Scramble for Malawi’s rare earths – Mining & Trade Review

201810 Mining & Trade Review Malawi Cartoon Land Resettlement Compensation James KazembeScramble for Malawi Rare Earths

…Australian firm moves to acquire Kangankunde

…Govt. signs consent to end 15-yr court battle

By Marcel Chimwala

The 15-year battle for ownership of the Kangankunde Rare Earth mine in Balaka is finally over as the Malawi Government has signed a consent agreement with a South African geologist Michael Saner of Rift Valley Resources who in 2003 dragged the government to court for snubbing   his application to renew an exclusive prospecting licence (EPL) for the tenement.

Rift Valley has signed the consent agreement with government following a deal it has struck with ASX-listed Lindian Resources for the latter to acquire a controlling 75% interest in the controversial mine.

In 2003, the Malawi government snubbed Rift Valley’s application to renew the Kangankunde EPL and later granted the tenement to a local firm, Rare Earths Company which was believed to have links with the then Bakili Muluzi administration.

In 2006, Rare Earths Company sold the mineral rights to ASX-listed firm, Lynas Corporation, at US$4-million but though the deal received the blessing of the late Bingu Wa Mutharika’s administration, Saner obtained an injunction from the court restraining the granting of the mineral rights to any other party other than himself.

Saner was also claiming US$100-million from the Malawi Government for damages plus sunk costs, legal costs and interest.

But Government sources have confided with Mining & Trade Review that following the coming in of Lindian Resources, Saner has signed the consent order with the Ministry of Natural Resources, Energy and Mining on Kangankunde Project.

Director of Mines in the Ministry Jalf Salima says in an interview that the Malawi Government will soon issue a public statement to inform Malawians about the country’s benefits on the deal.

We are waiting for the Attorney General to finalise the legal requirements before we make a public announcement,

he says.

He says it will be the decision of Lindian Resources whether to come up with a development agreement with the government or operate using the existing mining and taxation laws.

Malawi’s civil society groups have been advocating for mining companies to operate using existing taxation laws other than entering into development agreements saying due to poor negotiating skills by its personnel, the government risks getting a raw deal from development agreements as was the case with Kayelekera.

Information collected from Lindian’s press statements on Australian Stock Exchange indicates that with the consent order now obtained from the Malawi Government, the company will move to verify and update all previous reports and studies on the project which include pre-feasibility economics; and conduct initial on-site sampling and mapping to assist in confirming previously reported grades.

After the initial stage acquisition has been finalised with the issuing of a new EPL over the project, Lindian, which has a technical team in Tanzania, will conduct further drilling to provide confirmation of grade as well as confirm and raise Resource confidence from previously reported categories.

Lindian Chairperson Asimwe Kabunga says:

The consent order is an incredibly important milestone for Lindian and its option to acquire up to 75% of the Kangankunde Rare Earths Project.

The settlement between the Malawi Ministry of Natural Resources and Mining and Mr. Saner effectively ends 15 years of litigation in respect of this project and allows for Lindian to finalise its due diligence.

The global rare earths market is expected to surpass US$20 billion by 2041, driven in part by surging demand for electric and hybrid vehicles.

The Kangankunde rare earths project has all the hallmarks of a top tier global rare earths project underpinned by its size and scale. As a result, Lindian has every opportunity to become a major player in the global rare earths market through the successful development of Kangankunde.

Kabunga says with the consent order now, Lindian will proceed to finalise its due diligence on the proposed acquisition and then convene a meeting to seek the necessary shareholder approvals.

The consent order settles all matters between the parties and, more importantly, provides for the issuing of a new EPL (25 km²) over all the ground that comprises the Kangankunde rare earths project.

The EPL will be in accordance with current Malawi regulations and will be for an initial period of three years and renewable twice for periods of two years each.

It also provides for the Malawi Ministry of Natural Resources and Mining to support the conversion of the EPL into a Mining Licence (in accordance with the application of all valid regulations) as well as assistance with any financing parties introduced to develop the project.

The Kangankunde deposit is a large rare earth carbonatite system that rises up to 200 m above the surrounding plane over an area of 1.4 km by 1.7 km.

Studies have indicated that the deposit has extremely low thorium and uranium levels for a rare earths deposit.

Project economics have not been independently updated since 2011 but since then, key rare earths Neodymium and Praseodymium have become increasingly valuable given their strategic use in permanent magnets.

Kangankunde is located 100 km north of Blantyre and 25 km from the Nacala rail corridor, which is a positive attribute in terms of mobilization for the project and transportation of the ore.

The carbonatite mineralisation was first discovered in 1907, however, the importance of rare Earth mineralisation within the deposit was not noted until the early 1950s.

The project has had several phases of exploration with the most comprehensive geological and process test work completed between 1987 and 1990 by the French geoscience organisation Bureau de Récherches Géologiques et Minières (BRGM).

Tanzanian Junior Miner, Lindian Resources, is also focused on advancing its Lushoto Bauxite Project in the East African nation.

Malawi has a number of unexploited rare earth deposits mainly in the Southern Region in the Chilwa Alkaline Zone, and the others include Songwe Hill being pursued by TSX-Venture Exchange listed Mkango Resources, Chisi Island on Lake Chilwa and Machinga.

***

This piece was initially published in Malawi’s Mining & Trade Review Issue Number 66 (October 2018).

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.

3 responses to “Scramble for Malawi’s rare earths – Mining & Trade Review

  1. Marcel, why is it that the mine life of all our discovered deposits do not exceed 20 years? You also once wrote about iron ore deposits somewhere in southern region which was said to be one of the largest in your article. What’s going on?

    • It depends on the size of the economic reserves that have been determined during exploration and feasibility studies. Most companies continue exploration to extend the mine life. Paladin, for example, is exploring to extend Kayelekera mine life beyond 10 years.

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