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PrintChina Non-Ferrous Metal Mining Co Ltd (CNMC) has signed a $505 million deal to take a controlling stake in rare earths miner Lynas Corporation Ltd.
If approved by regulators and Lynas shareholders, the state-owned Chinese company will take a 51.6 per cent stake in Lynas.
Lynas shares surged more than 40 per cent on news of the deal, up 12.5 cents at 42 cents by 1444 AEST.
As part of the deal, CNMC will buy 700 million Lynas shares for 36 cents, for a total equity of $252 million.
CNMC will also guarantee a Chinese bank loan of $US104 million ($A143.43 million) to Lynas and said it will provide a guarantee for a second loan of about $US80 million ($A110.33 million).
Lynas will receive a total of about $US366 million ($A504.76 million) under the agreement.
The deal also makes provision for CNMC to help Lynas obtain a $US15 million ($A20.69 million) working capital facility within ten business days of the heads of agreement being signed.
The Sydney-based Lynas needed the funds and investment with CNMC to recommence work at its first mine, the Mt Weld rare earths project in Western Australia, which was suspended in February due to financing uncertainty.
Some of the money will also be used to fund a processing plant in Malaysia.
Rare Earths refer to 15 metallic elements that play a key role in environmental products such as energy-efficient light bulbs and hybrid cars. – Associated Press
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