American Rare Earths (ASX:ARR) signed a memorandum of understanding with Novex through its wholly owned unit, Wyoming Rare (USA), covering the conversion of separated rare earth oxides from the Halleck Creek project in Wyoming into the metals required to make permanent magnets, according to a Monday Australian bourse filing.

Novex will support the firm in improving recovery, purity, and product qualification for neodymium-praseodymium, terbium, dysprosium, samarium, and yttrium from Halleck Creek ore. Novex will receive neodymium-praseodymium oxide produced by the firm's demonstration plant and convert it into a metal product suitable as a magnet precursor.

The parties will collaborate on the design of a rare earth metal production facility to be built by American Rare Earths. They will also review options for the firm to produce and supply samarium, dysprosium, and terbium-bearing samples for metallurgical testing and qualification.

Its shares jumped 7% in recent trading on Monday.