Kendrick Resources Enters Definitive Agreement for Rare Earth Licenses in Namibia

The initial consideration includes 22,000,000 new shares, with a six-month lock-up and then six months of orderly market conditions. Kendrick has 30 days to arrange a sale during that orderly period, and no more than 50% of the Consideration Shares can be sold in any one transaction. Post-Admission, the share count rises to 315,248,152. The 22,000,000 new shares represent about 7.0% of the enlarged share capital. A further 3,000,000 shares are payable if the licences are extended by at least 18 months.

Development pathway and JV structure

Kendrick funds work to PEFS. Upon completion of the PEFS (or earlier by mutual agreement), Bonya will form a special purpose vehicle (SPV – a dedicated project company) that is 100% owned by Bonya, and the parties will enter a joint venture and shareholders’ agreement. The SPV will be responsible for taking the project from PEFS into production and raising the funds to do so.

The economics are framed by Kendrick’s 70% interest in the licences and the Partners’ 30% carried interest across exploration, development and production expenditure. In production, there is a 2% net smelter royalty (recipient not disclosed). Importantly, 60% of cashflows will be retained by Kendrick until it has fully recovered funds it advanced, with the remaining 40% distributed according to equity interests. That cost-recovery feature reduces payback risk for Kendrick if the project advances.

Governance and local alignment

Subject to regulatory checks, Wilhelm Shali will join Kendrick’s board as a non-executive director. He is described as a Namibian businessman with experience in exploration, mining, property and agriculture. Adding the local partner to the board can help alignment and stakeholder engagement.

What I like and what gives me pause

Positives

• Clear majority position: 70% interest with cashflow recovery protections is attractive if the project progresses.
• Data head start: Inherited drill holes, unassayed core and geophysics could accelerate discovery work.
• Commodity focus: Early read-across to magnet rare earths targets a strategically important niche.
• Structured de-risking: Cashflow sweep to recover advanced funds and 50% of sale proceeds provide downside protection if monetised pre-production.
• Orderly issuance: Lock-up and orderly market terms help manage near-term selling pressure from consideration shares.

Watch-outs

• Exploration risk: Grades, tonnage and metallurgy still need to be proven – no resource figures are disclosed.
• Funding burden: Kendrick is responsible for costs to PEFS; funding sources are not disclosed.
• Royalty and SPV clarity: The recipient of the 2% net smelter royalty is not disclosed, and final JV equity mechanics at SPV level are not detailed beyond the 70%/30% economics.
• Further consideration: Additional USD500,000 and 3,000,000 shares are payable on licence extension, which would add to cash outlay and dilution.

Key dates and next steps

• Immediate: Drill programme mobilisation and further metallurgical test work (company says “fast-track”).
• On or around 2 March 2026: Admission of 22,000,000 new shares to the Official List and LSE Main Market.
• Future trigger: Potential further consideration upon licence extension of at least 18 months.

My take

This is a punchy move into rare earths with a majority position, a substantial dataset and strong statements from management about potential. The deal architecture is thoughtful: carried interest for partners, Kendrick’s cashflow recovery rights, and guardrails on share sales. The prize is clear if magnet rare earths are confirmed at scale.

The flip side is typical for early-stage mining: proof will come from the drill bit and the metallurgical lab, and Kendrick must fund its way to PEFS. With no resource numbers or economics yet, this is still high risk-high reward. For now, on balance, it reads as a well-structured entry into a strategically important commodity, with catalysts to watch as drilling and test work get underway.