Neo supported AR3's initial public offer in mid-2021, and clearly likes the progress it has made.
The MoU is designed to help accelerate Koppamurra to first production with a technical joint development agreement and an offtake agreement for 50% of the planned mixed rare earth carbonate product for module one, and future expansions.
The agreement goes beyond Koppamurra and could consider other clay-hosted rare earth projects across Australia and New Zealand.
AR3 will issue options worth A$1.7 million, exercisable at 48c within three years when the joint development agreement is signed.
AR3 non-executive chair Professor Dudley Kingsnorth described Neo as a "world-leader in the rare earths industry" that could deliver vital technical support and advice as the company pursues a near term development of heavy rare earth feedstock.
Neo operates several rare earth production facilities around the world that source MREC from third-party producers, but it is increasingly making upstream investments.
Its increased interest in AR3 follows its 104% boost in resources to 81.4 million tonnes at 785 parts per million total rare earth oxides, and an exploration target of up to 220Mt.
The deposit remains open in all directions.
A 10,000m aircore program is underway to assess the upside. Drilling to date covers just a fraction of the 4000sq.km project area.
Having found the clay-hosted rare earths, AR3 has also confirmed it can recover the minerals, reporting recoveries of 60% for neodymium and praseodymium, and more than 40% for terbium and dysprosium at reduced acid consumption levels.
AR3 and Neo will now work to improve the Koppamurra flowsheet to reduce impurities.
Mining of a trial pit has also been completed and rehabilitated in recent weeks.
AR3 has around $13 million cash remaining to fund its work.
Neo, which is now 22.1% owned by Australian hard rock REE hopeful Hastings Technology Metals, has net cash exceeding C$580 million, and reported revenues exceeding US$600 million over the previous year.
Hastings funded its C$135 million acquisition of Neo shares at $15 per share via a A$150 million note issue with Andrew Forest's Wyloo Metals.
Hastings is developing its Yangibana REE operation in Western Australia and hopes its feedstock may end up in Neo's downstream operations. It is seeking to become an integrated
mine-to-magnet supply chain business.
AR3 saw its shares jump 15% this afternoon to 35.7c, valuing it at $46 million.
It has traded between 30c and $1.22 over the past year.
Neo's stock, which has traded at C$9.88-22.85c over the past year, was at $9.88 overnight, valuing it at $445 million.
