Viridis gets huge Brazilian finance nod for strategic minerals play
The Brazilian National Bank for Economic and Social Development (BNDES) and the Federal Agency for Studies and Projects (FINEP) confirmed the company and its joint venture entity Viridion, are eligible to progress a joint support plan under the government's strategic minerals initiative.
The plan will provide the company with potentially transformative non-dilutive grants, debt financing and possible equity participation to develop its Colossus rare earths project in the Brazilian state of Minas Gerais.
At the same time, Viridis announced it has signed a binding memorandum of understanding with two leading Brazilian asset management firms, clearing another pathway for staged payments of up to US$30 million (A$46 million) in private share placement funding. The funding is expected to provide much-needed support, as Viridis looks to rapidly develop Colossus towards a final investment decision and starts executing the highly anticipated project.
Under the BNDES/FINEP initiative, Brazil plans to inject a whopping BRL$5 billion (US$903 million) into the country's most noteworthy strategic mineral projects to strengthen its local supply chains. Viridis received an initial nod to progress to this next phase of the initiative in June.
Being tapped to participate in the program could play a major role in fast-tracking Viridis' expanding Colossus rare earths project towards production and boosting its Viridion JV recycling and downstream refining business.
Providing certain requirements are met, Viridis-Viridion could gain access to financial options, including BNDES funding programs, credit lines and equity investment, as well as to FINEP's non-reimbursable resources.
Viridis plans to immediately negotiate a tailored funding package to supercharge Colossus' development and refining operations.
Management says the company was selected largely due to the strong economics revealed in its preliminary feasibility study for Colossus, as well as its access to ASX-listed Ionic Rare Earths' patented and proven new-age refining and recycling technology. Viridion is a joint venture between Viridis and Ionic.
The joint agency initiative was recently bolstered by a second round of funding, which put a further BRL$3 billion (US$542 million) on the table to help companies advanced in the strategic minerals refining process to develop innovation hubs and technology.
The Viridion joint venture encompasses Ionic's patented solvent extraction technology developed at its Belfast plant in Ireland. The partners recently secured land in Minas Gerais' capital Poços de Caldas to build a centre for rare earths innovation, technology and recycling.
The rare earth recycling facility will focus on recovering magnets from end-of-life equipment, such as wind turbines, electric motors and MRI machines. It will also process mixed rare earth carbonates from Colossus' demonstration plant. With its recycling and processing arms, Viridion could be an ideal candidate to source more funding from Brazil's second round funding.
Viridion recently delivered high-purity magnet rare earths neodymium, praseodymium, dysprosium and terbium to Brazil's only magnet manufacturer CIT SENAI ITR. The new recycling facility will produce four magnet rare earth oxides at better than or equal to 99.5 per cent purity.
In a further head-turning reveal, Viridis announced it has signed a binding memorandum of understanding with two leading Brazilian asset management firms, ORE Investments Ltda and Régia Capital Ltda, of up to US$30 million (A$46 million) in private share placement funding.
Private equity group ORE Investments only invests in the mining sector, where it has deep experience in the technical, operational and financial sectors. Asset manager Régia Capital provides sustainable investments strongly aligned with environmental, social and governance criteria.
The funding support for Colossus signifies a major vote of confidence in the growing project from renowned industry players, which may lead to improved access to project financing, permitting and support from potential key local stakeholders.
Equity finance could provide flexible financing options for Viridis at important stages of its project development.
The investment framework enables staged equity funding, designed to be delivered across four tranches over a maximum 36 months to support the company through key project milestones.
Viridis will receive an initial US$5 million when it executes definitive agreements, priced at 91 cents per share. Follow-on tranche payments of US$5 million, US$10 million and a final US$10 million are scheduled at 12-month intervals to provide predictable funding support in line with Viridis' expected project development timelines.
Viridis retains the right to pursue other financing opportunities, including under the joint BNDES and FINEP initiative, offering the company maximum flexibility.
Viridis continues to work on environmental permitting and says advancing the regulatory framework is a priority. It completed an environment impact assessment report in January and a preliminary licence is expected to be approved shortly.
Management says it has received strong interest in recent financing discussions with multiple government institutions, export credit agencies and development banks in several nations.
The company is also pursuing strategic offtake talks, boosted by the recent strong pre-feasibility study economics. It is planning to run a metallurgical test program to enhance its recovery levels, and will feed this data into an upcoming definitive feasibility study.
Viridis, with its massive Colossus project and magnet recycling joint venture with Ionic, seems to have caught the attention of the right players willing and able to support mining. That can only be a positive thing for this aspiring rare earths producer.
Is your ASX-listed company doing something interesting? Contact:
matt.birney@wanews.com.au
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