JOHANNESBURG (miningweekly.com) – A prefeasibility study (PFS) at Toronto-listed Mkango Resources’ Songwe Hill rare earth project, in Malawi, has supported the declaration of a maiden probable mineral reserve estimate of 8.5-million tons and has indicated a net present value of $293-million, based on rare earth oxide (REO) prices of $55/kg.

The study, which was based on the development of an openpit operation, using contract mining, with a mine life of 18 years starting in 2017, further outlined initial capital expenditure (capex) of $217-million, including a contingency of $20-million.

Assuming an additional cost of $10/kg to account for the cost or discount associated with toll separation or the sale of a mixed chemical concentrate, the study outlined cash operating costs of $13.4/kg for the first five years of production, increasing to $17/kg for the remainder of the mine life.

There was potential to significantly expand production or the mine life 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 yearly production of some 2 840 t/y of REO in concentrate,” the company said in a statement.

Mkango CEO William Dawes described the results as 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 PFS or feasibility study announced.

“We are very encouraged by the project’s strong returns and relatively low capex,” he commented.

Mkango president Alexander Lemon added that, with the ongoing support of the Malawian Ministry of Natural Resources, Energy and Mines, as well as the communities surrounding the project, Malawi had the potential to become a significant sustainable producer of rare earths on a global scale.

“We are proud to be spearheading this initiative with the government and people of Malawi,” he said.