Following a period of discussion, mining exploration company Altona Energy has entered into a memorandum of understanding (MoU) with mining consultancy Akatswiri Mineral Resources to potentially acquire a majority stake in a rare earth mining project in the Chambe basin, in southern Malawi.
The acquisition will be subject to the signing of a binding agreement.
Akatswiri owns 100% of Malawi-registered Akatswiri Rare Earths (ARE), which has applied for exploration licence APL 0153, for the Chambe rare earths project, which it expects to be granted in June, following government approval.
According to the terms of the MoU, Altona will acquire an initial 51% holding in ARE in exchange for Altona shares. This could increase to 75% on certain project milestones being met.
Akatswiri will remain a 25% shareholder.
Chambe is a large, ionic adsorption clay-hosted rare earth elements project bearing appreciable quantities of critical heavy and light rare earth elements, particularly ytterbium, dysprosium, yttrium, neodymium and praseodymium.
Extensive exploration work has been carried out on the site since September 2010, confirming the presence of mineralised rare earth oxide clays, similar to many of the larger rare earth element mines in China, says Altona.
The benefits of extracting rare earth elements from ionic clay deposits include lower operating and capital costs, as well as shorter times for development.
The expansion of new energy sectors and increases in the demand for electric vehicles is driving demand for neodymium, praseodymium and other ‘technology’ metals which are used in permanent magnets, a key component in electric vehicle manufacturing. It has been widely reported that many companies are looking for alternative rare earth elements supplies outside China, which has controlled the supply for the past several years.
Altona interim CEO Christian Taylor-Wilkinson says that although still at an early stage, the company is in active discussions with Akatswiri’s team, led by Akatswiri CEO Hilton Banda.
“We are looking to commence our due diligence in June, which we hope will quickly lead to a binding agreement. We are also speaking with a number of parties to work with us through the acquisition and fund the subsequent mining project.”
Banda says that working with Altona gives Akatswiri the confidence that it will secure the funding necessary to develop Chambe as a strategic and sustainable producer of rare earths.
“The project has already received support from government, local communities and key stakeholders, through our active engagement and involvement with local communities over the past three years.”
Both companies have commenced due diligence to examine the feasibility of the acquisition. The due diligence process is expected to take up to three months to complete and is dependent upon certain factors, including Akatswiri providing an up-to-date geological report, which it expects to gain access to in due course.
The report, it is understood, will form the key components of a competent persons report, which Altona believes will be required ahead of a fundraise, which is a necessary element of the project's success.