Mkango Mining plots London listing to speed rare earth exploration

Mkango Resources, a Toronto-listed rare earth explorer led by former Rio Tinto geologist Will Dawes, has applied to float on London's AIM in January.

The Calgary-based company and its broker and nominated adviser SP Angel Corporate Finance are currently finalising the details of a small fundraising alongside its secondary listing, having in October raised CAD1.13m in a private placing.

Mkango's main interest are its two 100%-owned exploration licences in southern Malawi, which it is scouring for magnet rare earth elements and associated minerals, including Praseodymium, Neodymium and Dysprosium.

A recent pre-feasibiliuty study for its Songwe Hill rare earth project determined an after-tax net present value of $345m 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.

The key role played by rare earth minerals in high‑tech defence, industrial and renewable energy technology leads a number of countries to consider them strategic raw materials.

It was calculated that the project would require initial capital expenditure of $216m, which SP Angel suggested is among the lowest in the rare earth sector, with the IRR is among the highest in the rare earth sector.

Mkango, which has a market capitalisation of just over CAD3m and is 21%-owned by Dawes' and company president Alexander Lemon's Leo Mining vehicle, said its strategy was to further develop Songwe and secure additional rare earth element and other mineral opportunities in Malawi and elsewhere in Africa.

In a client note, SP Angel has said Songwe offers an "uncomplicated, quarry style, mine development with a low temperature process route [that] underpins the project’s low cost structure" and posited that in a market dominated by China, "some consumers may welcome the entry of a new supplier to diversify the market".

It added that demand for the suite of light and heavy rare earth elements used in high intensity magnets, which represent around 80% of the value at Songwe Hill, is expected to grow strongly until at least 2020.