Mkango (CVE:MKA) will now focus primarily on what it calls the “big four” magnet rare earths, following the update of its pre-feasibility study for the Songwe Hill project in Malawi.
The company also commissioned a report on the rare earths market from industry consultants Adamas Intelligence which confirmed this view.
Dawes said “Mkango’s rare earth mix is geared to the rare earths which may potentially face supply – demand deficits in coming years with the permanent magnet and fuel cracking catalyst sectors being the key demand drivers.“
“Green energy, the environment and technology are likely to be key themes of China’s forthcoming 13th five year plan and this should benefit rare earth prices both from the supply and demand perspective”
“Mkango’s project is well positioned being a cost leader amongst advanced stage, low capex projects, and one of only a handful of projects globally to have advanced beyond the pre-feasibility stage.”
Under the parameters of the reworked study, Songwe Hill shows an after-tax net present value of US$345mln and offers an after tax internal rate of return (IRR) of 37%, based on a long-term rare earth basket value of US$59.8 per kilogram of rare earth oxide (REO).
To get it built will require initial capital expenditure of US$216mln, including a contingency of US$20mln.
Cash operating costs are likely to average US$13 per kilogramme of REO over the first five years, and US$16.4 over the full 18 years of mine life.
However, a further US$10 per kg will have to be added to account for the discount associated with tolling or the sale of a chemical concentrate.
In terms of saleability, over 80% of the basket value of the product will be attributable to rare earths used in high growth permanent magnet applications, comprising over 65% attributable to neodymium and praseodymium, and over 15% to the heavy rare earths dysprosium and terbium.