Fresh from delivering a feasibility study on its massive Kangankunde rare earths project in Malawi, Lindian Resources has completed a successful North American roadshow to promote the project’s economic credentials and explore finance options.
The company says it has fielded strong interest in helping it fund the first two stages of the operation after meeting with meeting with various stakeholders – including United States Government bodies, industry participants and investor groups – and is in the process of reviewing potential partners.
And in broadening the awareness of Kangankunde as a high-grade, low-cost rare earths asset, investors were presented with a set of stage one numbers that, if funded and developed, would make it one of the lowest capital cost rare earths projects globally to get into production.
The Kangankunde project boasts an initial ore reserve of 23.7 million tonnes with an impressive average grade of 2.9 per cent total rare earth oxides (TREO), underpinning a mine life of 45 years. According to the feasibility study and at a targeted rate of production of 15,300 tonnes per annum of premium concentrate up to a 55 per cent TREO grade, the project has a net present value (NPV) of US$555 million (AU$824 million) at an 8 per cent discount rate.
Forecast to generate an average annual EBITDA of US$84 million (AU$125 million) after a capital cost of just US$40 million (AU$59.3 million), the payback would be less than two years and would run an average ultra-low operating cost of US$2.92/kg TREO. And just to make the opportunity even sweeter, 40 per cent of its annual production is already contracted to Gerald Metals, a US-based commodity trading firm.
Management says the economics have attracted interest from various parties – including its offtake partner – not only for stage one, which remains the company’s primary focus, but also potentially for stage two. The company is basing its decisions on which route is the least dilutive to its shareholders.
The Stage 1 development will require low upfront capital cost, presents low commissioning risk and generates strong financial returns. Importantly, Stage 1 could serve as logical springboard for future expansion options. Kangankunde is fully permitted to commence construction and operations once financing is confirmed.
On the development front, the company has pushed on with the construction of temporary site facilities and is close to clinching a deal with two reputable construction firms for the design and construct fixed price contract for the process plant. Minor adjustments to the plant’s design may be made to reduce risk and optimise recovery, but the final contract awards are still expected to be made by the end of this month, contingent on securing project funding.
The company says its project’s environmental and social impact approvals are in place, with Malawi’s environmental protection authority confirming that the necessary certifications remain valid.
The Kangankunde development is starting to tick all the boxes and appears only a short funding step away from becoming a reality. With the insatiable demand for rare earths continuing to gather pace, metal prices should stay strong, playing right into the hands of Lindian in its bid to become one of the lowest-cost producers of TREO in the world.
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