapidly expanding market.

“Cementing our ties with South Korea’s advanced manufacturing sector represents an incredible opportunity to create value from our Dubbo project.”

The Australian firm plans to complete an optimisation study for the Dubbo project by the end of this year’s third quarter.

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Proceeds from the stake sale are planned to be used by ASM to advance the development of the project, which is located near the village of Toongi, 25km south of Dubbo, in Central Western New South Wales.

Moreover, the consortium will have the provision for an offtake agreement from ASM’s Korean Metals Plant (KMP), which is currently under construction in Ochang, South Korea.

Over a ten-year period, the consortium will have the option to buy up to 2,800tpa neodymium-iron-boron (NdFeB) alloy from the KMP.

Based on the volumes outlined in the offtake agreement, all of the neodymium oxide production from the Dubbo project would be used as feed to the KMP.

ASM plans to complete the acquisition and offtake transactions by the end of the year.