Malawi’s Songwe mining project prospects at $293m

Mkango Resources Limited, a mining company which was doing feasibility studies on Malawi’s Songwe Hill rare earth project has announced that prospects for the site stands at almost US$293 million for a projected 18-year life span.

In a statement which the company has released Chief Executive Officer William Dawes described the results of the feasibility study as a major milestone in the development of the mining project.

 William Dawes

William Dawes

“Since listing in 2011, Mkango has progressed an early stage exploration project to one of only three rare earth projects in Africa with a Pre-feasibility Study or Feasibility Study announced. We are very encouraged by the Project’s strong returns and relatively low capex (capital expenditure,” said Dawes.

The feasibility study report indicate that the mining project is capable of realizing US$293 million after-tax net present value (NPV) with its probable mineral reserve estimated at 8.5 million tonnes of rare earth oxide grading 1.6 percent.

The report further stated that using a 10% nominal discount rate, and 36% after-tax internal rate of return (IRR) and based on rare earth oxide (REO) prices equivalent to a total rare earth basket price of US$55.0 per kg is expected.

“The basket (REO) price reflects the selective removal of a large proportion of the cerium during the hydrometallurgical process which enhances the value of the product mix,” says the report.

The initial capital expenditure (Capex) is expected to be at US$217m, including a contingency of US$20m, which the report says is among the lowest in the rare earth sector.

The company further expects cash operating costs to average US$13.4 per kg for the first five years of production and US$17.0 per kg for the entire life of the mine.

“The Study assumes an additional cost of US$10.0 per kg to account for the cost or discount associated with toll separation or the sale of a mixed chemical concentrate,” reads the report.

The Feasibility Study results support the declaration of a maiden Probable Mineral Reserve Estimate of 8.5 million tonnes grading 1.60%.

“(This) is based on an open pit operation, using contract mining, with a mine life of 18 years commencing in 2017,” reads the study report.

The study also shows that there is potential to ‘significantly’ expand production or the mine life and for a lower strip ratio given the large additional Inferred Resource and potential to expand the Mineral Resource.

It adds: “This first phase of development envisages production of a high grade, critical and heavy rare earth enriched, purified chemical concentrate for toll treatment or sale, with annual production of approximately 2,840 tonnes per year of REO in concentrate.”

Mkango Resources Limited is a Canadian based company listed on the Toronto Stock Exchange. As a mineral exploration and development company Mkango Resources focuses on rare earth elements and associated minerals in Malawi.

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29 thoughts on “Malawi’s Songwe mining project prospects at $293m”

  1. gulukunyinda says:

    Govt has decided to move this rare earth mining from songwe to chinakanaka to be close to the mining school of MUST.

  2. mlomwe wa nzeru says:

    we shall be there we have avast experience of the earthmoving machine we got from vale mining muatize,Rio tinto and jindal africa in tete now is our turn to goto the origin team nyasaland amene zimuwawe akaziponye ku lake malawi

  3. Malawi Speech says:

    Not In Karonga Again! People Are Tired Kumapusisidwa Zitukuko

  4. Ifeyo says:

    Sorry guyz but this Songwe mining project of rare earth minerals is not in Karonga district. It is in Phalombe district !

  5. Mwana wa Mfumu M'vonye says:

    MKA -TSA (Mkango Resources – Toronto Stock Exchange) is but a penny stock, nothing more. And I would not invest in this kind of company – reminds of the penny stocks during the high tech era. Again like Kayerekera, we are dealing with rare earths here. Dangerous minerals in terms of personal and environmental safety.
    A lifespan of eighteen years is not worth it. Nothing to write home about; let alone to boast about.

  6. Malindima says:

    A cost of mine closure rehabilitation not specifically included. They will leave a hole after 18 years mind you!
    What are the effects of this commodity interms of environmental impact? We need more info.

    1. Mabasa says:

      You will need to get hold of the Environmental Impact Assessment report for you to have that information.If our laws which govern mining activities are updated and enforced accordingly,the company would not just leave without rehabilitating the affected environs.

  7. Malawian Jew says:

    I urge the Karongians to withhold the commencement of the mining project until the dust of Federalism is settled. Otherwise history will be repeated with reference to Kayerekera mines bad memories.

  8. Frances Tyler says:

    Tell me, Why would anybody want to mine in Malawi? The CSOs and greedy Chiefs are already licking their chops looking at this one. And all the royalties will disappear, never to be seen or heard of again. Then the mining company will be blamed for everything while the government sits in silence. Sound familiar?

  9. wafika says:

    And somebody thinks as a Federal Government the self administering state would not be able to last long. The human resource is there. do not think of infrastructure because those yo implement and it is the human resources that does the implementation. there is going to be a lot of employement for everybody in Malawi for all 3 governments. Some people talk of chasing people away from the other regions but the north talk of employing everybody despite being a southerner.

    Yembekedzani kuti muone zo zizwa.

  10. MAKONOKAYA says:

    BASI WAKU THENGERE BASI WOYEEEE !!!

  11. Fuvung'ondo says:

    THIS PROJECT SHOULD NOT START UNTIL FEDERALISM IS IN PLACE. DON’T GIVE THEM EASY MONEY.

  12. Weniweni says:

    Federal System basi, We need this one and all the moneys should go to the north not any region

  13. Quota system says:

    Is the site close to our neighbour, TZ ? Remember the Lake Malawi issue.

  14. KUKHALA says:

    GOOD DEVELOPMENT BUT …………….. WATCH OUT…………… NO SIMILAR MISTAKE LIKE ON KAYELEKELA …………………….MIND YOU THESE MINING GUYS ARE THE SAME THOUGH COMING IN DIFFERENT NAMES.

  15. Zambulo says:

    Dziko lathu ndalama zamzungu.kikikik. nkhanj yake umbuli.

  16. jack says:

    Ndichifukwa chake achawa akuopa federation.

  17. Nyasa says:

    Selfish Mtumbuka akamva izi mumva akuti ndakula ine. Ndikufuna ndiziphika pandekha. Just go, no sane Malawian will miss you. But remember kunyamula nyumba zanu zones because you wont be allowed to come back.

  18. eye eye says:

    ?But how much of this would go to Malawi and Songweans? thats what is important otherwise all these dollars may evaporate to overseas…..and government should minimise these tax holidays especially where we wont benefit much as the Kayelekera Mine!

    Why cant local companies like Press Corporation invest in such ventures?

  19. Fwangalubiro says:

    A mine with a life span for 18 years is not a good deal being open pit after 18 years another lake

  20. Kodi ku Thyolo ndi Mulanje kuli mine anji?

  21. martha says:

    Applying quota system, the north shd benefit the most from the mining sector becsuse most of the wealth is here. Tisawone alomwe mphuno biii kufuna zakuno

  22. Boss says:

    This is a good news for us in the north because we have something to bost with just fancy Kayelekera,Kanyika,Oil on Lake Malawi in the north all these are our money in the north and I encourage my fellow northens to stand up for feudalism or tigawane zida basi

  23. DZIKO LATHU says:

    come on lets go for it ,

  24. Biggie says:

    Good thing, create more job opportunities

  25. Kau says:

    Secession for the north.

  26. vindere says:

    Northern Region is the richest region as compared to central and southern regions in terms of natural,human and mineral resources.If it becomes independent, it will be one of the powerhouse in southern Africa within ten years.Mark my words.You people who hate the North are going to shit yourselves.

  27. Master says:

    thats lot of money, but such money will go to politicians idiotic animals we call politicians will kill this country!!!

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