AMN - MALAWI: Earn-in agreement for uranium licence

Mkango Resources has entered into a non-binding Heads of Terms Agreement with MetalNRG PLC, whereby the latter will earn up to a 75% interest in the Thambani uranium exclusive prospecting licence in Malawi, by spending up to US$2 million on exploration. 

The terms of the agreement outline that the parties will enter into a Binding Definitive Agreement on or before June 30, 2019, that shall include the following elements:

• MetalNRG must spend US$500,000 on exploration within the Thambani Licence within 12 months of the date of the definitive agreement, including a drilling program totalling approximately 1500 metres. The details of the initial work plan will be determined in conjunction with Mkango. The completion of this work plan shall entitle MetalNRG to a 25% economic interest in the licence, with such interest limited to uranium only.

• After the completion of the initial work plan, MetalNRG may elect to further explore and develop the Thambani Licence by spending US$700,000 over the subsequent 12 months. Completion of the second work plan shall entitle MetalNRG to a 49% economic interest in the Licence, limited to uranium.

• Following completion of the second plan, MetalNRG may elect to further explore and develop the Licence by spending US$800,000 over the subsequent 12 months. Completion of this third work plan shall entitle MetalNRG to a 75% economic interest in the licence, limited to uranium.

• Mkango to have right of first refusal on 100% of the offtake for uranium and other minerals.

• If, following MetalNRG's initial expenditure of US$500,000 and completion of the initial plan, MetalNRG is not satisfied with the exploration results produced during the first 12 months, it may elect, at its sole discretion, to discontinue future funding of the second and third plans, but it will retain a 25% economic interest in the uranium assets and operations which are the subject of the Thambani licence.

Subject to MetalNRG electing to discontinue future funding of the second and third plans, Mkango shall have the right to seek third-party investment in order to raise sufficient capital to develop further the exploration area covered by the licence. MetalNRG's 25% economic interest will be diluted down when further exploration/development expenditure is made by Mkango or a third party.

Mkango's president Alexander Lemon said: "This transaction is another milestone for Mkango and for Malawi and is further endorsement of the company's strategy and potential.

"With MetalNRG funding the Thambani uranium project and the previously announced transaction with Talaxis funding Mkango's Songwe Hill rare earths project, Mkango shareholders can look forward to an exciting year of news flow and progress in two of the market's most strategic commodities at present.

"We are pleased to be working with MetalNRG and look forward to a new drilling program being carried out at Thambani."

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