Mkango Resources (TSXV:MKA) announced it had received the results of a pre-feasability study for its Songwe Hill rare earth project in Malawi. The study indicates a $293 million USD after-tax net present value for the project along with a probable mineral reserve estimate of 8.5 million tonnes grading 1.6 percent rare earth oxide.
According to the press release, highlights include:
- Pre-feasibility Study (the Study) indicates US$293 million after-tax net present value (NPV), using a 10% nominal discount rate, and 36% after-tax internal rate of return (IRR) for the Songwe Hill Rare Earth Project (the Project), based on rare earth oxide (REO) prices equivalent to a total rare earth basket price for Songwe Hill of US$55.0 per kg REO. The basket price reflects the selective removal of a large proportion of the cerium during the hydrometallurgical process which enhances the value of the product mix.
- Initial capital expenditure (Capex) of US$217m, including a contingency of US$20m, is among the lowest in the rare earth sector.
- Cash operating costs average US$13.4 per kg REO1 for the first 5 years of production and US$17.0 per kg REO1 for the life of mine. The Study assumes an additional cost of US$10.0 per kg REO1 to account for the cost or discount associated with toll separation or the sale of a mixed chemical concentrate.
- The Study supports the declaration of a maiden Probable Mineral Reserve Estimate of 8.5 million tonnes grading 1.60% TREO for the Project and is based on an open pit operation, using contract mining, with a mine life of 18 years commencing in 2017.
- There is potential to significantly expand production or the mine life and for a lower strip ratio given the large additional Inferred Resource and potential to expand the Mineral Resource.
- This first phase of development envisages production of a high grade, critical and heavy rare earth enriched, purified chemical concentrate for toll treatment or sale, with annual production of approximately 2,840 tonnes per year of REO in concentrate.
William Dawes, Chief Executive Officer of Mkango, said:
This is a major milestone in the development of the Project. Since listing in 2011, Mkango has progressed an early stage exploration project to one of only three rare earth projects in Africa with a Pre-feasibility Study or Feasibility Study announced. We are very encouraged by the Project’s strong returns and relatively low capex.
Click here to read the Mkango Resources (TSXV:MKA) press release
