Northern Minerals now debt-free after $8.7 million refund payment from ATO

Northern Minerals Ltd (ASX:NTU) has received a refund payment of $8.7 million from the Australian Tax Office (ATO) and as a result, has achieved a key goal of being debt-free by the end of 2020. The refund payment relates to the company’s refundable R&D tax offset claim for the financial year ended June 30, 2020. Shares of the company, which has a market cap of approximately $141.8 million, have been as much as 10% higher to 3.5 cents intra-day. Debt-free status NTU CEO Mark Tory said with the payment of the 2020 claim, Northern Minerals would today repay the last amount of debt of $2 million to JHY Investments Pty Ltd. “We have achieved our aim today of being debt-free by the end of the 2020 calendar year and continuing to invest in the potential of Browns Range to support a full-scale, commercial operation in the future through ramping up our exploration program in the next six months.” Debt related to Convertible Note The company entered into a $4 million Convertible Note subscription and option agreement with JHY in December 2018. The original term of the notes had a maturity date of December 31, 2019, and an interest rate of 16% per annum. Northern Minerals subsequently negotiated an extension of the maturity date for a further year and at a lower interest rate of 10%. The company’s updated cash position following the initial receipt of funds from the ATO is $15.3 million with the zero debt as of November 9, 2020. Also following the repayment of the Sinosteel debt in October, the company has no security over its assets. Browns Range project NTU is one of a few producers of heavy rare earth element dysprosium outside of China via production from the Browns Range Heavy Rare Earth Project in northern Western Australia. Northern Minerals’ tenure around the project covers 3,595 square kilometres and is centred on the Browns Range Dome, a major geological feature covering about 1,500 square kilometres. A targeting exercise has identified 170 conceptual targets within the tenement package and these are being prioritised for systematic exploration. Northern Minerals is also evaluating the economics of further downstream processing options for Browns Range ore which includes separating heavy rare earth oxides for better economic realisation. Production of heavy rare earth carbonate The company started production of heavy rare earth carbonate in late 2018 as part of a three-year pilot assessment of economic and temporarily technical feasibility of a larger-scale development at Browns Range. In March 2020, the operation was placed into care & maintenance as a result of COVID-19 and partially restarted operations in August 2020. Through the development of its flagship project, the Browns Range Project, the company aims to build the Western Australian operation into a significant world producer of dysprosium outside of China. Dysprosium is an essential ingredient in the production of dysprosium neodymium iron boron (DyNdFeB) magnets used in clean energy, military and high technology solutions.