AMN - MALAWI: Mkango signs Songwe Hill development deal

Mkango Resources Ltd has signed an agreement with trading entity Noble Group to develop the Songwe Hill rare earths licence in Malawi. Talaxis, a Noble subsidiary, will acquire up 75% of Lancaster Exploration, which holds the licence, and up to 49% of Maginito, a downstream rare earths business.

Talaxis already has a 20% stake in Lancaster following a £6 million investment in January.

This will fund a drilling program with a resource estimate scheduled by the end of the year.

The drilling is part of a feasibility study, the initial stages of which have begun.

At that point, Talaxis can increase its stake in Lancaster to 49% through investing a further £7 million with an option to go up to 75% once the study is complete.

The feasibility study is expected to be completed by the end of 2019.

Drilling is targeted to begin within the next month, once all roads and drill-pads are completed.

The program is for a minimum of 5000 metres and will be focused on infill, step-out and geotechnical drilling, the latter for the purposes of mine design.

The drill plan is based on a refined geological model developed in-house by Mkango’s technical team in consultation with The MSA Group and Bara Consulting, which have been appointed resource and mining consultants, respectively.

Cartwright Drilling has been appointed as drilling contractor, with a combined Canadian and Malawian drilling team to operate two diamond drill rigs both running 24 hours.

More than 50 drill pads are being constructed for the program, as well as an enlarged camp to accommodate a larger team.

If Talaxis exercises its option, Mkango will retain a 25% interest, free carried to production.

Maginito will also receive a further £1 million once a second phase of R&D work is completed, which will take Talaxis’ stake to 49%.

Talaxis executive director Daniel Mamadou said: "As the market for permanent magnet technology continues to grow rapidly, access to reliable sources of neodymium becomes key.”

Rare earths such as neodymium alloy powders are used in magnets expected to be used extensively in electric vehicles.

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