Viridis Mining and Minerals has secured a significant government endorsement for its Brazilian ambitions, landing a R$77.5 million (A$21.09M) financing facility from the Brazilian Development Bank (BNDES) to progress its flagship Colossus rare earths project.

The deal provides the company with highly attractive, long-term and non-dilutive funding. It carries a 16-year tenure, comprising a four-year grace period and a 12-year amortisation schedule, at an exceptionally low indicative interest rate of just 4.8 per cent per annum.

The new financing package will be funnelled into Viridis’ Rare Earths Research and Processing Centre (CPTR), in the Brazilian city of Poços de Caldas, helping reimburse costs already sunk into establishing the facility while bankrolling ongoing demonstration plant operations, research and innovation activities.

The approval converts a former “Joint Support Plan”, which Viridis secured with BNDES and the Federal Agency for Studies and Projects (FINEP) in July last year, into tangible, low-cost capital.

The notional conversion follows the original Joint Support Plan’s identification of BNDES’ credit programs as one of several potential funding avenues to support Viridis’ development activities. It appears to be a solid vote of confidence from Brazilian development institutions in the strategic importance of establishing a domestic rare earths value chain, with Colossus at its heart.

The Colossus project sits in the mining-friendly state of Minas Gerais and is considered one of the world’s most significant near-surface, ionic adsorption clay (IAC) rare earths discoveries.

The project’s primary foundation lies in its massive 473-million-tonne global resource grading 2505 parts per million (ppm) total rare earth oxides (TREO) and 592ppm magnet rare earth oxides (MREO). That inventory includes a measured and indicated core of 305Mt averaging 2723ppm TREO and 659ppm MREO, driven by tighter infill drilling in high-grade core zones.

A definitive feasibility study released in August confirmed the bankability and execution readiness of the Colossus project, putting Viridis firmly on the path towards a final investment decision, targeted for the third quarter of this year

A key de-risking milestone was achieved in May when the company’s CPTR demonstration plant produced its first batch of mixed rare earth carbonate (MREC). That facility is now validating the project’s processing flowsheet under continuous operating conditions, providing crucial data for the final engineering and design of the larger commercial-scale plant.

The BNDES loan facility significantly strengthens Viridis’ funding position for the US$449 million (A$621.65M) project. The company has already identified US$154 million (A$213.2M) in equity funding, which is US$19 million (A$26.3M) more than its targeted equity requirement. The new A$21.09 million BNDES debt facility has taken another bite out of Colossus’ funding bill, trimming the remaining senior debt needed to bring the project to life to US$280 million (A$387.7 million).

The company is also advancing discussions with several other export credit agencies, including Export Finance Australia, Export Development Canada and France’s Bpifrance, which have provided non-binding letters of interest for further debt financing.

A 16-year facility at an indicative current cost of approximately 4.8% represents exceptionally attractive funding and demonstrates the strength of the support available in Brazil for strategic projects such as Colossus.

With a war chest of A$56.5 million as at the end of the last quarter, Viridis says it is fully funded through to a final investment decision.

The company appears to be rounding the corner from explorer to developer at a serious pace. Having the Brazilian government not only cheering from the sidelines but also reaching into its pockets with long-term, cheap funding sends a powerful signal about its backing for Colossus.

With a bankable study in the bag and a demonstration plant already churning out product, Viridis seems to have all its ducks in a row as it barrels towards a final development decision on its world-class rare earths asset.

Is your ASX-listed company doing something interesting? Contact: [email protected]

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails