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Mkango Resources: US$345 Million NPV, 37% IRR in Updated PFS For Songwe Hill
Nov. 09, 2015 08:52AM PST
Rare Earth InvestingMkango Resources (TSXV:MKA) reported results of an updated pre-feasibility study for its Songwe Hill Rare Earth Project in Malawi. Highlights included updated capital expenditures and operating costs, as well as a rare earth market review from Adamas Intelligence.
Mkango Resources (TSXV:MKA) reported results of an updated pre-feasibility study for its Songwe Hill Rare Earth Project in Malawi. Highlights included updated capital expenditures and operating costs, as well as a rare earth market review from Adamas Intelligence.
As quoted in the press release, highlights included:
After-tax net present value (NPV10%) of US$345 million and after-tax internal rate of return (IRR) of 37% based on a long term rare earth basket value of US$59.8 per kg rare earth oxide (REO).
Initial Capex of US$216 million, including a contingency of US$20 million, remains among the lowest in the rare earth sector.
Cash operating costs average US$13.0 per kg REO for the first 5 years of production and US$16.4 per kg REO for the life of mine with an additional cost of US$10.0 per kg REO to account for the cost or discount associated with tolling or the sale of a chemical concentrate.
Production of 2,841 tonnes of REO in mixed chemical concentrate per year over an 18 year mine life.
A large proportion of the cerium is removed during the hydrometallurgical process, significantly enhancing the basket value of production.
Over 80% of basket value is 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.
Mkango CEO, William Dawes, said:
The market review, completed in conjunction with the updated Pre-feasibility study, validates our strategy and focus on the “big four” magnet rare earths, which have a strong market outlook, geared to China’s emerging green economy and growing consumer demand, and make up over 80% of our potential future revenue.
Benchmarking analyses completed internally by Mkango and independently by Adamas Intelligence indicates that Mkango is favourably positioned with a combination of low capex and opex versus its peer group of advanced stage rare earth projects at the Pre-feasibility or Feasibility stage.