Shares in Pensana PLC (LSE:PRE, OTC:PNSPF) rose 16% after it announced significant progress in securing debt financing for its Longonjo rare earths project in Angola, revealing the negotiation of a non-binding term sheet with a consortium of lenders for $156 million.
Once secured, the funding will help bankroll the development of the mine, including its flotation circuit and refinery.
The finance facility is structured to offer up to 50% participation among the lending parties and is designed to span the construction phase and subsequent ramp-up to full production, extending to a maximum tenure of seven years.
The execution of this facility is contingent upon securing guarantees from the relevant export credit agency, discussions for which are reportedly in advanced stages.
At the same time, Pensana said it is in the latter stages of negotiations with the Angola Sovereign Wealth Fund (FSDEA) and a consortium member to finalise an $80 million equity portion of its fundraiser.
This follows the successful redesign of Longonjo, one of the world's largest deposits of minerals used in magnets and car batteries. Now fully permitted, the investment required to get it up and running is estimated at $217 million, including a 10% contingency.
To further support early-stage development and streamline the path to securing the main finance, FSDEA has extended a $15 million bridging loan facility as part of the $80 million equity investment framework.
"We are grateful to FSDEA for its ongoing support and to the lender consortium for their work in concluding the US$156 million debt term sheet to finance the Longonjo rare earths mine and processing facility," said Pensana chairman Paul Atherley.
"This is a major step for the company in its plans to bring into production one of the world’s largest undeveloped rare earth projects."
In addition to these developments, Pensana is actively engaging with various entities for the offtake agreements of its mixed rare earth carbonate (MREC), a product free from radionuclides and thus highly marketable. The company has already received product approval from a potential customer and anticipates securing commitments for up to 100% of the MREC production from the Longonjo facility.
At 9.23 am, Pensana shares were changing hands for 35.5p, up 5p.