View of the Kangankunde Hill
Rare earths mining and development company Lindian Resources has announced the completion of a feasibility study on Stage 1 of its Kangankunde rare earths project in Malawi.
The study examined Stage 1 of the project's development, which includes mining operations, a mineral processing plant and necessary support infrastructure.
The results of the study support a technically robust Stage 1 project with supportive economics, providing confidence that a significantly larger expansion project in the future should be considered, the company said on July 1.
“The feasibility study results reaffirm the world-class status of the Kangankunde project and its competitive positioning to meet a rising demand for rare earths. It is distinguished by its high grade, low levels of impurities and attractive cost structure that positions the project in the lowest cost quartile of rare earths projects globally.
“The Stage 1 development will require low upfront capital cost, presents low commissioning risk and generates strong financial returns.
“Importantly, Stage 1 could serve as a logical springboard for future expansion options. Kangankunde is fully permitted to begin construction and operations once financing is confirmed. The feasibility study has been prepared over ten months by a team of experienced contractors, consulting firms and Lindian team members,” Lindian CEO Alwyn Vorster said.
The results are supported by extensive drilling programmes and a maiden Joint Ore Reserves Committee 2012- (Jorc-) compliant ore reserve developed from the recent mineral resource estimate update. It also included metallurgical testwork, detailed engineering designs, cost studies, contract tender processes, human resource planning, product market studies and financial modelling.
The Kangankunde project is now well-positioned for development, the company said, given that Malawi is a stable jurisdiction for mineral developments.
Kangankunde will require more than 200 full-time equivalent site roles during the construction phase, and more than 100 full-time equivalent site roles during the operational phase.
All key approvals have been received, including the mining licence, environmental licence and water permit, enabling construction to begin immediately once funding is secured.
The study of Stage 1 development confirms a technically low-risk and economically-robust project. Stage 1 post-tax net present value (NPV) of $555-million, an internal rate of return of 80% and average yearly earnings before interest, taxes, depreciation and amortisation (Ebitda) of $84-million.
Preproduction capital cost of $40-million, which includes 12.5% contingency, make it one of the lowest capital cost rare earths projects under development. Average yearly free-on-board operating cost of $2.92/kg total rare earth oxides (TREO), positions Kangankunde in the lowest-cost quartile of the global rare earths industry.
The project is expected to have a payback period of less than two years, and a post-tax NPV to capital expenditure ratio of more than 10:1.
Vorster said this low-cost structure meant that the Stage 1 project would be one of very few global rare earths projects which could deliver a positive yearly Ebitda at current low rare earths prices.
Stage 1 will produce an average 15 300 t/y premium concentrate with 55% TREO grade, with low levels of radionuclides (thorium and uranium) and limited acid-consuming minerals.
The premium concentrate will contain about 8 400 t/y of rare earth oxides and about 1 640 t/y of neodymium and praseodymium (NdPr).
There will be no prestripping, with a low waste to ore ratio of less than 0.2:1, a simple flowsheet based on gravity and magnetic separation requiring limited reagents, and availability of low-cost grid power.
Kangankunde premium product specifications are attracting significant offtake interest, Lindian said, with about 40% of yearly production already contracted with US commodity trading group Gerald Metals.
Key development approvals were in place, Vorster said, meaning construction contract awards to preferred tenderers could occur within a short timeframe once funding had been secured. Multiple funding discussions are gaining momentum with construction groups, trading companies, and strategic investors.
He added that Lindian also currently maintained a healthy cash reserve.
The development schedule is aimed at achieving funding confirmation in the third quarter, the start of site construction in the fourth quarter and the commissioning of the processing plant in the fourth quarter of 2025.
The economics of Stage 1 and the resource endowment of the Kangankunde project, plus robust market demand forecasts, provided confidence for a potential Stage 2 expansion to significantly increase yearly production, Voster explained. As such, Lindian intends to formally start a Stage 2 expansion study this year.
Market research analysis from research firm Project Blue has indicated that significant new supply will be required to track the increasing demand, particularly for NdPr units, over the next three decades. This demand is driven by factors such as climate change, advances in technology, resource scarcity and geopolitical tensions.
The long-term demand outlook for rare earths will continue to be dominated by magnet applications, of which NdPr is a critical component. This will be driven by growth in renewable-energy generation and electrified transport.
As such, the magnet market will be the largest growing sector, and it was forecast that it would account for almost 60% of the NdPr market by 2050, Project Blue said.
Moreover, the firm forecast that the NdPr market would triple in the period to 2050, requiring an increase of two to three times above 2023 supply to maintain a balanced market.
Vorster said Lindian would be well positioned to respond to the increasing NdPr demand when the time came.
From a project technical perspective, the mine design indicates high conversion from indicated resources to ore reserves (99% of the contained TREO). The feasibility study and ore reserve used 46% of the indicated resources contained TREO, compared with 39% of the indicated resources tonnes, by feeding predominantly high-grade ore over the 45-year mine life.
The remaining indicated resource and inferred resource will form the basis of the Stage 2 expansion to produce updated ore reserves, according to Lindian.
This additional expansion study work would include increased in-pit metallurgical testwork data to cover the total indicated resource, updated geotechnical and mining schedule assessment to cover the total indicated resource, increase the plant processing capacity and rate, expand tailings facility capacity, and further resettlement agreements to provide land access for the expanded project footprint.
The Kangankunde project’s Jorc maiden ore reserves are estimated at 23.7-million tonnes of ore at a grade of 2.9% TREO, based on a cut-off grade of 1% TREO. All of the ore reserve is within the probable category.
Lindian expects to have funding confirmation by the third quarter, to award all key construction contracts by early in the fourth quarter, to start construction in the fourth quarter, to commission the process plant in the fourth quarter of 2025 and the project to generate first revenue by early 2026, Vorster said.