Under the deal, Talaxis has invested £5 million (US$6.7 million) for a 20% interest in Songwe Hill where drilling is expected to start soon, with Mkango aiming to complete an updated mineral resource estimate by the end of 2018.
Talaxis will invest another £7 million for another 29% interest after Mkango publishes a NI 43-101 technical report relating to the mineral resource estimate update and the funds will be used complete the project's feasibility study (FS) by the end of 2019.
Once the FS is done, the option will remain for Talaxis to acquire another 26% stake by arranging funding for the rest of the project development costs.
In Januray, Talaxis invested £1 million to acquire a 24.5% interest in Maginito, which is investigating the downstream opportunities of developing neodymium powder technologies to use on high intensity magnets and other electric-vehicle related applications.
This includes a research and development programme with Metalysis, which is focused on advancing alloys using neodymium or praseodymium with other elements for permanent magnet manufacturing.
Once Maginito reaches the second phase of its programme, Talaxis will invest £1 million for a further 24.5% stake.
Talaxis and Mkango have also agreed to be each other's preferred partner for all rare earths projects and for all activities in Malawi.
Mkango CEO William Dawes said the company had a "defined pathway to production against the backdrop of a strong outlook for rare earths geared to the electric vehicle market", and looked forward to working with Talaxis to develop Songwe and downstream technologies through Maginito.
Talaxis executive director Danial Mamadou said: "As the market for permanent magnet technology continues to grow rapidly, access to reliable sources of neodymium becomes key … Our focus is to ensure that our clients can benefit from a supply chain specialized in technology metals that is reliable and resilient to external shocks."
Mkango's nomad and broker SP Angel said the cementing of the relationship between the two companies underpinned a route to bring the Songwe Hill into production.
"We look forward to results from the drilling and to the milestone for the next tranche of investment when the updated mineral resource estimate becomes available later this year," it said.