"JOGMEC is mandated to seek a stable supply of natural resources for Japan and we are delighted that they have recognised the potential of Lofdal," NMI CEO Pine van Wyk said.
He said the partnership provided alignment with and access to "significant industrial groups" in Japan looking to secure long-term supplies of dysprosium, terbium and other heavy rare earths.
China's domination of rare earths was thrust into the spotlight last year as trade tensions increased between the US and China, with the two countries this month signing a phase one deal.
NMI said after the earn-in and completing a feasibility study, JOGMEC could acquire a further 1% for $5 million (US$3.8 million) and elect to exclusively fund development, subject to NMI's right to maintain a 26%-carried interest in Lofdal.
NMI said Lofdal's Area 4 deposit had a 2.88 million tonne indicated resource grading 0.32% total rare earth oxides for 9,230t, of which 7,050t were estimated to be heavy rare earth oxides.
The 3.28Mt inferred resource at 0.27% TREO for 8,970t was estimated to have 6,700t HREO.
It said Area 4's mineralisation was unique as it was dominated by heavy rare earth mineral xenotime, with global sources derived from southern China and the only other primary xenotime deposit being Northern Minerals' Browns Range project in Australia which was in the pilot plant production phase.
A preliminary economic assessment in 2014 concluded Lofdal could produce an average 1,500t REO per annum but NMI has noted rare earth prices have "significantly declined" since 2014.
The company moved to change its name from Namibia Rare Earths in December 2017 as it expanded its portfolio in the African country.
NMI said it would remain operator through to the completion of the feasibility study and van Wyk pointed out the agreement was structured so no equity would be issued and was non-dilutive to NMI shareholders.
It had submitted a mining licence application for Lofdal in 2017.
NMI had about $227,000 in working capital at the end of August, having last raised $4 million (US$3 million) at 18.5c per share in May 2018.
Its shares have ranged from 8-32c over the past year and closed 18.5% higher to 16c yesterday, capitalising it at $28.8 million (US$21.8 million).