Rare earths and magnet metals mining company Pensana's engineering team has successfully completed a modular redesign of the Longonjo neodymium and praseodymium mine and processing facility in Angola, with a total capital expenditure (capex) of $200-million.

“The completion of the engineering redesign, together with the technical and economic approval by the Mineral Corporation during November, is a very important step toward the execution of the financing," Pensana chairperson Paul Atherley said on October 31.

In an update on the financing of both the Longonjo and Saltend projects – the latter being in the UK – the company revealed that financial institution Absa, which had been mandated as the lead arranger for a $120-million loan facility, had provided high-level commercial debt terms, which include support from the South African Export Credit Agency.

The company stated that the Fundo Soberano de Angola (FSDEA) and a pan-African multilateral development financial institution are working to provide the $80-million equity investment required to support the debt facility.

The FSDEA has provided a $15-million bridging loan facility toward the $80-million investment, which is available to meet operating cash flow requirements to facilitate early-stage development and the route to main finance.

"We are grateful for the ongoing support from the FSDEA, which is working closely with us and the team at Absa to secure the funding to allow the commencement of construction at Longonjo in the first quarter of next year," Atherley said.

Pensana said it was aiming to fully fund the Longonjo project at the subsidiary level, Ozango Minerais (84%-owned by Pensana), which owned 100% of the Longonjo project.

As a result, the company's holding in Ozango Minerais is expected to reduce from 84% to about 64% at a read-through valuation of 66p a share.

An updated mineral investment contract is being worked on, which could potentially include various additional tax incentives, including a reduction in the rate and deferral of the payment of the corporate income tax rate, along with a reduction in the tax applicable to the distribution of profits and dividends.

Pensana said it was in advanced discussions with a number of parties for the offtake of the marketable, radionuclide-free mixed rare earth carbonate (MREC) and expected to be in a position to sign up to 100% of the production of the high-value, clean MREC from the Longonjo processing facility.

"We have been pleased with the strong interest in the high-value radionuclide-free MREC product from Longonjo and are advancing a number of offtake agreements as part of the financing," Atherley said.

The proposed funding arrangements for the Saltend rare earth separation facility remain largely as previously advised, with Nordic investment bank ABG Sundal Collier recently confirming that it will place a bond for about $150-million, and are independent of the Longonjo financing.

Pensana is also in early discussions with the UK Infrastructure Bank and with other potential equity partners for the balance of the funding, namely about $100-million in equity requirement at the subsidiary level.

The company has received a UK government grant of up to £4-million toward the funding requirement.

"We continue to progress the financing for the Saltend project, which will be independent of the Longonjo financing and, as previously advised, will be bond finance, now with support from the UK government," Atherley said.