Australian Stock Exchange (ASX)-listed Lindian Resources, a firm with an option to acquire a staged interest in Kangakunde Rare Earth Project in Balaka of up to 75 percent, says it expects to complete the takeover of the mine this month.
Kangankunde has mineral deposits worth billions of dollars and can be a game changer for Malawi if successfully developed, according to mining experts.
Lindian Resources acquired a stake in Kangakunde from a South African company Rift Valley Resources owned by geologist Michael Saner.
Saner came in the spotlight when the Ministry of Natural Resources, Energy and Mining in March 2000 granted him an exclusive prospecting licence (EPL) to mine monazite rare earths, which is used in television sets, fertiliser and refining oil in Kangankunde Mine in Balaka.
But government did not renew his EPL after an application was submitted, three months prior to its expiry date.
Since 2003, Saner has been involved in legal battles with the Malawi Government over ownership of the mine.
As a result of the legal battles, Kangankunde deposit, which is believed to be one of the world’s largest rare earths projects outside China, was abandoned.
But, recently, Saner signed a consent order with government, in a move that has put to rest the wrangles.
Responding to a questionnaire, Lindian Resources director Steve Formica said his company, after Saner signed a consent order in September this year, is expected to spend $500 000 (about K367 million) on an agreed six months exploration programme.
“This will be followed by an option to spend $2.5 million [about K1.8 billion] on exploration and development in a year and a half period which will also take the project through bankable feasibility stage,” he said.
Formica said the project shows promising indications and the company anticipates to spend about $30 million (about K22 billion) on capital development to take it into production.
“If project economics are proved in the BFS [Bankable Feasibility Study] the way we think, we would anticipate a significant sum being spent on capital development for the project.
“The option has not been exercised to date, but we anticipate moving forward and exercising shortly subject to final due diligence,” he said.
Kangankunde deposit is a large rare earth carbonatite system that rises up to 200 metres above the surrounding plain.