London-listed Pensana has outlined details of a revised financing and development strategy which will see the Longonjo operation, in Angola, being fully funded into production.

A revised execution plan allows for staged mine development, which will reduce the upfront capital expenditure (capex) to $200-million.

Following discussions with its major shareholders, the FSDEA (Angola Sovereign Wealth Fund) and M&G Investment Management, supported by Angola’s Ministry of Mineral Resources, Petroleum & Gas, a detailed review was undertaken by the Longonjo engineering team to reflect the strong desire of all parties to bring the Longonjo operation into production as soon as is practical.

The revised execution plan is based on a staged development of the mine and processing facilities with a reduced upfront capital cost of $200-million, with about $105-million, related largely to the national power grid connection, rail spur and subsequent expansion costs, deferred until year three.

Subsequent to the engineering redesign, the Angolan government has announced a commitment to invest $83.6-million in the extension of the hydroelectric power line to Huambo. This has the potential to reduce the capital funding requirement for the project by $36-million thereby potentially reducing the capex in year three to about $70-million.

The FSDEA has agreed to provide an initial $15-million loan facility as part of an $80-million investment (which is subject to due diligence and the finalisation of investment terms) and which will be repaid out of the larger facility, for the $200-million staged development.

The purpose of the proposed investment is to facilitate the immediate development of the Longonjo mine and to provide the necessary support for the proposed project debt facility.

The company has also mandated ABSA Bank to arrange a $120-million project loan which, together with the potential $80-million investment, represents the funding required to develop the mine and processing facilities.

The funds are required to be put in place between now and the end of the calendar year to meet the proposed construction and commissioning schedule, with first production targeted in 2025.

The FSDEA’s commitment towards funding has allowed for the continuation of on-site activities for which the earthworks contractor (Grupo Nov) and Electrical contractor (Elektra) have already been mobilised.

During peak construction activity, the site will employ more than 650 personnel and contractors and will create more than 420 full-time jobs, Pensana highlights.

At full production, once the staged development is complete, Longonjo will produce about 38 000 t/y of mixed rare earth sulphate, representing about 5% of world production, for downstream processing or to be sold on the international market.

In addition to the Longonjo project, Pensana is building the Saltend Chemical Park, in the Humber Freeport, in the UK, where it will process high-value raw materials from Longonjo.

The Saltend facility is expected to be the UK’s first rare earths processing facility and will produce about 12 500 t/y of rare earth oxide, of which 4 500 t/y will be neodymium and praseodymium oxides – important magnet metals used in the production of electric vehicles.