Northern Minerals Ltd (ASX:NTU) has received a refund payment of $8.64 million from the Australian Tax Office (ATO) with the remaining balance of $1.3 million to be received on or before Thursday, September 17.
This will be the net cashflow effect of the settlement agreement between the company and the ATO, announced on August 24, 2020, relating to refundable Research and Development (R&D) tax offset claims for the financial years ended June 30 2017, 2018 and 2019.
The settlement agreement also provided a framework for reviewing the company’s refundable R&D tax offset claim for the financial year ended June 30, 2020, which will be lodged shortly.
Pilot plant test-work planned
CEO Mark Tory said with the settlement and payment of claims with the ATO being finalised, Northern Minerals was very pleased to be in a strengthened position to move forward with the Pilot Plant testing at Browns Range.
He said: “Our strategy is to be 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.”
On receipt of funds from the ATO, Northern Minerals has moved to immediately reduce debt with the early repayment of $2 million to JHY Investments Pty Ltd.
The company entered into a $4 million convertible note subscription and option agreement with JHY in December 2018 with an original 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 to December 31, 2020, and at a lower interest rate of 10%.
The company’s updated cash position following the initial receipt of funds from the ATO is $11.9 million with the indicative debt position as at September 11, 2020, excluding any accrued but unpaid interest, totalling $4.1 million.
Northern Minerals updated cash position.
Browns Range Project
The company commenced the 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 its Browns Range Heavy Rare Earth Project in northern Western Australia.
In March 2020, the operation was placed into care and maintenance as a result of COVID-19 and partially restarted operations in August 2020.
The work program provides the opportunity to gain production experience and surety of supply for offtake partner, thyssenkrupp, as well as allowing the assessment of various project enhancement initiatives including ore sorting and the separation of the product into individual rare earth oxides.