Highlights

• Victory Metals signs non-binding Letter of Intent with Sumitomo Corporation for North Stanmore Heavy Rare Earth Project offtake.
• Planned supply of up to 30% annual MREC production (1,000 tonnes/year).
• Pilot plant sales anticipated in 2027.
• Strategic partnership aims to establish a non-Chinese rare earth supply chain for Japan's critical minerals needs.

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Publicly traded Victory Metals Limited (opens in a new tab) (ASX: VTM) has announced it has signed a non-binding Letter of Intent (LOI) with Japanese Fortune 500 trading house Sumitomo Corporation (opens in a new tab), advancing strategic cooperation for offtake from its North Stanmore Heavy Rare Earth Project (opens in a new tab). This development follows the December 2024 MOU between the two companies and marks a step closer to a binding supply agreement.

Key Details

• Offtake Framework: Victory expects to supply up to 30% of annual MREC production, or ~1,000 tonnes/year, including ~50 tonnes/year of dysprosium-terbium (Dy/Tb), for an initial five-year term.
• Timeline: Pilot plant sales through Sumitomo are anticipated in 2027, with full commercial production to follow.
• Resource Base: North Stanmore hosts 320.6Mt at 510 ppm TREO + Sc₂O₃, making it Australia’s largest indicated clay-hosted HREE resource.
• Japanese Interest: Other trading houses are also in discussions, underscoring Japan’s urgency to secure non-Chinese supply.

Strategic Significance

For Japan, whose 2010 rare earth cutoff experience still shapes policy, this LOI represents a hedging strategy against Chinese dominance. For Victory, Sumitomo’s global marketing network offers credibility and access to downstream customers in magnets, defense, and EVs. The inclusion of Dy/Tb—critical magnet elements with few Western sources—is particularly significant.

Critical Investor Questions

• How will Victory manage the technical and capital intensity of clay-hosted HREE processing, particularly separation beyond MREC?
• Will Sumitomo lock in financing or equity participation to move beyond a non-binding stage?
• Can pilot-scale sales in 2027 realistically align with Japan’s and the U.S.’s accelerated supply chain security timelines?

Stock Perspective

Fundamentals: Victory’s market capitalization remains modest compared to the scale of its resource. Partnering with a trading giant like Sumitomo validates the project, but binding commitments and financing structures will be the true catalyst.

Technicals: VTM shares have traded sideways in 2025 amid investor caution on project development costs. The LOI news could set near-term resistance around prior highs, with potential momentum if a definitive offtake or funding package follows.

REEx View

The LOI strengthens Victory’s positioning as a Western-aligned HREE supplier and is a credible step forward. However, retail investors should temper enthusiasm until concrete offtake terms, financing, and processing capability are secured. If executed, this partnership could establish Victory as a cornerstone of Japan’s non-Chinese rare earth supply.

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