Name of the Project
Songwe Hill rare earths project.

Location
South-eastern Malawi, between Lake Chilwa and the Mulanje Massif.

Project Owner/s
Mkango Resources.

Project Description
Songwe Hill was confirmed in July 2022 as one of the very few rare earths projects worldwide to have reached the definitive feasibility study (DFS).

The DFS envisages Songwe as a standalone project selling mixed rare-earth carbonates, as opposed to separated rare-earth oxides, and excluding Pulawy, which has potential to add significant downstream value.

The DFS envisages a conventional openpit contract mining operation, feeding mills, flotation and hydrometallurgy plants on site to produce a mixed rare-earth carbonate, with an operating life (mining and processing) of 18 years.

Mkango says there is potential to increase the mine life given the additional inferred resource, the potential to expand the mineral resource and the exploration potential of the nearby Nkalonje project.

The mixed rare-earth carbonate is expected to be shipped to the proposed Pulawy rare earth separation project, in Poland, for separation.

The processing capacity is about one-million tonnes a year of ore to produce an average of 5 954 t/y of total rare-earth oxides in mixed rare-earth carbonate for the first five years, and 4 081 t/y of total rare-earth oxides in mixed rare-earth carbonate from years 6 to 18.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value (NPV), at a 10% (nominal) discount rate, of $559-million and an internal rate of return 31.5% (nominal), with a payback of 2.5 years from full production. The NPV excludes any value attributable to the proposed Pulawy project, which is expected to process mixed rare-earth carbonate from Songwe Hill.

Capital Expenditure
Initial capital expenditure is estimated at $277-million, excluding a $34-million contingency, for the development of the mine, mill, flotation and hydrometallurgy plants, tailings storage facility and related project infrastructure in Malawi.

Planned Start/End Date
The DFS envisages mining starting in February 2025, with processing expected to ramp up from July 2025 and full production from September 2025.

Latest Developments
Mkango and two of its subsidiaries have signed a mining development agreement (MDA) with the Malawi government for the project.

The subsidiaries are British Virgin Islands-based Lancaster Exploration Limited, and Lancaster Exploration Limited, in Malawi.

The signing of the MDA marks a significant occasion in the history of the country’s mining sector, Malawi Mining Minister Monica Chang’anamuno has said, adding that the agreement paves the way for the companies to start mining rare earths at the project.

The MDA is a culmination of two years’ work and symbolises a new partnership. Mkango has said that the conclusion of the MDA is testament to what can be achieved when stakeholders work together towards a common purpose.

According to the MDA, government will provide the requisite infrastructure to support mining activities at Songwe Hill and the country in general, enabling future mining operations in Phalombe to have far-reaching impacts on the economy.

The agreement also confirms the fiscal terms applicable to the project and enhances the options to create value for shareholders amid the ongoing strategic review, as well as engagement with potential strategic investors, development and commercial banks, and offtakers.

Particular components of the MDA include a 5% royalty of gross revenue, a 30% corporate tax rate, a 10% nondiluting equity interest in the project to the Malawi government, exemption from customs and excise duties and a provision that community development expenditure is an allowable tax deduction.

Key Contracts and Suppliers
The MSA Group (geology, mineral resource and geotechnical investigation); Bara Consulting (mining); Grinding Solutions (comminution); DRA Global Company subsidiary SENET (process plant, including on- and off-site infrastructure); Australian Nuclear Science and Technology Organisation (hydrometallurgy); KYSPY Investments and ALS Metallurgy (flotation); Epoch Resources (tailings storage facility); Digby Wells and Associates and Kongiwe Environmental (environmental-, social- and health-impact assessment); SGS Australia (geochemistry); Western Geotechnical and Laboratory Services (geotechnical testwork); Steinweg Bridge (logistics).

Contact Details for Project Information
Mkango Resources, tel +1 403 444 5979.