Mining & Trade News

By Marcel Chimwala

Lancaster Exploration, a 100% owned subsidiary of TSX.V and AIM listed Mkango Resources, has signed a Mining Development Agreement (MDA) for the Songwe Hill Rare Earths Project in Phalombe with the Malawi Government.

The signing ceremony was held at the Office of the President and Cabinet in Lilongwe, Malawi during the evening of Friday July 26th, 2024.

Hon. Minister Monica Chang’anamuno MP, Minister of Mining for Malawi stated

“The signing of the MDA marks a momentous and significant occasion in the history of Malawi's mining sector. It is with great pride and optimism that we sign the MDA between the Government of Malawi and Lancaster Exploration Limited (Mkango) paving the way to start mining Rare Earths at Songwe Hill in Phalombe.  The MDA signed by the Government of Malawi is a product of almost two years of hard work. I would like to thank the team at Mkango for their positive partnership spirit during the negotiation period. This Agreement is not just a contractual obligation; it symbolizes a renewed partnership, a commitment to sustainable development, and a shared vision for a prosperous future for both parties. The journey to this has been marked by diligent negotiations, mutual respect, and a deep understanding of the potential that lies beneath our feet. The conclusion and signing of this MDA is a testament to what can be achieved when we work together with a common purpose. It will ensure that the benefits of our mineral wealth are shared equitably and that our environmental and social responsibilities are upheld. The MDA we have signed today is a win-win agreement and is based on the belief that Government, the mining investor and Malawians share some fundamental interests of benefitting from these future mining activities. On behalf of the Malawi Government I would like to take this opportunity to assure the investors that the Government will adhere to its obligations reflected in this MDA.  I would like to reiterate Government’s commitment in ensuring that it provides requisite infrastructure to support the mining activities at Songwe Hill and the country in general. The future mining operations at Songwe Hill in Phalombe will have far-reaching impacts on our economy. As we are all aware mining represents the hopes and dreams of the Malawian people for economic growth, wealth and job creation in line with Vision 2063 and the Agriculture, Tourism and Mining (ATM) Strategy championed by His Excellency the President Dr Lazarus McCarthy Chakwera.  To the management team at Lancaster Exploration Limited (Mkango) I would like to thank you for your unwavering commitment to Malawi. Together, we are not just signing an agreement; we are embarking on a journey towards a brighter, more prosperous future for Malawi. Let this be a shining example of what can be achieved through partnership, perseverance, and a shared vision for a better tomorrow.”

Alexander Lemon, President of Mkango stated: “We are very pleased to announce this major milestone for the Company and the nation of Malawi. I am delighted that the MDA has been agreed and signed with the Government of Malawi. The Project when developed, is expected to be a game changer and transformational for  Malawi and Mkango welcomes the very strong support it is receiving from the Government of Malawi and all stakeholders. When developed, my hope is that Songwe Hill will catalyse a new industrial revolution in Malawi, creating employment opportunities ,producing high value-added exports, as well as further unlocking Malawi’s mineral potential and new infrastructure developments.”

Songwe is one of the very few rare earths projects globally to have completed a definitive feasibility study and hold a signed and approved Environmental, Social, Health Impact Assessment (“ESHIA”), which was completed in compliance with IFC Performance Standards and The Global Industry Standard for Tailings Management (2020) (“GISTM”) adopted for design and management of the tailings storage facility. The key rare earths being targeted at Songwe are neodymium, praseodymium, dysprosium and terbium which are all critical for the green transition and are essential to permanent magnets for electric vehicles, wind turbines and many electronic devices.

Key components of the MDA include:

➢ 5% royalty of gross revenue

➢ 30% corporate tax rate

➢ 10% non-diluting equity Interest in the Project to Malawi Government

➢ Exemption from customs and excise duties – Lancaster will be exempted from Export Duty, Import Duty,

Import Excise and Import VAT on imports and exports of capital goods as provided in the applicable law

➢ 10 years stability period

➢ 10 years Tax loss carry forward

➢ Community Development Expenditure is an allowable tax deduction

The key rare earths being targeted at Songwe are neodymium, praseodymium, dysprosium and terbium which are all critical for the green transition and are essential to permanent magnets for electric vehicles, wind turbines and many electronic devices. Rare earth elements are critical enablers of clean energy and electro-mobility. They are used in a wide range of applications that have transformed modern society, and due to their unique physical and chemical properties, are exceptionally challenging to duplicate or replace.

UK and Canadian listed Mkango has been conducting detailed geological exploration and feasibility study work since 2010 at Songwe Hill in Phalombe and invested over US$35million to date

 The Company works closely with the local communities and prioritizes employing both skilled and non-skilled workers from the community, and carries out a number of corporate social responsibility projects in different areas including education, health, agriculture and infrastructure development.

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