EDITOR: | July 31st, 2013 | 3 Comments

Mkango achieves yet another milestone in the rare earth race to production

| July 31, 2013 | 3 Comments
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Will-DawesMkango Resources Ltd. (TSXV: MKA) recently achieved yet another major milestone with the announcement of the company’s base case metallurgical flow sheet to produce a high-grade rare-earth product from the ore at its flagship Songwe Hill REE Project in southern Malawi.

The Canadian rare earth and exploration company’s extensive concept test work produced two products – the proposed base case flow sheet uses conventional technology, comprised of flotation, followed by acid leaching, then precipitation and purification – both of which contained significant quantities of the most valuable heavy rare earth elements.

A high-grade, mixed rare-earth carbonate product contained 59% total rare-earth oxides (TREO), with 7% heavy rare-earth oxides (HREO/TREO). The second product stripped out the light rare element cerium to leave a heavy rare-earth enriched mixed hydroxide concentrate containing 55% TREO and 18% HREO/TREO.

On the processing side, Mkango’s distinct competitive advantage is Songwe Hill’s favorable mineralogy, which allows for simple, low-temperature acid leaching. This method of processing achieved leach recoveries of up to 90% and above of Neodymium, Europium, Terbium, Dysprosium and Yttrium; all of which are critical rare earth elements and vital components of electronics, consumer products and clean energy applications.

Another competitive advantage compared to other rare-earth deposits is that high capital and energy-intensive kilns are not required in the proposed Songwe Hill processing flow sheet. Mkango anticipates utilizing a modular plant design for processing with conventional technology, further ensuring the potential for lower capital expenditures and ease of future expansion.

Mr. William Dawes, Chief Executive Officer and Executive Director of Mkango Resources, stated, “This is a major milestone in the development of the Songwe Hill rare-earth project and the company is now well positioned to further progress discussions with potential strategic investors, separation facilities and off-take partners. Mkango has delineated a significant indicated and inferred rare-earth resource at Songwe and is spearheading development of a major, world-class rare-earth mineral province in Malawi.”

Mkango’s most recent landmark further solidifies the company’s ability to advance to the pre-feasibility study (PFS) stage of development, which is scheduled for release later this year or in early 2014. In the meantime, aside from progressively de-risking the project, while refining and optimizing metallurgical processing, Dawes is keenly focused on keeping his CAPEX and OPEX costs as low as possible, while maximizing expansion potential.

On a project level, it is important to note that in November 2012, Mkango filed a NI 43-101 technical report for the indicated and inferred mineral resource estimates for Songwe Hill. The in-situ indicated mineral resource estimate of the filing was more than sufficient for Mkango to move directly to the PFS stage of development, which goes a long way towards de-risking the project geologically. The key benefit here is that Mkango does not have to complete any additional costly test drilling in the near term – further reducing the company’s PFS cost – as a large proportion of pre-feasibility studies are often spent on drilling.

Perhaps what’s most propitious about Dawes being able to initially scale a somewhat modest operation is that Mkango will have significant resource upside potential. When drilling continues, as the project advances, the company intends to take what is presently in the inferred category of its mineral resource estimate and move said resources into the indicated category. Additionally, with 1,751 km² in rare-earth-enriched southern Malawi, the expansive Songwe Hill project affords Mkango additional exploration upside, not only in rare earth elements, but also other commodities as well.

A competitive advantage on the mining side for Mkango is the fact that Songwe Hill is a relatively shallow, open pittable mine and, as a result, mining operations will be simple and extremely cost effective.

Since the filing of the Songwe Hill’s mineral resource estimate, Mkango closed on an oversubscribed, non-brokered private placement, raising C$2.3M this past April. An incredibly impressive accomplishment in a rather unpleasant (to put it mildly) funding climate, clearly showcasing the trust and faith the current shareholder base has in William Dawes and his stellar management and technical teams. A tremendously astute expert in rare earth elements, it is Dawes’ seemingly conservative, yet strategic, corporate strategy steering Mkango that impresses stakeholders most.

Based on the results demonstrated by Mkango’s metallurgical flow sheet, Dawes is optimistic. And he should be. Mkango is in the enviable position as the most advanced-stage rare-earth project in Malawi (there are five known substantial rare-earth deposits in the country) and is, quite possibly, poised to become the country’s first REE producer. With all that Mkango has already accomplished, coupled with strong government support and ongoing optimization of requisite infrastructure, Dawes justifiably believes this can happen – more than ever.


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Comments

  • J. Best

    Great article Ty. I am a follower of Mkango and found this excellent! I have put out to some friends I have discussed the stock with in the past. I look forward to more or your articles and wondered if you know any of the other companies that are working the other deposits in Malawi?

    July 31, 2013 - 11:52 AM

  • Ty Dinwoodie

    Thank you very much, JB. I was familiar with Mkango before writing the piece, but after speaking with CEO William Dawes at great length (and subsequently with Mkango’s razor-sharp Corporate Communications Manager, Ashlee Utterback), I had an entirely new appreciation for the company, its accomplishments, the Songwe Hill project, but especially with Dawes’ strong strategic leadership and prudent, pragmatic approach.

    Regarding your question, I know of only one other REE exploration co. in Malawi – Spring Stone Limited, a Malawi subsidiary of an exploration joint venture between Japanese-owned Japan Oil, Gas and Metals National Corporation and Canada’s Gold Canyon Resources Inc. (TSXV: GCU); however, Japan’s Mitsui Mineral Development Engineering Co. Ltd. has been contracted as the operator of the program. As I understand it, Spring Stone was served with an injunction from the Malawian government in December 2012 that prevented the company from continuing exploration work for REEs in Mulanje, Malawi (in the southern region, close to the border of Mozambique). Mulanje – the heart of Malawi’s tea-growing industry – is the headquarters of the conservation group, the Mulanje Mountain Conservation Trust (MMCT). The MMCT is an environmental endowment trust funded by the World Bank, through the Global Environmental Facility. Perhaps you can see where this is going… there’s a lot of local opposition to Spring Stone’s project. However, last May, the December injunction against Spring Stone to halt operations was overturned… but as of August 1st, the company was served with an “ultimatum” to cease all activities – again. The United Nations may be getting involved (protesting citizens are seeking United Nations Secretary General Ban Ki Moon’s intervention), so it will be interesting to see how this all plays out for Spring Stone.

    Comparatively speaking, Mkango’s project is in a mining-friendly jurisdiction and clearly has the support of both the Malawian government and its people. As mentioned in the article, the Songwe Hill project is the most advanced-stage REE project in Malawi (arguably the world’s next centre for rare earths) and Mkango is poised to make history by becoming the country’s very first REE producer.

    August 3, 2013 - 1:08 AM

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