Mining
Kangankunde Rare Earth Project feasibility study confirms technically low risk, economically robust project
July 12, 2024 / Marcel Chimwala
Vorster (Centre) captured at Kangankunde
By Marcel Chimwala
ASX-listed Lindian Resources has released exciting feasibility study results for Stage 1 of the Kangankunde Rare Earth Mining Project in Balaka.
The Feasibility Study examines Stage 1 of the Kangankunde Project's development, which includes mining operations, a mineral processing plant, and necessary support infrastructure.
Lindian CEO Alywn Vorster says in a statement that the results of the Study support a technically robust Stage 1 project with highly attractive economics and provides confidence that a significantly larger expansion project in the future should be considered.
The results indicate that Kangankunde Stage 1 has a post-tax Net Present Value (NPV8 real) of US$555M (A$831M), an internal rate of return (IRR) of 80% and average annual earnings before taxes, depreciation and amortization (EBITDA) of US$84M1 (A$124.5M) 1 .
Vorster explains that the study shows that Stage 1 of the mining project has pre-production capital cost of US$40M (A$60M2) which includes 12.5% contingency, making it one of the lowest capital cost rare earths projects under development.
He says an average annual FOB (Free On Board) operating cost of US$2.92/kg total rare earth ore (TREO) positions Kangankunde in the lowest cost quartile of the global rare earths industry while a payback period of less than 2-years, and post-tax net present value (NPV) to Capex ratio of more than 10:1 are outstanding characteristics across the total mining industry.
“The low-cost structure means that the Stage 1 Project will be one of very few global rare earths projects which can deliver a positive annual EBITDA at current low rare earths prices,” says Vorster.
The Stage 1 project targets Maiden Ore Reserves of 23.7 million tonnes at 2.9% TREO supporting a life-of-mine of 45 years.
The plan is to produce an average annual ~15,300 tonnes per annum (tpa) premium concentrate with 55% TREO grade, with low levels of radionuclides (thorium and uranium) and limited acid consuming minerals. The premium concentrate will contain ~8,400 tpa of REO and ~1,640 tpa of NdPr.
There will be no pre-stripping, and the work will produce very low waste to ore ratio of less than 0.21. using a simple flowsheet based on gravity and magnetic separation requiring limited reagents, and availability of low-cost grid power.
Vorster says: “The Feasibility Study results reaffirm the world-class status of the Kangankunde Project and its competitive positioning to meet a rising demand for rare earths. It is distinguished by its high grade, low levels of impurities and attractive cost structure that positions the Project in the lowest cost quartile of rare earths projects globally.”
“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.”
“The Feasibility Study has been prepared over 10 months by a team of experienced contractors, consulting firms and Lindian team members. The quality of the study is first class, and everyone is to be congratulated on their efforts.”
Executive Chairman Asimwe Kabunga comments: “We are extremely proud of the excellent Feasibility Study results. We have been discussing funding options for Stage 1 with several parties over a number of months, and the Feasibility Study is the key catalyst to progress these negotiations, as well as attract new funding interest. We are confident of securing a superior funding solution that minimises dilution for shareholders. The fully permitted Kangankunde Project is strongly supported by the Malawian Government and the local communities. It will create hundreds of jobs, improved local infrastructure and become a major source of income for the Malawian economy.”
Meanwhile, Kangankunde is attracting significant offtake interest with its premium product specifications, with ~40% of annual production already contracted with USA commodity trading group, Gerald Metals.
Vorster reports that key development approvals are in place, meaning construction contract award to preferred tenderers can occur within a short timeframe, once funding has been secured.
He says: “Multiple funding discussions are gaining momentum with construction groups, trading companies and strategic investors. Lindian also currently maintains a healthy cash reserve.”
Lindian’s development schedule aims to achieve funding confirmation in the third quarter of 2024, commence site construction in the fourth quarter of the year and commission the processing plant in fourth quarter of 2025.
“The very strong economics of Stage 1 and the large resource endowment of the Kangankunde Project, plus robust market demand forecasts, provide confidence for a potential Stage 2 expansion to significantly increase annual production. Lindian intends to formally commence a Stage 2 expansion study in 2024,” he says.
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The establishment of a stable and self-sustaining ecosystem, but not necessarily the one that existed before mining began. In many cases, complete restoration may be impossible, but successful remediation, reclamation, and rehabilitation can result in the timely establishment of a functional ecosystem.
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