Livium (ASX:LIT) signed a non-binding term sheet with the University of Melbourne to explore the use of the university's microwave technology for the extraction of rare earth elements, according to a Tuesday Australian bourse filing.

The research into rare earth elements extraction using microwave technology at the university will be funded by Livium with an initial investment of around AU$65,000 and an increase of up to AU$250,000, contingent on the achievement of two project milestones by the university, the filing said. This includes securing grant support for the prototype scale microwave reactor.

Microwave technology can boost chemical reactions and alter the morphology of minerals to help selectively recover rare earth elements. Recovery rates of over 95% grade of neodymium, over 80% grade of praseodymium have been achieved in laboratory test work, with the potential to achieve over 90% grade of praseodymium with an oxidant.

The firm's shares rose almost 17% in recent trading on Tuesday.