Mkango Resources Ltd (LSE:MKA) announced on Monday that it had intersected its highest grade rare earth mineralisation to date. The company is focused on assets in Malawi and released its final drill results from the Songwe Hill project. The final drilling phase comprised of 21 drill holes with 19 encountering significant zones of rare earths mineralisation grading above 1% total rare earth oxides (TREO).
Mkango holds interests in three exclusive prospecting licenses in Malawi, the Phalombe licence, Thambani licence and Chimimbe Hill licence.
The Songwe Hill deposit is on the Phalombe licence which is 80% held my Mkango. This area features carbonatite-hosted rare earth mineralisation and was subject to previous exploration in the late 1980s. A Feasibility Study is currently underway and will be a main focus for 2019. Talaxis Limited will fully fund the study at Songwe with an investment of £12m for a 49% interest in the project. Talaxis has a further option to acquire a further 26% by arranging funding for the project which will leave Mkango retaining a 25% interest, free carried to production. The initial phases of the study includes the recently completed 10,900 metre drilling programme. Talaxis has already invested £5m so far and will invest a further £7m on the publication of an NI 43-101 technical report detailing the results at Songwe – the report is expected to be published in the first quarter of 2019.
Mkango completed a Pre-Feasibility Study for the Project in September 2014, which was subsequently updated in November 2015. The Pre-Feasibility Study is based on a conventional open pit operation using contract mining and a mine life of 18 years.
William Dawes, Chief Executive Officer, commented: "This rounds off what has been a highly successful drill programme with another excellent set of results. Metallurgical optimisation and work relating to the Environmental, Social and Health Impact Assessment is also progressing well and we look forward to updating the market as we progress the feasibility study through 2019, starting with the resource update in the first quarter."
Author: Stuart Langelaan
Disclosure: The author does not own shares in any of the companies mentioned above