Under a binding memorandum of understanding with Jien Mining, the first tranche of $3 million has already been received in the form of a convertible note.

A further two $1 million instalments will be paid in March.

The remainder of the money will be received through share placements and options that hinge on due diligence being completed before June 5.

Jien is the local subsidiary of China-based mining and investment company Jilin Jien Nickel Industry Co, and Northern Minerals managing director George Bauk said the deal had introduced a significant partner.

“This is a key funding initiative and partnership, and reaffirms the quality of the project, and the strong market fundamentals for our high-grade dysprosium product,” he said.

“The partnership will allow us to leverage Jien’s mining experience, financial strength and capital market networks to secure the financial capital require to build the project and progress into production.”

Along with due diligence the bulk of the funding deal hinges on Northern shareholder approval and a green light from the Foreign Investment Review Board.

Once the approvals are secured, Jien will be issued 110 million shares to raise a further $17 million, at which point it will be entitled to one board position.

A further 110 million options with a one-year term will raise the final $27.5 million once exercised, and at that point Jien can make another appointment to Northern.

When the deal is done and the options exercised, Jien will be Northern’s largest shareholder with a 33% stake.

Moving forward, the funding will aid the completion of detailed engineering design for the 100%-owned Browns Range and support the start of early construction works once final project financing is in place.

Northern said the deal left it on track to become the first significant dysprosium producer outside China.

The company’s shares were up as much as 8.7% earlier but were last trading steady at 23c.