# Pensana secures financing for Longonjo REE project

- Link: https://www.directorstalkinterviews.com/pensana-secures-financing-for-longonjo-ree-project/4121122851
- Published: 2023-06-28T07:50:31+01:00
- Author: Amilia Stone

**Pensana Plc **([LON:PRE](https://www.directorstalkinterviews.com/company/pensana-rare-earths-plc/pre.l))
has provided details of a revised financing and development strategy which will 
see the Longonjo operation fully funded into production.

 * A revised execution plan allows for staged mine development which will reduce
   the upfront Capex to US$200 million with US$105 million deferred until year three.
 * Major shareholder FSDEA to provide an immediate US$15 million loan facility as
   part of a broader US$80 million investment (subject to due diligence and the 
   finalisation of investment terms) to facilitate the development of the mine and
   to provide the equity component for the proposed project debt facility.
 * ABSA Bank has been mandated to arrange a US$120 million project debt facility
   which together with the US$80 million funding will fund the mine and processing
   facilities into production.
 * The mine will employ around 650 people during construction and will create 420
   permanent high value jobs.
 * At full production, once the staged development is complete, Longonjo will target
   production of 38,000 tonnes per annum of mixed rare earth sulphate, containing
   14,000 tonnes of TREO and 4,400 tonnes of NdPr oxide, representing around 5% 
   of world production, for downstream processing or sold on the international market.
 * Adamas Intelligence forecasts that due to demand from the electric vehicle and
   wind power sectors the value of NdPr oxide consumed will increase eleven-fold
   by 2035. Prices are forecast to rise from current levels of US$67,000 per tonne
   to US$100,000 per tonne by 2025, increasing steadily to over US$200,000 per tonne
   by 2035.

Following discussions with its major shareholders, FSDEA (Angola Sovereign Wealth
Fund) and M&G, supported by Angola’s Ministry of Mineral Resources, Petroleum & 
Gas (MIREMPET), a detailed review was undertaken by the Longonjo engineering team
to reflect the strong desire of all parties to bring the Longonjo operation into
production as soon as practical.

The revised execution plan is based on a staged development of the mine and processing
facilities with a reduced upfront capital cost of US$200 million, with circa US$
105 million, related largely to the national power grid connection, rail spur and
subsequent expansion costs, deferred until year three following commissioning.

Subsequent to the engineering redesign the Angolan Government has announced a US
$83.6 million funding for the extension of the hydroelectric power line to Huambo.
This has the potential to reduce the capital funding requirement for the project
by US$36 million thereby potentially reducing the capex in year three to around 
US$70 million.

FSDEA has agreed to provide an initial US$15 million loan facility as part of a 
US$80 million investment (which is subject to due diligence and the finalisation
of investment terms) and which will be repaid out of the larger facility, for the
US$200 million staged development.

The purpose of the proposed investment is to facilitate the immediate development
of the Longonjo mine and to provide the necessary support for the proposed project
debt facility.

Pensana has also mandated ABSA Bank to arrange a US$120 million project loan which
together with the potential US$80 million investment represents the funding required
to develop the mine and processing facilities.

The funds are required to be put in place between now and the end of the calendar
year in order to meet the proposed construction and commissioning schedule with 
first production targeted in 2025.

FSDEA’s commitment towards funding has allowed for the continuation of onsite activities
for which the earthworks contractor (Grupo Nov) and Electrical contractor (Elektra)
have already been mobilised.

During peak construction activity the site will employ over 650 personnel and contractors
and will create over 420 full time jobs.

Wood MacKenzie, CRU and Adamas Intelligence have all forecast strong demand for 
NdPr oxide over the next twenty years. Adamas forecasts that due to demand from 
electric vehicles and wind power sectors the market for NdPr oxide will increase
five-fold by 2040 leading to an undersupply of 90,000 tonnes per annum.

NdPr oxide consumption by value is expected to increase by 11-fold by 2035. Prices
are forecast to increase at CAGR of 3.3% to 5.2% over the same period rising from
current levels of US$67,000 per tonne to US$100,000 per tonne by 2025 and increasing
steadily to over US$200,000 per tonne by 2035.

> **Pensana Chairman, Paul Atherley commented:**
> “We are delighted with the ongoing support from the Government of Angola, FSDEA,
> ABSA and others for the development of this important project. Longonjo is one
> of the world’s largest undeveloped rare earth projects which benefits from a high-
> grade near surface orebody, with low-cost hydroelectricity and direct access to
> the Lobito Corridor rail and port infrastructure.
> The engineering review and the staged development has resulted in a significantly
> lower up front capital cost which greatly enhances the projects’ ability to be
> financed.
> This immediate funding from FSDEA will allow CEO Tim George and the team to accelerate
> the work on the ground with a view to commencing main construction later in the
> year with a view to achieving first production in 2025.”

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