The South African department of trade and industry has approved an R8 million (K304 million) grant to a Toronto Stock Exchange (TSX)-listed Mkango Resources Limited under its capital projects feasibility programme for the Songwe Hill rare earth project.
The grant, according to a statement posted on its website, will be dispersed between June 2014 and March 2015 as the company meets certain milestones including environmental and social impact studies, among others.
Mkango Resources Limited chief executive officer William Dawes expressed gratitude to South African government for their support.
“We are very pleased to qualify for this significant funding which, in addition to our recent $2.3million fund raising, provides a solid platform to advance the project towards the development phase,” he said.
Secretary for Mining Leonard Kalindekafe, in an interview, welcomed the grant as positive to the mining sector, saying the development confirms how important the project is to the international community.
He said the project, which now is in its feasibility study, will go into production in three years time.
But responding to a questionnaire, Dawes said the company is facing challenges in giving international institutional and private investors the necessary comfort that Malawi is a good jurisdiction to invest in, particularly those who have little or no knowledge of the country or even Africa.
“It is critical that there is a stable and transparent investment environment to attract international investment. Getting the project linked to Malawi’s electrical grid will also be very important in the future,” he said.
The Songwe Hill rare earth project is in Phalombe where the company is exploring carbonatite hosted rare earth mineralisation which was subject to previous exploration in the late 1980s.