Mkango Resources 'working proactively' amid pandemic

The AIM-traded firm said it was working proactively to protect its staff and business amid the pandemic, saying it remained focused on completion of the feasibility study for Songwe, and the development of downstream opportunities through Maginito.

That includes Maginito's 25% interest in Hypromag - a UK-based company focused on rare earth magnet recycling.

The company said it was taking pre-emptive precautions in response to Covid-19, and providing ongoing advice to its staff in the country.

It said that in the “rapidly evolving” environment, it was prioritising the safety of its employees.

With the drill programme for Songwe completed in 2018, most of its in-country operations could be completed offsite, and all of its employees were now working from home when possible, with all travel curtailed.

Mkango said it was in a “strong” financial position, with a current unaudited consolidated cash position totaling around $7.4m.

In November 2017, Mkango entered into an agreement with Talaxis to fund the feasibility study for Songwe.

Talaxis has invested £12m in Lancaster Exploration - Mkango's subsidiary which owns the Songwe project - for 49% of Lancaster.

It also had an option to acquire a further 26% of Lancaster by arranging financing for project development, including funding the equity component thereof.

Talaxis also holds a 24.5% interest in Maginito.

Mkango said that while the feasibility study was continuing with work underway in Australia, South Africa and the UK, it believed it was inevitable that some work streams would be impacted, although the degree of impact was currently uncertain.

Following a review of the various ongoing workstreams, it was now targeting completion of the study in the second half of 2021, in line with an anticipated more stable market environment and favourable backdrop to advance project development.

It did note, however, that extended periods of Covid-19 disruption could further impact that timing.

Operations at Hypromag were continuing where possible, the board added, in line with current UK government guidelines.

“The welfare of the company's staff remains the main priority for Mkango,” said chief executive William Dawes.

“While the current market environment is very challenging, Mkango's strong financial position means the company is well positioned to weather ongoing market uncertainty for the foreseeable future.

“The impact of Covid-19 has focused attention on the vulnerability of supply chains globally, already a major concern in the rare earths sector prior to the pandemic, and Mkango looks forward to further engagement with government and market participants to play a major role in future development of a robust and sustainable rare earth supply chain for global markets.”

At 1600 BST, shares in Mkango were down 26.67% at 2.75p.