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Mkango Resources increases cash, advances Songwe Hill project

30th November 2021

By: Donna Slater

Features Deputy Editor and Chief Photographer

     

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Aim- and TSX-V-listed rare earths project developer Mkango Resources increased its cash on hand to $6.24-million as at September 30, compared with the $5.78-million held at the same time in 2020, and the $4.92-million held at December 31, 2020.

The company, which is focused on advancing the Songwe Hill rare earths project in addition to other projects in Malawi, and on downstream opportunities relating to the rare earths supply chain, also reports that its comprehensive loss for the three months to September 30, widened to $2.52-million, from the $767 401 for the corresponding period in 2020.

Mkango’s mineral project expenditures at the end of the period increased by $1.13-million compared with the corresponding period in 2020 as work on the feasibility study continues.

In addition, the company experienced an increase in foreign exchange losses of $349 645 as a result of a weakening of the pound against the dollar.

Nonetheless, Mkango expects that funding previously received from Talaxis, through the exercise of warrants, and received from the $7.6-million ($7.2-million net) fundraising announced on August 5, will be sufficient to fund its operations in the next 12 months.

In this regard, the company notes that also on August 5, it restructured Talaxis’ interests in both the Songwe Hill rare earths project and Maginito, to simplify and enhance Mkango’s ownership structure prior to delivery of the Songwe Hill feasibility study and to significantly enhance its growth potential.

Through this transaction, Mkango will increase ownership of the Songwe Hill project and of Maginito to 100% in an $18-million share transaction with Talaxis, while retaining all offtake rights relating to Songwe Hill, Maginito and the 100%-owned Pulawy separation plant project in Poland.

This fundraising programme will have a complementary $7.6-million ($7.2-million net) fundraising at a 2.9% premium to its five-day volume-weighted average price, including a $966 000 investment by nonexecutive chairperson Derek Linfield and a $550 000 investment by Resource Early Stage Opportunities Company.

In line with the fundraising, Mkango reports that it is fully funded to complete the feasibility study for the Songwe Hill rare earths project, which is targeted for completion in the first quarter of 2022.

Going forward, Mkango states it is best positioned to accelerate its integrated mine, refine, recycle strategy with a simplified and vertically-aligned ownership structure and enhanced financial flexibility.

Progress on this feasibility study is continuing, with work under way in Malawi, Australia, South Africa and the UK. Mkango believes that some workstreams may still be impacted on as a result of Covid-19; however. the degree of impact is currently uncertain.

At Songwe Hill, Mkango started a geotechnical drilling and pitting programme on September 23.

The geotechnical test work programme will obtain samples from about 150 5-m-deep pits and twenty-two 20 m drill holes, and is being undertaken to confirm the soil and ground characteristics of the Songwe Hill project area.

The geotechnical samples are being tested and investigated in Malawi at the Geoconsult laboratories in Lilongwe and will provide the detailed geotechnical information that is required to finalise the detailed engineering design plans, prior to the completion of the feasibility study.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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