Pensana Plc (LON:PRE) has provided the following update on the debt finance component of the Longonjo rare earth project:
Leading Pan-African bank Absa Bank Limited, acting through its Corporate and Investment Banking Division, has conditionally approved a credit term sheet for its 50% participation in an approximately US$160 million syndicated loan facility, subject to the conclusion of definitive loan documentation and the fulfilment of conditions precedent contained therein as well as obtaining political and commercial risk insurance cover from a reputable political risk insurer on Absa’s exposure under the Facility.
The Facility will provide senior funding for the Phase 1 development of the Company’s Longonjo rare earth mine in Angola through its 84% owned subsidiary Ozango Minerais SA.
The debt financing will look to deliver approximately 60%of all project funding for Longonjo with the balance (40%) funded through equity provided at the Ozango level.
Pensana Chairman, Paul Atherley, commented:
“We are grateful for the work undertaken by the Absa team in providing the Longonjo project with a conditional commitment to its share of the US$160 million debt funding requirement for the Longonjo project.
This is an important step towards finalising funding for a project which will have a major positive impact on the community, creating over 600 high value jobs of which over 50% are expected to be allocated to young people as well as supporting local businesses and farmers.
Once in full production the project will create an estimated 2,400 direct and indirect jobs and will produce around 5% of the world’s magnet metal rare earths used for wind turbines and electric vehicles”
The agreed term sheet follows the successful completion of a detailed technical, marketing, environmental and fiscal due diligence process and conditional approval of the loan by Absa’s credit committee, with the legal due diligence process to be finalised.
Pensana plc Chairman Paul Atherley commented “It’s great to see such tangible progress on the ground at Longonjo. The effort by everyone involved is much appreciated and we look forward to completing the financing and getting the main construction underway.”
Pensana Plc (LON:PRE) has announced that it has secured $US 3.4 million of Technical Assistance grant funding (Grant Funds) from the U.S. International Development Finance Corporation (DFC), America’s development finance institution.
The Grant Funds will support technical assistance activities in the form of feasibility studies for doubling the capacity of the existing Longonjo mine design, addition of downstream refining in Angola as well as test work for the development of the Coola project orebodies.
The Technical Assistance program is part of the US Better Utilization of Investments Leading to Development (BUILD) Act, which is used to provide advice and financial assistance and prepare future deals for the DFC to offer further financial support stimulating development.
The Grant Funds have been earmarked for specific projects which have the potential to receive later loan funding for any necessary capital, contingent on the successful completion of associated feasibility studies, as follows:
Facilitate the study for an increase of the current design run-of-mine throughput of the Longonjo Processing plant in Huambo, Angola from 800ktpa to 1.5mtpa and the resultant Mixed Rare Earth Carbonate (MREC) product from 20ktpa to 40ktpa.
Feasibility study to determine the capital and operational costs of further MREC beneficiation in Angola through a REE Separation Plant.
Completion of the metallurgical test work program underway on the Coola concession orebodies with initial focus on the surface Sulima West laterite deposit to accelerate plans to use this as an additional feedstock to the Longonjo Processing Plant.
The Grant Funds are to be equally matched by Pensana contributions over the next 27 months.
Anna Mann, DFC’s Technical Assistance Specialist commented – “Alongside the DFC’s participation in the Lobito Corridor, this complementary initiative at Longonjo opens the way to stimulate future growth in the area and is in line with our mandate to increase the supply and processing of critical minerals”.
Tim George, Pensana CEO commented – “The participation of DFC secured during their visit to Longonjo, alongside our recently announced relationship with Hanwa, recognises the significant further development potential of both the Longonjo and Coola Projects and a path to secure the longer term future funding requirements.”
About the U.S. International Development Finance Corporation
The U.S. International Development Finance Corporation (DFC) is America’s development finance institution. DFC partners with the private sector to finance solutions to the most critical challenges facing the developing world today, investing across sectors including energy, healthcare, critical infrastructure and technology. DFC also provides financing for small businesses and women entrepreneurs to create jobs in emerging markets. DFC investments adhere to high standards and respect the environment, human rights, and worker rights.
About Longonjo
The electrification of motive power through EVs and Wind Turbines is the biggest energy transition in history. Adamas Intelligence forecasts that the global demand for rare-earth magnets will increase at a CAGR of 8.7% from 2024 to 2040.
Pensana owns one of the world’s largest undeveloped rare earth mines, one of only three with a JORC Reserve >100,000 tonnes of NdPr. Once in full production the Longonjo project located in Angola near Huambo on the Lobito Corridor will produce ~5% of world production of NdPr in the form of an exported mixed rare earth carbonate.
The upfront capital cost of US$217 million for the fully permitted mine and processing facilities is amongst the lowest amongst its peers making Pensana highly competitive.
Pensana has recently been awarded a Gold Medal by EcoVadis, a leading sustainability ratings provider, placing it in the top 5% of the companies assessed.
The ratings by EcoVadis are widely used by the automotive and offshore wind OEMs to monitor the ESG credentials of potential suppliers and are based on a detailed assessment of operations in the areas of environment, sustainability, procurement, labour and human rights and ethics.
The award follows the award by S&P Bond Rating Agency CICERO in 2022 which rated the Company’s operations as Light Green with Good Governance.
Pensana will continue to operate under the EcoVadis tracking and reporting system, as leadership in global sustainability is critical to its long-term growth strategy.
Pensana’s Blueprint for Sustainable Rare Earths, demonstrating our strategic commitment to ESG, can be found here:
The Company has been in discussions around the need to restructure the size of the Company’s Board so as to align it more appropriately with its current market capitalization. Non-Executive Directors Jeremy Beeton and Baroness Lindsay Northover have accordingly offered to resign from the Board and their resignations have been accepted. The Company extends its heartfelt gratitude and thanks to both Lindsay and Jeremy for the valuable support and guidance that they have provided since their respective appointments to the Board. Both Jeremy and Lindsay will remain engaged with the Company in an ongoing advisory capacity.
Pensana Plc (LON:PRE) has advised that it has signed a non-binding Memorandum of Understanding for an offtake with a major Japanese partner, Hanwa Co. Ltd.
Key MOU terms include:
Offtake proposal for up to 20,000tpa of ultra clean Mixed Rare Earth Carbonate from Longonjo mine over 5 years at prices to be discussed.
Hanwa intends to co-operate with Pensana in the marketing and distribution in the Global market but also work towards developing a strategic and sustainable supply chain for magnet metal material.
Hanwa is considering a deeper co-operation including possibility of an investment to continue to develop the Pensana upstream and downstream projects with the aim of delivering a low embedded carbon magnet metal supply chain supporting Hanwa’s customers and future partners.
The MOU also allows for Hanwa to consider providing financial support and to jointly study support opportunities from Governmental and financial institutions for the various Pensana projects. These include Coola and Sulima west expansion, the separation facilities and metallization project.
Hanwa commented – “We see this MOU as the path to finalisation of a long-term agreement between Pensana and Hanwa, ensuring high quality magnet metal products with leading ESG benefits are available to Hanwa’s Global customers.”
Paul Atherley, Pensana Chairman commented – “We are delighted to be working with Hanwa with a view to establishing a long term and sustainable supply of high-quality magnet metal products from our Longonjo operations in Angola.”
About Hanwa
Hanwa Co., Ltd is a Japan-based trading company, handling a diverse range of commodities including steel products, non-ferrous metals, foods, petroleum and chemical products, lumbers, machinery and now intensively focusing on key feedstock (metals and chemicals) for the electric vehicle and FCV with a market capitalisation of ¥215.9 billion (circa US$1.5 billion) and reported net sales of more than ¥2,400 billion (circa US$16.9 billion) in FY2023-2024. Hanwa has an “A-“ credit rating.
Hanwa is aggressively acting amongst the largest commodity traders of metals and chemicals specifically in the Asian region, and has a long history of trading with global metal and chemical producers and operating a specifically-dedicated primary metal and battery team. This team has been intensively expanding its critically important minerals including not only above key metals for battery cathodes but also graphite (natural & synthetic), silicon and black mass for battery anodes, rare earth materials and recycling products.
Hanwa will keep contributing to both social development and environmental conservation by responding to increasing demand while expanding its supply ability through partnerships with the resource suppliers and smelting/refining companies, off-takes and investments.
About Longonjo
The electrification of motive power through EVs and Wind Turbines is the biggest energy transition in history. Adamas Intelligence forecasts that the global demand for rare-earth magnets will increase at a CAGR of 8.7% from 2024 to 2040.
Pensana owns one of the world’s largest undeveloped rare earth mines, one of only three with a JORC Reserve >100,000 tonnes of NdPr. Once in full production the Longonjo project located in Angola near Huambo on the Lobito Corridor will produce ~5% of world production of NdPr in the form of an exported mixed rare earth carbonate.
The upfront capital cost of US$217 million for the fully permitted mine and processing facilities is amongst the lowest amongst its peers making Pensana highly competitive.
Pensana has recently been awarded a Gold Medal by EcoVadis, a leading sustainability ratings provider, placing it in the top 5% of the companies assessed.
The ratings by EcoVadis are widely used by the automotive and offshore wind OEMs to monitor the ESG credentials of potential suppliers and are based on a detailed assessment of operations in the areas of environment, sustainability, procurement, labour and human rights and ethics.
The award follows the award by S&P Bond Rating Agency CICERO in 2022 which rated the Company’s operations as Light Green with Good Governance.
Pensana will continue to operate under the EcoVadis tracking and reporting system, as leadership in global sustainability is critical to its long-term growth strategy.
Pensana plc (LON:PRE) has announced that it has been awarded a Gold Medal by EcoVadis, a leadingsustainability ratings provider, placing it among the top 5% of the companies assessed.
The ratings by EcoVadis are widely used by the automotive and offshore wind OEMs to monitor the ESG credentials of potential suppliers and are based on a detailed assessment of operations in the areas of environment, sustainability, procurement, labour and human rights and ethics.
The award follows the award by S&P Bond Rating Agency CICERO in 2022 which rated the Company’s operations as Light Green with Good Governance.
Tim George, Pensana CEO, commented: “We have strong demand for our rare earth products and this recognition from EcoVadis emphasises the very high standards of sustainability our customers can rely on from us.
The award represents the culmination of the strong focus on sustainability by the Pensana team notably Danny McNeice (Sustainability Manager), Magu Adriano (Social and RAP Manager), Benedito Dumbo (Longonjo Site Manager) andHenda Guimarães (Environment Coordinator).
Angola was one of the biggest gainers in the recently published Fraser Institute’s annual survey of mining jurisdictions attractiveness and a big part of this re-rating was the supportive fiscal terms and the excellent infrastructure which each play their part in achieving high levels of sustainability.
We are also extremely appreciative for the ongoing support from the Angolan Sovereign Wealth Fund and are aiming to build on this support by making Angola one of the world’s most sustainable suppliers of rare earths.”
Pensana will continue to operate under the EcoVadis tracking and reporting system, as leadership in global sustainability is critical to our long-term growth strategy.
Pensana plc (LON:PRE) has provided an update on the beneficiation test work on samples from the Sulima West deposit on the Coola exploration licence located 75 kilometres north of Longonjo.
The test work is being undertaken to determine whether the mineralogy at Sulima West is amenable to simple upgrading onsite, prior to transporting to Longonjo for further processing.
The initial results on the samples tested are very encouraging. Both samples tested show the potential for separation and upgrading to a high-grade concentrate using simple magnetic and gravity processes.
Once the test work has been finalised a drill programme will be undertaken to delineate the extent of the near surface mineralisation over the six-hectare target area at Sulima West.
Highlights include:
· The composite laterite sample graded 8.4% TREO (total rare earth oxide) with 80% comprising magnetic iron and manganese oxides and 10% REE (rare earth element) rich monazite.
· Magnetic and gravity separation test work has been commissioned with the target of producing a 50% TREO concentrate suitable for treatment at Longonjo.
· The apatite-maghemite sample graded 22% P2O5 (phosphate) and was upgraded to 42.6% P2O5 using magnetic separation. Test work has been commissioned with the aim of producing a commercially saleable >40% phosphate concentrate.
Sulima West Laterite
The Sulima West REE enriched laterite covers an area of approximately 6 hectares and has a surface expression defined by a strong soil anomaly grading >3% TREO. The laterite has been sampled in four trenches and numerous pits of 4-6 metres deep, with all the pits ending in mineralisation.
Delineation drilling is required to fully evaluate the dimensions of the laterite and will be undertaken based on the outcome of beneficiation test work.
In late 2023, a 100-kilogram laterite sample was extracted from the wall of Trench 1 over a width of 7 metres and bagged and freighted to Blu Sky Mining laboratory in Pretoria, South Africa for test work.
The entire 100-kilogram laterite sample was homogenised and ground to 100% passing 3.35 mm and 35-kilogram split off and stage ground to 80% passing 150 µm. Samples were screened into six size ranges, analysed for major and trace elements, and PSD plots compiled. Three different size fractions were submitted for QEMSCAN analysis.
The head grade of the laterite is 8.4% TREO, and the sample comprises 80% goethite (iron oxide), psilomelane (manganese oxide) and other oxides, which are all importantly paramagnetic. 10% of the sample comprises monazite which is large and well liberated.
The monazite shows very little association with the goethite or psilomelane . Other rare earth minerals identified are bastnaesite and florencite and gangue minerals including fluorite, variscite and minor quartz.
Further ongoing test work commissioned involves magnetic separation to remove the paramagnetic minerals to the magnetic fraction and then subject the non-magnetic fraction containing the non-magnetic minerals (REE’s, fluorite, variscite, quartz, etc.) to further gravity test work to upgrade and recover the monazite and bastnaesite with the aim of achieving a 50% TREO concentrate grade.
The liberation of the monazite appears sufficient to continue with the current grind. This REE concentrate will then be subject to bench scale test work to see how it responds to the Longonjo flotation and hydrometallurgy regime.
Sulima West Apatite-Maghemite
The Sulima West apatite-maghemite (phosphate) sample was sourced from an isolated, outcropping hill of this rock type, immediately to the northwest of laterite area. The outcrop has a surface area of approximately 500 m2 and has been exposed in two 5-6 metre, deep pits.
A 100-kilogram sample of this outcropping phosphate rock type was bagged and freighted to South Africa for beneficiation test work. The entire sample was homogenised and ground to 100% passing 3.35 mm and three grind sizes were considered, 80% passing 1 mm, 80% passing 850 µm and 80% passing 500 µm. The sample head grade is 21% P2O5. The sample comprises essentially Fe oxides (55%) and apatite (42%) with minor rutile/ilmenite (2%).
Two beneficiation processes were considered, namely gravity (shaking table) and magnetic separation (Carpco).
Gravity separation was not efficient to achieve a saleable P2O5 grade. Magnetic separation achieved a >38% P2O5 grade at a good mass yield. 80% passing 500 µm achieved the highest mass yield and grade after magnetic separation, achieving a grade of 42.6% P2O5 and 34% mass yield. The La and Nd upgraded to the phosphate concentrate.
Further ongoing test work commissioned involves milling a 50-kilogram sample to 80% passing 500 µm and conducting WHIMS (wet high intensity magnetic separation) test work to the milled sample to get a >38% P2O5 concentrate at maximum yield. In addition, a 10-kilogram sample of apatite concentrate will be produced for further mineralogical studies and for marketing purposes.
Grant Hayward, Pensana Exploration Manager commented: “‘These early results indicate the potential for low-cost physical beneficiation of the Sulima West ore at site, feeding the Longonjo processing plant with a high-grade rare earth concentrate.”
Pensana plc (LON:PRE) has announced that, further to the Angolan Sovereign Wealth Fund (FSDEA) advancing a US$15 million loan facility to the Company in August 2023 to enable the funding of capital expenditure, working capital and operating expenditure at the Longonjo project, the Company has reported that discussions have been held regarding the extension of the loan facility to coincide with the anticipated finalisation of the main financing.
Pensana will make an announcement as soon as these arrangements are finalised.
Pensana plc (LON:PRE) has reported the analytical results for the three trenches and nine pits sampled at Sulima West laterite during late 2023.
The Sulima West laterite is located 75 kilometres north of the Longonjo Rare Earths Project and test work programmes are designed to test for the amenability of this mineralisation to be processed at Longonjo.
The Coola Exploration Project of which the company has a 90% interest is located approximately 160 kilometres east of the Port of Lobito, originally covering an area of 7,456 square kilometres.
The Company has completed multiple field programmes in 2020, 2021 and 2022 confirming carbonatite/alkaline rare earth mineralisation on two highly prospective targets, the Coola carbonatite and Sulima West laterite.
Highlights
· Trench and pit sampling results confirm a six hectare, enriched laterite at Sulima West grading 2 – 3% TREO.
· Sampling of three additional historic trenches totalling 206 metres averaged 1.8% TREO (La2O3 + CeO2 + Nd2O5 + Pr6O11).
· Higher grade zones intersected in these trenches include:
▪ Trench 2:2.3% TREO over 32 metres (0-32 m)
▪ Trench 3: 2.3% TREO over 28 metres (24-52 m)
▪ Trench 4: 2.2% TREO over 54 metres (0-54 m)
· All the pits within the six hectare >3% soil anomaly are mineralised with an average grade of 2.1% TREO and with all pits ending in mineralization.
Notable pit intersections include:
▪ Pit 14: 3.0 % TREO over 4 metres
▪ Pit 15: 2.8% TREO over 4 metres
Exploration Manager, Grant Hayward, commented:
“The trench sampling confirms the current understanding of the grade and lateral extent of the Sulima West laterite and the pitting shows mineralisation to depths greater than 5 metres. All pits ended in mineralisation.
Should the current metallurgical testwork campaign on the Sulima West laterite show promising beneficiation results, then the full grade and depth extent of the laterite will be tested by drilling.
The deployment of a portable XRF is a game changer with no more lengthy delays waiting for analytical results before being able to progress activities which will greatly enhance our understanding and shorten the discovery time for these new deposits.”
Three historic trenches totalling 206 metres and nine historic pits ranging in depth from 4 to 5 metres were cleaned, logged and sampled during Q3 2023 (Figure 1). Samples were dried and riffle split, and a 0.5 kg aliquot removed for crushing/pulverising to 100% passing 500 microns.
This sample is then placed in a zip lock plastic bag and analysed with the recently acquired SciAps X-555 REE Analyzer. This pXRF device has a 55kV x-ray tube for superior limit of detection and has been optimized for rare earth element analysis.
The average TREO grade for the 3 recent trenches is 1.8 % over the 206 metres sampled. Higher grade zones occur within the trenches returning 4REO values (La2O3 + CeO2 + Nd2O5 + Pr6O11) averaging 2.3% over widths between 28 to 54 metres.
All pits within the six hectare >3% in soil anomaly are between 4 – 5 metres deep and averaged 2.1% TREO with Pit 14 and Pit 15 reporting 3.0% and 2.8% TREO over 4 metres respectively.
Figures 1: Sulima West trench and pit pXRF sampling results.
For further details please go to https://pensana.co.uk/coola-exploration-project/ on the Pensana website.
The board is pleased to present its review of Pensana Plc (LON:PRE), the rare earth exploration, mining and processing group, whose flagship development assets are the Longonjo NdPr Project and the Coola exploration project in Angola alongside the Saltend rare earth processing hub in the UK.
Half Year Highlights
Finalisation of revised Longonjo execution plan allowing for staged mine development reducing upfront capital expenditure to US$217 million with US$105 million deferred until year three.
Deployment of US$15 million Fundo Soberano de Angola (FSDEA) 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 Longonjo Project.
Offtake memorandum of understanding for up to 100% of Longonjo production.
Ongoing mineralogical studies confirm processing potential of the rare earth host minerals at the Coola carbonatite and Sulima West exploration targets.
Meeting with United Kingdom (UK) Minister Nusrat Ghani to discuss the potential UK and United States (US) government support for the Saltend Project.
Pensana, working in partnership with Polestar, Route2 and the Universities of Leeds and Hull, awarded £316,643 in conditional grant funding by Innovate UK under its CLIMATES programme.
Letter of intent signed between Pensana and The Yorkshire Energy Park (“YEP”) for the site of a future permanent magnet metal facility within the park. The YEP is located adjacent to the Saltend End Chemicals Park in the Humber Freeport UK.
Post period-end
The Company, through its 84% owned subsidiary Ozango Minerais SA (Ozango), which owns 100% of the Longonjo project, has concluded a non-binding term sheet (Term Sheet) with the Longonjo lender consortium for a US$156 million project finance debt facility (Facility).
Approval by one of Pensana’s major potential customers of the product qualification specifications for Longonjo’s proposed mixed rare earth carbonate (MREC) product.
Technical due diligence report on the Longonjo rare earth project reported on by The Mineral Corporation (TMC) to ABSA Capital (ABSA) as the Mandated Lead Arranger for potential debt funding of the Project.
Review by the six-member board, head of investment and key analysts of FSDEA to review the early-stage construction activities being funded by the US$15 million bridging loan from FSDEA, ahead of conclusion of the main financing.
CEO’s Review
Dear Pensana Shareholders,
Over the period our owner’s team, along with key financial support from our major shareholders, have focused on rapidly repositioning our Longonjo Rare Earth Project and the Saltend separation facility into a staged development programme targeting first production in early 2026.
The significant efforts have culminated in the finalisation of a Class 2 AACE study being completed providing a high degree of confidence around the capital estimates and contingencies and the lender appointed Independent technical experts, The Mineral Corporation, being able to carry out a detailed review on the updated project.
Additionally, all preferred vendors of major and long-lead equipment items were identified over the Period and have been engaged in preparation for project development; coupled with ongoing improvements and enhanced modularisation enabling for a de-risked off-site pre-fabrication, testing and containerised transport ensuring a faster and more efficient construction phase in terms of schedule, equipment and manpower requirements.
The reduced US$217 million capital cost metallurgical plant is a downscaled version of the identical processing unit stages within the existing defined mining, comminution, flotation, thickening, calcining, leaching and product precipitation process route.
The key points in the revised development implementation that allowed the team to rapidly facilitate the reworked phased development plan were that:
Existing permits remained intact including the Exploitation Licence, the Environmental and Social Impact Assessment (ESIA) construction permit, the Resettlement Action Plan (RAP) and the Livelihood Restoration Plan (LRP) as developed in conjunction with the local community and relevant provincial authorities;
Pre-production spend was minimised whilst still ensuring that the project’s potential for generating economic benefits on a larger scale were not compromised;
Production of a standardised and globally saleable refined radionuclide-free mixed rare earth product from Angola, independent of other developments;
The modular sulphuric acid plant production unit capacity provides the pivot point around which the engineering and design work was undertaken and optimised;
The historical testwork and pilot plant trials conducted in collaboration with equipment vendors continued to underpin the plant design criteria;
Job creation in Angola along with training and skills transfer mechanisms remain intact.
Notable developments towards de-risking aspects of the project included:
The SRK team finalising their geotechnical investigation in support of the dual-purpose TSF detailed design over the Period. The selected TSF site was confirmed as also being able to provide suitable excavated material for use in the TSF starter walls, pit haul roads, plant terracing and other construction-related requirements, thus mitigating the need to develop borrow-pit sources and associated licensing and material transport costs as well as reducing the overall environmental impact.
Integration of the Longonjo Project bulk reagent consumption requirements (including sulphur and caustic soda) into the Trafigura/Mota Engil-led strategic mineral-focused Lobito Corridor port and rail concessions is being pursued as part of the ongoing operations readiness preparation. Logistical and operational expenditure benefits are obvious in terms of broader reagent supply to the existing Democratic Republic of the Congo (DRC) Copperbelt mines alongside the limestone which will be sourced from the existing quarries in the Lobito area.
Negotiation of global procurement and logistical support for the construction phase with Deugro, an internationally established freight-forwarding business with a specific relationship with their Africa-centric specialised project logistics division. This combination of global and local logistics to enable efficient movement of material to and from the project site is considered by management to contribute to significantly de-risk this aspect of the project.
Saltend
With the focus on bringing the Longonjo project through financing and into development, on-site activity for the Saltend Project along with all significant engagements with third-party contractors continued to be put on hold whilst the financing options are being advanced. The existing Intellectual Property developed to date and core technical team expertise remain available to the group. Once Longonjo is in construction, attention will turn to the completion of the financing and development of the Saltend facility.
Update on construction activities at Longonjo
Over the Period the early-stage development activities continued to be funded via a US$15 million bridging loan provided by FSDEA ahead of the main finance. The significant activities have been the civil works for the camp, the rehabilitation of the access road to the Longonjo railway station and the agricultural demonstration plots under the Livelihood Restoration Programme.
The 4.5 kilometer road linking the site to the Benguela railway line has been upgraded. The enhanced road features include an improved roadbed substructure, a redefined road profile and rapid drainage systems. Serving as the primary route for inbound materials during construction and later for reagent import and the export of Mixed Rare Earth Carbonate in containers, the road connects the mine to the Longonjo station for rail access to the port of Lobito for shipping.
The Benguela railway line is part of the Lobito corridor undergoing a US$550 million investment from the US Government. The investment aims to secure critical minerals across central Africa to be exported via the port of Lobito and is anticipated to become one of Africa’s most important rail transport systems.
Several kilometers of overhead powerlines, together with an underground water supply and effluent disposal system have been installed ahead of the arrival of the 350-person modular camp, which has been assembled at Johannesburg and is being relocated to site. The camp will be the primary operations base for the construction team.
Agricultural demonstration plots have been established by South African agriculture consultants, Vuna Agri, as part of the Livelihood Restoration Programme. The demonstration plots have an area of nine hectares and have now successfully completed their first full season. The Livelihood Restoration Programme was established to provide replacement land for any displaced farmers and additionally to provide a training base for those persons affected by the project to develop their agricultural skill sets.
The objective is to help local growers and farmers create healthy and sustainable agro-ecosystems, boosting household income in nearby communities, whilst enhancing overall food security. This ongoing programme is being conducted in collaboration with local universities with a view to continually improving farming practices.
With well on 50 engineering contractors and Longonjo staff now working on site in preparation for the commencement of main construction there has been a very positive reaction to the activities on site amongst the local community, in particular with the creation of well-paid jobs and the successful implementation of the first phase of the livelihood restoration programme.
We have a strong team supporting the main construction which is being managed by MCC a leading project management team with a track record of delivering projects across Africa, including Angola. The engineering team is supported by ADP and ProProcess, both being African minerals specialists in the detailed design, construction and commissioning of modular mineral processing plants with extensive development experience in Angola.
Environment Social Governance (ESG)
The business continues to ensure ESG is at the heart of its activities with the core business strategy focused on providing a source of sustainable rare earths to the market.
Health, Safety and Environment
From a health, safety and environment view the business embeds HSE into its operating culture and has had zero recordable cases and zero environmental incidents in the Period. In Angola several staff residing in the community reported the contraction of malaria and the business therefore has delivered a malaria awareness programme.
Angola
In the Period the finalisation of the revised Longonjo execution plan including sections on environmental, health and safety, stakeholder relations and social and communities was completed.
After the completion of phase one of the resettlement action plan (RAP) in October 2022, 28 project affected households continue to receive transitional support food packages to supplement their temporary loss of livelihood. The project plan will see the requirement for more resettlement to occur in 2024, to ensure land is available for the project. The team are currently in the process of contacting, engaging with and updating the records of all those who will be affected by the next phase of the project. During the period the RAP delivery plan has been reviewed and the project can therefore ensure compensation will be fair and transparent.
Stakeholder engagement continues apace with regular meetings taking place over the period between the project team and key stakeholders. This includes local and national authorities, transitional leadership, project affected people, training institutions and much more. This is supported by continued operation of an active grievance mechanism with community engagement with the process. All grievances raised have continued to be resolved at step 1, between the complainant and Ozango staff.
Further progress has been made over the Period in developing the replacement land to support the economic relocation of agricultural land affected by the project. During the period further studies were undertaken to review existing land use, biodiversity, and agricultural potential, confirming the availability of sufficient suitable land. Additionally, the project has agreed with the local community that Ozango will not affect any existing agricultural land and land not currently used for agriculture will be purchased for a value of at least market price. Furthermore, the project has invested in the formation of two demo plots, one in each of two replacement land blocks, to further investigate the most effective techniques and crops for optimal yield and to further demonstrate to PAPs that the replacement land can effectively host agriculture. These supplement the ongoing test and demonstration work at the existing plots within the mine boundary.
UK
In the UK, the business continues to explore research and development opportunities and during the period a studentship, in partnership with University of York and University of Leeds has commenced looking at the social impacts and opportunities from rare earth mining, using our Longonjo project as a case study. This is in addition to the ongoing project funded by innovate UK’s CLIMATEs fund to investigate, in partnership with University of Leeds, University of Hull, Route2 and Polestar, opportunities across the value chain to support Pensana’s objective of delivering a sustainable rare earth value chain.
Exploration
In August the Company reported high grade TREO soil sampling results at Sulima West and encouraging results from other targets on the Coola exploration licence area. This was subsequently followed by a report on the Mineralogical Characterisation studies undertaken by SGS South Africa of samples collected at Sulima West and the Coola carbonatite during 2022.
The report highlighted that:
the Sulima West laterite mineralisation contains monazite which hosts NdPr with moderate liberation and exposure which should be amenable to some degree of simple upgrading at the current location, prior to processing at Longonjo;
the Coola carbonatite contains a significant amount of bastnaesite which is host to more than 90% of the NdPr. The bastnaesite is moderately liberated and exposed, again suggesting that there is potential for recovery using the physical separation at the current location prior to processing at Longonjo.
The initial mineralogical study has confirmed the processing potential of the rare earth host minerals for both the Sulima West laterite and the Coola Carbonatite. The opportunity for upgrading the ore at the current location using physical separation techniques is currently being further assessed with the testing of larger samples which have been collected. We obviously see both Sulima West and Coola carbonatite as having the potential for upgrading the ore at its current location and thereby providing a high-grade near-term feedstock which would be transported to Longonjo for further processing and extraction of the rare earth elements.
Ground geophysical surveys were completed at both targets in 2023 which helped to better define known areas of mineralization and added additional exploration targets which will be further investigated in 2024.
Post-period end we continued with mineralogical studies and anticipate results to be reported by mid-year. Exploration drilling of the most prospective targets is scheduled for the latter half of 2024.
Operating and Financial Review
During the period, the consolidated entity incurred a comprehensive loss for the period of US$3,657,839 (31 December 2022: US$4,218,451 loss).
Administration expenses decreased to US$3,461,420 (31 December 2022: US$4,044,824). This was due to a decrease in consultancy fees, travel expenditure and legal fees incurred.
The group incurred a foreign currency exchange gain of US$50,471 for the six months ended 31 December 2023 (loss of US$42,468 during the six months ended 31 December 2022). These gains and losses arise from the settlement of invoices in currencies other than the functional currencies (USD, GBP, AUD, AOA), as well as the translation of balances denominated in currencies such as the pound and Australian dollar to the US dollar, where the balances are held in currencies other than the functional currency of the relevant company and reflect the movements in these currencies during the respective periods.
Group net assets decreased in the period from US$56,760,602 at 30 June 2023 to US$53,812,514 at 31 December 2023. This was due to a decrease in cash of $7,266,475 during the period, as explained below. The decrease in cash was partially offset by an increase in property, plant and equipment and intangible assets of US$5,531,583, mainly due to the construction programme at the Longonjo project.
The decrease in cash was due to expenditure at the Longonjo development project of US$10,425,893 (Six months ended 31 December 2022: US$8,615,868). This was partially offset by the receipt of the bridging loan facility from FSDEA which is secured over the company’s shareholding in Ozango. By 31 December 2023, $4.7 million of the facility was drawn down.
The Group experienced net cash outflows from operating activities of US$3,223,494 (31 December 2022: US$4,074,921) with the decrease primarily reflecting working capital movements.
Net cash outflows from investing activities of US$8,827,832 increased from cash outflows of US$7,359,572 for the six months to 31 December 2022, mainly due to a decrease in capex items locked up in working capital, due to the timing of payment of invoices. Cash outflows for both periods under review related to cash spent on additions to the Longonjo project, as well as the Saltend project for the six months ended 31 December 2022. During the period, the group also received a R&D tax credit of $1,598,061 for work related to Saltend in the UK ($1,037,336), as well $560,725 for work related to Longonjo.
The decrease in the cash inflows from financing activities from US$10,000,000 for the six months ended 31 December 2022 to US$4,784,851 for the six months ended 31 December 2023 was mainly the result of no equity being issued during the period. The group did however receive a bridging loan facility from FSDEA of $4.7 million as explained above.
The ability of the company and group to continue with its plans to develop the Longonjo mine are contingent on the successful completion of the proposed debt and equity funding arrangements currently underway in the normal course of business. It is anticipated that the contemplated financing across the group may include further issues of equity at the asset level and export credit-backed debt financing. There is a risk that funding may not be available and/or the cost of financing may be higher than expected.
The ongoing support provided by the Angolan government and the approval of a non-binding term sheet from the Longonjo lender consortium as announced recently is expected to enable the Group to refinance the US$15m FSDEA loan facility.
The Group has received a loan facility from two of its directors for GBP2 million to meet the underlying operating costs of the UK over the next 6 to 9 months, excluding the existing UK contractor balances and capital development costs. The Board continues to engage proactively with the UK contractors to maintain support while further funding is secured to enable settlement, with non-binding letters of intent and agreements setting out the route to settlement under discussion with the key contractors.
Please refer note 3 to the financial statements for the going concern statement which includes a material uncertainty in relation to going concern.
Principal Business Risks
The Group is exposed to several risks and uncertainties which could have a material impact on its long-term development, and performance and management of these risks is an integral part of the management of the Group. An overview of the key risks which could affect the Group’s operational and financial performance was included in the company’s 2023 Annual Report, which can be accessed at www.pensana.co.uk. These may impact the Group over the medium to long term; however, the following key risks have been identified which may impact the Group over the short term.
Financing and liquidity
The group is in pre-production phase and therefore has no revenues from operations currently.
The ability of the company and group to continue with its plans to develop the Longonjo mine are contingent on the successful completion of the proposed debt and equity funding arrangements currently underway in the normal course of business. It is anticipated that the contemplated financing across the group may include further issues of equity at the asset level and export credit-backed debt financing. There is a risk that funding may not be available and/or the cost of financing may be higher than expected.
The ongoing support provided by the Angolan government and the approval of a non-binding term sheet from the Longonjo lender consortium as announced recently is expected to enable the Group to refinance the US$15m FSDEA loan facility.
The Group has received a loan facility from two of its directors for GBP2 million to meet the underlying operating costs of the UK over the next 6 to 9 months, excluding the existing UK contractor balances and capital development costs. The Board continues to engage proactively with the UK contractors to maintain support while further funding is secured to enable settlement, with non-binding letters of intent and agreements setting out the route to settlement under discussion with the key contractors.
Details of the Board’s going concern assessment are provided in note 3 to the financial statements and include a material uncertainty in respect of going concern.
Development of the Longonjo and Saltend Projects
The group’s operations are at an early stage of construction development and future success will depend on the group’s ability to manage the Longonjo and Saltend Projects (the projects) and the production of NdPr-rich MREC for export to the Saltend refinery and further processing into a rare earth oxide. In particular, the group’s success is dependent upon the directors’ ability to develop the projects by commencing and maintaining production at the sites and there is no certainty that funding will be available. Development of the projects could be delayed or could experience interruptions or increased costs because of supply chain or inflationary pressures or may not be completed at all due to a number of factors.
Logistical challenges and delays
Global supply chain challenges could result in logistical risks relating to availability, potential delays and increased costs of equipment and material both for the project and operations phase.
Commodity price
If the group is able to develop the Longonjo and Saltend Projects and/or the Coola Project for production and the market price of rare earth oxide decreases significantly for an extended period of time, the ability for the group to attract finance and ultimately generate profits could be adversely affected.
Attracting skilled employees
The group’s ability to compete in the competitive natural resources and specialist rare earth chemical processing sectors depends upon its ability to retain and attract highly qualified management, geological and technical personnel. The loss of key management and/or technical personnel could delay the development of the Longonjo Project, exploration at the Longonjo Project and the Coola Project and development and commissioning of the Saltend refinery thereby negatively impacting on the ability of the group to compete in the resources and chemical processing sectors. In addition, the group will need to recruit key personnel to develop its business as and when it moves to construction and ultimately operation of a mine, each of which requires additional skills.
Mr. Tim George
Chief Executive Officer
28 March 2024
INDEPENDENT REVIEW REPORT TO PENSANA PLC
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2023 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2023 which comprises the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated statement of cash flows, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and as regards the Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for conclusion
We conducted our review in accordance with Revised International Standard on Review Engagements (UK) 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” (“ISRE (UK) 2410 (Revised)”). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 3, the annual financial statements of the Pensana Plc are prepared in accordance with UK adopted international accounting standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, “Interim Financial Reporting.
Material uncertainty related to Going Concern
We draw attention to note 3 to the half-yearly financial report which indicates that the group will require additional funding to settle outstanding amounts due to suppliers and further subsequent additional funding to meet its commitments and planned expenditures which is not guaranteed. As stated in note 3, these events or conditions, along with other matters as set out in note 3, indicate the existence of a material uncertainty which may cast significant doubt over the group ability to continue as a going concern. Our conclusion is not modified in respect of this matter.
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting.
This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410, however future events or conditions may cause the group to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible for assessing the company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statement in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority and for no other purpose. No person is entitled to rely on this report unless such a person is a person entitled to rely upon this report by virtue of and for the purpose of our terms of engagement or has been expressly authorised to do so by our prior written consent. Save as above, we do not accept responsibility for this report to any other person or for any other purpose and we hereby expressly disclaim any and all such liability.
Ryan Ferguson
BDO LLP
Chartered Accountants
London, UK
28 March 2024
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Pensana plc (lLON:PRE) has reported the interpretation of the geophysical surveys conducted late in 2023 over the Coola carbonatite and the Sulima West laterite located 75 kilometres north of the Longonjo project and of the commencement of a bulk metallurgical test work programme designed to test for the amenability of this mineralisation to be processed at Longonjo.
The Coola Exploration project of which the company has a 90% interest is located approximately 160 kilometres east of the Port of Lobito, originally covering an area of 7,456 square kilometres. The Company has completed multiple field programmes in 2020, 2021 and 2022 confirming carbonatite/alkaline rare earth mineralisation on two highly prospective targets, the Coola carbonatite and Sulima West laterite.
Highlights
Coola confirmed as a 900 metre diameter carbonatite ring dyke with a similar scale and prospectivity to Longonjo;
Sulima West has reported strong anomalies of high-grade Total Rare Earth Oxide (TREO) mineralisation for drill testing;
A Coola carbonatite 4.7% TREO bastnaesite initial sample and a Sulima West 4.8% TREO enriched laterite initial sample have been sent for bulk metallurgical test work in South Africa; and
These bulk samples will be tested for low-cost beneficiation to a high-grade concentrate at site for trucking to Longonjo for processing.
A metallurgical test work programme at Blu Sky Mining laboratory in South Africa is underway to test the identified mineralisation for low-cost physical separation techniques which can be applied at site to produce a high-grade rare earth concentrate.
Successful results from these separation techniques will allow the drill programmes to target zones of mineralisation which have the potential to produce a high-grade concentrate at site. These concentrates may then be trucked to the Longonjo facility for processing.
Four bulk samples have been sent for metallurgical test work, including the Coola carbonatite initial sample reporting 4.7% TREO as mainly bastnaesite, and the Sulima West enriched laterite initial sample reporting 4.8% TREO as well as samples of fluorite and apatite.
These samples will be tested for multi-gravity, wet tables, WHIMS (wet high intensity magnetic separation), magnetic separation, and XRF/optical sorting with a view to concentrate generation ahead of processing at Longonjo, or as standalone mining opportunities in the case of the fluorite and apatite targets.
Figures 1 & 2: Coola carbonatite Magnetics (TMI-RTP – left hand image) showing central diatreme unique magnetic anomaly and Coola Radiometrics (Total Count – right hand image) showing fluorite rich plug.
Pensana Exploration Manager, Grant Hayward, commented:
“The Coola carbonatite magnetic survey has identified a number of compelling targets for follow-up and has clearly identified a large, roughly 600 metre diameter circular magnetic feature, with a unique magnetic signature occupying the central caldera.
We believe this to be a highly prospective, deeply weathered, volcanic pipe, or diatreme, which appears to have a similar scale to Longonjo. We know that the central areas of carbonatites often host supergene enriched REE deposits as is the case at Longonjo and so we are looking forward to drill testing this highly prospective target.”
Pensana plc (LON:PRE) has provided the following update on the Longonjo project:
Concrete foundations have been poured for the 316-person modular camp manufactured in South Africa for despatch to site later this month.
The on-site team, under the leadership of experienced Project Manager Kevin Botha, is continuing to make good progress with preparatory works ahead of main construction anticipated in May 2024, with cold commissioning commencing in August 2025.
An order has been placed with NCP International, a global supplier of new and refurbished comminution equipment based in South Africa, for the US$2.3 million ball mill for delivery from Johannesburg to meet the construction and commissioning timelines for the concentrator plant.
The detailed design and procurement documentation for other main long lead time or critical path items, such as the thickeners and flotation columns in the concentrator section, along with key equipment in the recovery/MREC section, such as the sulphuric acid plant, have been completed and orders will be placed with the selected vendors shortly.
Grupo Nov has completed the civils and services connections for the initial section of the 316-person modular construction camp. The US$1.3 million camp has been fabricated off site and is ready for shipment from Johannesburg to site during March 2024.
All the site access roads have been completed within the licence area. The 5,000-litre potable water tank is ready for installation to support the construction camp and the future plant facilities.
High priority is being given to community relations and in particular to the resettlement action and livelihoods restoration plans which are progressing according to plan and are being well received.
The agricultural demonstration plots are in their second year and continue to generate excellent baseline data. They are providing the opportunity to train local farmers in the latest agricultural methods.
The mine and processing plant will be constructed from May 2024 and commissioning of the various circuits will commence in March 2025 and continue until final commissioning in April 2026.
A schedule of the expenditures is set out below.
Quarterly Expenditures
US Dollars
Activity
May – July 2024
5 044 000
Civil and Earth Works
August – October 2024
18 889 000
Structural and Mechanical installation
November – January 2025
32 435 000
Platework and piping installation
February – April 2025
36 032 000
Electrical installation
May -July 2025
36 185 000
Instrumentation installation
August – October 2025
38 274 000
Cold Commissioning
November – January 2026
23 096 000
Hot Commissioning
February – April 2026
6 476 000
Final Commissioning
Total
196 432 000
Tim George, Pensana CEO commented: “The growing on-site team, supported by experienced contractor Grupo Nov, is fully operational and is well advanced with the earth works and other preparatory works ahead of the commencement of the main civils and earthworks campaigns in the weeks ahead.
We are particularly pleased with the attention to health and safety, environmental performance, the training completed on site and the continued focus on the community engagement programs. This will continue to be a priority as we build out the workforce which will increase to over 650 people on site at peak construction later this year.”
Pensana plc (LON:PRE) has provide the following update on debt finance for the Longonjo project:
The Company, through its 84% owned subsidiary Ozango Minerais SA (Ozango), which owns 100% of the Longonjo project, has concluded a non-binding term sheet (Term Sheet) with the Longonjo lender consortium for a project finance debt facility (Facility).
The Facility amount is up to US$156 million with a participation of up to 50% between each of the lender participants.
The purpose of the Facility is to provide limited recourse senior secured project finance to fund the Longonjo mine, flotation circuit and refinery.
The maximum tenor of the Facility is to cover the construction period and ramp up to full production plus four years to an overall maximum of seven years.
The Facility is conditional on obtaining guarantees from the relevant export credit agency for which discussions are well advanced.
The Company is furthermore in advanced discussions with the Angola Sovereign Wealth Fund (FSDEA) and a member of the lender consortium to finalise the US$80 million equity component of the overall financing package.
Conclusion of the Term Sheet follows the successful completion of a modular redesign of the fully permitted Longonjo mine and processing facility, with a total capital expenditure (including 10% contingency) of US$217 million, making it one of the lowest amongst its peers.
The Company is in advanced discussions with several parties for the offtake of the highly marketable, radionuclide-free mixed rare earth carbonate (MREC) and has recently received product approval from one of its potential customers.
The Company expects to be in a position to sign up to 100% of the production of the high value, clean MREC from the Longonjo processing facility.
FSDEA has provided a US$15 million bridging loan facility towards the US$80 million equity investment, which continues to be available to facilitate early-stage project development and the route to main finance.
Paul Atherley Chairman commented:“We are grateful to FSDEA for its ongoing support and to the lender consortium for their work in concluding the US$156 million debt term sheet to finance the Longonjo rare earths mine and processing facility.
This is a major step for the Company in its plans to bring into production one of the world’s largest undeveloped rare earth projects.
It is also an important step for the establishment of an African-based, independent, supply chain of the metals crucial to the energy transition, which captures significant value within Angola and creates several hundred long-term high value jobs within the local community.”
About Longonjo
The electrification of motive power through Electric Vehicles and Wind Turbines is the biggest energy transition in history and is forecast to generate a demand growth for magnet metal NdPr of 7.5% CAGR over the next decade.
Pensana owns one of the world’s largest undeveloped rare earth mines, and one of only three with a JORC Reserve greater than 100,000 tonnes of NdPr.
Pensana recently announced that one of its major potential customers has approved the product qualification specifications for Longonjo’s proposed MREC product. The Longonjo MREC contains 50% Total Rare Earth Oxide of which 24% is NdPr with minimal impurities and is radionuclide-free.
Longonjo is expected to produce 20,000 tonnes of MREC commencing 2026 and 40,000 tonnes of MREC from 2029 onwards following the planned expansion.
At full production Longonjo will produce ~5% of world production of NdPr in the form of an exported mixed rare earth carbonate.
The upfront capital cost of US$217 million for the fully permitted mine and processing facilities is amongst the lowest amongst its peers.
Pensana plc (LON:PRE) has announced that one of its major potential customers has approved the product qualification specifications for Longonjo’s proposed mixed rare earth carbonate (MREC) product.
Longonjo is expected to produce 20,000 tonnes of MREC commencing 2026 and 40,000 tonnes of MREC from 2029 onwards following the plannedexpansion. The Longonjo MREC contains 50% Total Rare Earth oxide of which 24% is NdPr with minimal impurities and is radionuclide-free.
Tim George, Pensana CEO commented“We are very pleased to receive this important product quality approval for the Longonjo mixed rare earth carbonate which follows extensive pilot plant test work in Perth, Western Australia. Our understanding is that there is expected to be a shortage of high quality, clean product coming onto the market in the near future, and this puts us in a strong position when looking to secure offtake arrangements.”
The electrification of motive power through EVs and Wind Turbines is the biggest energy transition in history and is forecast to generate a demand growth for magnet metal NdPr of 7.5% CAGR over the next decade.
Pensana owns one of the world’s largest undeveloped rare earth mines, and one of only three with a JORC Reserve greater than 100,000 tonnes of NdPr.
At full production Longonjo will produce ~5% of world production of NdPr in the form of an exported mixed rare earth carbonate.
The upfront capital cost of US$200 million for the fully permitted mine and processing facilities is amongst the lowest amongst its peers making Pensana highly competitive.
Pensana also has a fully permitted US$250 million downstream separation facility at the Saltend Chemicals Park in the Humber Freeport.
Financing for each of the Longonjo and Saltend projects is currently underway.
Pensana plc (LON:PRE) has advised that the technical due diligence report on the Longonjo rare earth project in Angola has been reported by The Mineral Corporation (TMC) to ABSA Capital (ABSA) as the Mandated Lead Arranger for potential debt funding of the Project.
A summary of TMC’s key findings:
The Project is located approximately 320km east of the Port of Lobito and envisages the open pit mining and processing of near surface Rare Earth Elements (REE) bearing carbonatite ores to produce a mixed REE carbonate (MREC) concentrate which will then be marketed commercially.
The holder of the Mineral and Mining Rights over the Longonjo mining licence area is the Angolan registered company Ozango Minerais S.A. (Ozango), which is 84% owned by Portugal domiciled subsidiaries of Pensana. The balance of Ozango is held by the Angolan Sovereign Wealth Fund and two Angolan partners.
Longonjo will comprise an open pit mine to recover near surface REE, which will then be processed via concentration and downstream refining to produce a commercially saleable Mixed Rare Earth Carbonate (MREC) concentrate for export via the Port of Lobito to third-party offtakers for the purpose of ultimately producing Neodymium/Praseodymium (NdPr) feed into the renewable energy and electric vehicle markets.
A nominal plant feed of 0.8Mtpa has been specified at a TREO feed grade of 4.12% and an NdPrO feed grade of 0.9%. The stockpiling and blending strategy critical to achieving stable and consistent concentrator performance and product has been identified and included in the mining and processing flowsheets. The plant design is nominally based on a dry concentrate feed of approximately 59ktpa, to produce a nominal MREC dry product of 19.6ktpa (15ktpa normal operating conditions).
Whilst TMC is of the opinion that ramp-up to achieve design recoveries will be challenging, and the ongoing operational control of the processing plants will be critical to maintaining product quality and recovery, TMC notes no fatal flaws in terms of the revised bankable feasibility study (BFS) review and no material technical divergences from the level of study required for bank funding approval.
TMC noted the capital estimate provided is extremely detailed and based on bills of quantities and tendered prices with a capital base date of Q4 2023. An accuracy assessment was also carried out, which confirms the level of accuracy complies with that required by a BFS standard. TMC is of the opinion that sustaining capital may be slightly understated however this does not present a material risk to the Project.
Capital Cost Breakdown
Concentrator Plant
US$37 766 993
Plant Common Areas
US$14 687 930
TSF
US$7 157 201
Recovery Plant
US$75 472 541
Plant Infrastructure
US$15 568 988
Project Infrastructure
US$123 386
Mine Infrastructure
US$9 707 348
Environmental
US$4 538 590
Security
US$1 767 680
Site Infrastructure
US$7 001 150
Indirect Costs
US$22 640 254
Contingency
US$20 100 933
Total Project Capital Expenditure
US$216 532 994
The capital estimate was derived from the various currencies relating to the goods and services costs in the country of origin and adjusted for the relevant exchange rates: US$ South African Rand ZAR 18.5, European Euro EUR 0.9, Australian Dollar AUD 1.5 and Angolan Kwanza AOA 830.
TMC notes the level of detail provided in the detailed capital estimate consisting of in excess of 18,000 line items, the methodology undertaken to produce the capital estimate and the basis of estimate being predominantly based on bills of quantity, tendered rates and budget quotations.
Operating Cost Estimates have been updated based on the revised Project scope and also brought to a consistent cost base date of Q4 2023. TMC has reviewed all of the operating cost centre data and concurs that the operating cost estimates as provided meet the accuracy levels associated with a BFS, however it is noted that the retender for the mining contract scheduled for late 2024 will impact on overall Project economics and in all likelihood trigger the requirement for a revision of the mining optimisation plan.
TMC notes that the financial model as received is detailed in all modelled inputs and results in free cash flow levels which would be likely to support a funding decision. TMC reiterates the sensitivity of the Project economics to the forecast rare earth oxide prices and recommends that the imminent offtake agreements and pricing structures should be included in any funding agreement as Conditions Precedent. Once these are available the Project financial model should be updated, and the economics revised. The Project economics are most sensitive to projected market dynamics and the resulting product pricing projections, which in turn present the most material risk to Project economics.
Earthworks and civils contractors established site in November 2022. Servitude bush clearing and pylon installations to the borehole pumps, contractors camp, main camp and water treatment plant were in progress at the time of the site visit at the end of February 2023. Overall, the level of detail design of the infrastructure is commensurate with the requirements of the BFS and TMC is of the opinion that the infrastructure design is appropriate and fit for purpose to support the mining and processing operations.
TMC is of the opinion that the level of work undertaken for the project schedule and plan of execution is commensurate with the requirements of a BFS and the work undertaken is comprehensive and will be the basis for a potential successful project execution.
Extensive work has been undertaken in the areas of social and community engagement. TMC supports the programmes and costs which have been allocated to the various social initiatives, however notes that the Relocation Action Plan still requires careful monitoring and management to ensure successful implementation, minimising community grievances. Ozango’s engagements and initiatives now comply with the expectations associated with a BFS level of study and in some instances exceed expected levels.
TMC notes that all legislative aspects of Human Resources management have been addressed adequately, however it does recommend that remuneration levels are reviewed prior to the commencement of recruitment, as the budgeted levels may mitigate against the procurement of top level individuals, particularly in the senior technical expatriate roles. The BFS meets expected levels of detail in terms of all HR, operational readiness and occupational health and safety aspects. It is noted that specific operational readiness planning is only expected at the next stage of the Project.
Tim George Pensana CEO commented: “We are very grateful to Russel Heins and the team at The Mineral Corporation team for the diligent and extremely thorough review of all aspects of the Longonjo project undertaken in their role as lead Technical Advisor to ABSA as the Mandated Lead Arranger and we are pleased with the positive recommendations.
The review was based on the re-engineered, reduced capital cost of the project for financing purposes following our review inQ2of 2023. A huge amount of work has gone into the capital cost estimate which as noted by Russell and the team is based on very detailed estimates and we are pleased that despite the current inflationary and cost pressures the estimate has been confirmed around US$217 million, which includes US$20 million in contingency.
As previously announced, once the Longonjo operations are operational and fully commissioned it is our intention to expand production to around 40,000 tonnes of MREC per annum which will require an additional capital cost of around US$100 million which is expected to be incurred around year three of the initial operations.
Whilst this technical review has been underway, we have been working closely with our financiers ABSA, FSDEA and others and we expect to be in a position to announce the financing arrangements shortly.”
On 10 January 2024, Pensana plc (LON:PRE) and its local subsidiary Ozango Minerais S.A, welcomed the full board of Directors of the Angolan Sovereign Wealth Fund (FSDEA) to Longonjo for a site inspection. The six members of the Board were accompanied by the head of investment and key analysts of FSDEA.
The purpose of the visit was to review the early-stage construction activities being funded by the US$15 million bridging loan from FSDEA, ahead of conclusion of the main financing.
The Chairman of the Board, Armando Manuel, highlighted the importance of the Longonjo project in the FSDEA investment portfolio. The Chairman was keen to understand where FSDEA can assist in the roll-out of the next phase of key activities on site.
The Board advised that it was very satisfied with the activities completed to date, namely the deployment of capital for the civil works for the camp, the rehabilitation of the access road to the Longonjo railway station and the agricultural demonstration plots under the Livelihood Restoration Programme.
The Board also visited the overhead powerlines, which together with an underground water supply and effluent disposal system, have been installed ahead of the arrival of the 350-person modular camp currently being assembled in Johannesburg.
The visit was part of a larger review of projects along the important Benguela railway line connecting Longonjo to the port of Lobito, known as the Lobito Corridor. This infrastructure is a key enabler and core benefit to the Longonjo project.
Armando Manuel, Chairman of the FSDEA Board commented:“We are delighted to see the excellent progress being achieved on site at Longonjo, which is an important project for us. FSDEA has financed the acceleration of construction activities to ensure that the project maintains momentum whilst we work with the lender consortium to conclude the main finance.”
Tim George Pensana CEO commented:“We are grateful for the ongoing financial and other support from FSDEA for what is going to be a very important project in terms of high value long-term jobs. We are making good progress on site. Over the past few months, the site team has transitioned to a high-performance delivery role and is busy preparing for the main construction activities. We are in good shape to commence construction activities as soon as the financing is completed.”
Pensana Plc (LON:PRE) has provided the following update on activities at the Longonjo mine site ahead of main construction.
As previously announced the early-stage development activities are being funded by a US$15 million bridging loan provided by FSDEA (the Angolan Sovereign Wealth Fund) ahead of the main finance.
The significant activities have been the civil works for the camp, the rehabilitation of the access road to the Longonjo railway station and the agricultural demonstration plots under the Livelihood Restoration Programme.
The 4.5 kilometre road linking the site to the Benguela railway line has been upgraded. The enhanced road features include an improved roadbed substructure, a redefined road profile and rapid drainage systems.
Serving as the primary route for inbound materials during construction and later for reagent import and the export of Mixed Rare Earth Carbonate in containers, the road connects the mine to the Longonjo station for rail access to the port of Lobito for shipping.
The Benguela railway line is part of the Lobito corridor undergoing a US$550 million investment from the US Government. The investment aims to secure critical minerals across central Africa to be exported via the port of Lobito andis anticipated to become one of Africa’s most important rail transport systems.
Several kilometres of overhead powerlines, together with an underground water supply and effluent disposal system have been installed ahead of the arrival of the 350-person modular camp, which has been assembled at Johannesburg and is being relocated to site. The camp will be the primary operations base for the construction team.
Agricultural demonstration plots have been established by South African agriculture consultants, Vuna Agri, as part of the Livelihood Restoration Programme. The demonstration plots have an area of nine hectares and have now successfully completed their first full season. The Livelihood Restoration Programme was established to provide replacement land for any displaced farmers and additionally to provide a training base for those persons affected by the project to develop their agricultural skill sets.
The objective is to help local growers and farmers create healthy and sustainable agro-ecosystems, boosting household income in nearby communities, whilst enhancing overall food security. This ongoing programme is being conducted in collaboration with local universities with a view to continually improving farming practices.
Tim George Pensana PlcCEO commented: “We now have over 50 engineering contractors and Longonjo staff working on site in preparation for the commencement of main construction. There has been a very positive reaction to the activities on site amongst the local community, in particular with the creation of well-paid jobs and the successful implementation of the first phase of the livelihood restoration programme.
We have a strong team supporting the main construction which is being manged by MCC a leading project management team with a track record of delivering projects across Africa, including Angola.ADP, the main contractor is an African minerals specialist in the detailed design, construction and commissioning of modular mineral processing plants with extensive development experience in Angola.”
The electrification of motive power through EVs and Wind Turbines is the biggest energy transition in history and is forecast to generate a demand growth for magnet metal NdPr of 7.5% CAGR over the next decade.
Pensana Plc owns one of the world’s largest undeveloped rare earth mines, and one of only three with a JORC Reserve >100,000 tonnes of NdPr.
At full production Longonjo will produce ~5% of world production of NdPr in the form of an exported mixed rare earth carbonate.
The upfront capital cost of US$200 million for the fully permitted mine and processing facilities is amongst the lowest amongst its peers making Pensana highly competitive.
Pensana also has a fully permitted US$250 million downstream separation facility at the Saltend Chemicals Park in the Humber Freeport.
Financing for each of the Longonjo and Saltend projects is currently underway.
Pensana plc (LON:PRE) has announced that, at an on-site event on Friday, the 17th of November, Pensana and The Yorkshire Energy Park signed a letter of intent for the site of a future permanent magnet metal facility within the park. The YEP is located adjacent to the Saltend End Chemicals Park in the Humber Freeport UK.
By 2030 the UK is expected to have transitioned from being a major European producer of internal combustion engines to being a world leader in the manufacture of electric drive units. Without a secure magnet metal supply chain, this transition is under threat.
As part of its plans to establish an independent supply chain for magnet metals, Pensana is currently undertaking studies into the conversion of rare earth oxides into magnet metals using electric furnaces powered by offshore wind.
The letter of intent with YEP covers the proposed site as well as the supply of zero carbon electricity and a range of bespoke facilities for the processing of rare earths in magnet metals, R&D and supply chain activities.
The event was also attended by the Vice Chancellor of Lincoln University, which is working with Pensana and YEP to create a regional specialised centre of engineering excellence, training and higher education on YEP for the Humber region.
Paul Atherley, Pensana Chairman, commented:
“The partnership between YEP and Pensana is part of a broader study being undertaken to demonstrate how the UK can draw on its chemical engineering heritage and by connecting to offshore wind to create resilient supply chains to support the UK’s automotive sector in its transition from a major producer of internal combustion engines to be a world leader in the manufacture of electric drive units.”
Chris Turner, YEP Chairman, commented:
“We welcome theopportunity to deepen our collaboration with Pensana and the University of Lincoln on this nationally significant project. It represents another milestone for YEP and the Humber Freeport in delivering a zero carbon/advanced technology industrial cluster on the Humber.”
Professor Neal Juster, Vice Chancellor of University of Lincoln commented:
“This collaboration not only propels opportunities for the growth of research, development, and supply chain activities, but also sets a new standard for sustainable energy practices. Together with our esteemed partners, we are pleased to play a part in shaping a future in which the Yorkshire Energy Park stands as a beacon of excellence in engineering, training, and higher education for the entire Humber region, bringing economic benefit as well as supporting our Net-Zero goals.”
The Notice of Annual General Meeting and Form of Proxy will be published on Pensana’s website and will be posted to shareholders on or about 8 November 2023.
A copy of the Annual Report will also shortly be available on the National Storage Mechanism under the following link – https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Pensana plc (LON:PRE) has provided the following update on the financing of both the Longonjo and Saltend projects.
Highlights
The engineering team has successfully completed a modular redesign of the Longonjo mine and processing facility, with a total Capex of US$200 million.
The technical and economic due diligence review of the redesign by South African mining consultants, The Mineral Corporation, on behalf of ABSA Bank, is scheduled for completion in November.
ABSA which has been mandated as the lead arranger for a US$120 million loan facility has provided high level commercial debt terms which include South African export credit agency support.
FSDEA and apan-African Multilateral Development Financial Institution are working to provide the US$80 million equity investment required to support the debt facility.
FSDEA has provided a $15 million bridging loan facility towards the US$80 million investment, which is available to meet operating cash flow requirements to facilitate early-stage development and the route to main finance.
The Company is aiming to fully-fund the Longonjo project at the subsidiary level, Ozango Minerais (84% Pensana), which owns 100% of the Longonjo project and as a result the Company’s holding in Ozango Minerais is expected to reduce from 84% to ~64% at a read-through valuation of 66 pence per share.
An updated MIC is currently being worked on, which could potentially include various additional tax incentives as a result of amendments to the private investment legislation in Angola, including a reduction in the rate and deferral in the payment of Corporate Income Tax rate along with a reduction in the tax applicable to the distribution of profits and dividends.
The Company is in advanced discussion with a number of parties for the offtake of the highly marketable, radionuclide-free mixed rare earth carbonate (MREC) and expects to be in a position to sign up to 100% of the production of the high value, clean MREC from the Longonjo Processing facility.
The proposed funding arrangements for the Saltend rare earth separation facility remain largely as previously advised, with ABG Sundal Collier recently confirming that it will place a bond for circa US$150 million and are independent of the Longonjo financing.
The Company is in early discussions with the UKIB and with other potential equity partners for the balance of the funding, namely circa US$100 million equity requirement at the subsidiary level and has received a UK Government grant of up to £4,000,000 towards the funding requirement.
Paul Atherley, Pensana Chairman commented: “The completion of the engineering redesign together with the technical and economic sign off by The Mineral Corporation during November is a very important step towards the execution of the financing.
We are grateful for the ongoing support from FSDEA which is working closely with us and the team at ABSA to secure the funding to allow the commencement of construction at Longonjo in the first quarter of next year.
We have been pleased with the strong interest in the high value radionuclide-free MREC product from Longonjo and are advancing a number of offtake agreements as part of the financing.
We continue to progress the financing for the Saltend project which will be independent of the Longonjo financing and as previously advised will be a bond finance, however now with support from the UK Government.“
Longonjo
The engineering team has successfully completed a modular redesign of the processing facility, with a total Capex of US$200 million.
The redesign has been led by Project Manager Kevin Botha working with a team of contractors including ADP, part of Lycopodium group and specialist in modular minerals processing unit installation, with extensive experience in Angola, ProProcess a hydrometallurgical specialist with extensive expertise in modular processing plants throughout Africa and mining consultant Practara which has completed the detailed mine redesign and scheduling.
South African mining consultants, The Mineral Corporation, is undertaking a technical and economic review of the redesign on behalf of ABSA, which is scheduled to be completed in November.
As previously announced ABSA Bank, the South African based multinational banking and financial services conglomerate has been mandated as the lead arranger for a US$120 million loan facility.
ABSA which has existing exposure to Angola’s oil and gas sector and is looking to expand its interest in the country has identified the Longonjo project as an opportunity to gain exposure to the green energy sector.
High level commercial debt terms have been drafted which include South African export credit agency support. These terms are expected to be finalised once the sign off from independent consultants The Minerals Corporation has been received.
The Company continues to work closely with major shareholder, the Angola Sovereign Wealth Fund FSDEA. FSDEA is working with apan-African Multilateral Development Financial Institution to provide the US$80 million equity investment required to support the debt facility.
FSDEA has provided a $15 million bridging loan facility towards the US$80 million investment, which is available to meet operating cash flow requirements to facilitate early-stage development and route to main finance.
The Company is aiming to fully-fund the Longonjo project at the subsidiary level Ozango Minerais (84% PRE) which owns 100% of the Longonjo project.
It is intended that the US$80 million equity will be invested at the Ozango Minerais level by FSDEA and an African multilateral agency and as a result Pensana’s holding in Ozango Minerais will reduce from 84% to ~64% at a read-through valuation of 66 p per share at the Pensana level.
The valuation has been based on the independent third-party valuation prepared in March of this year at the time of the proposed US$220 million strategic equity investment by a multinational mining company.
Further tax incentives
The current Fiscal Terms currently in place under the Mining Investment Contract (MIC) include:
· 2% royalty on revenue;
· 20% Corporate Income Tax rate and a 5% municipal tax on taxable net profits following an initial six-year tax holiday;
· Custom duties exemption on imported equipment;
· Full 5-year capital repayment allowance;
· Dividend tax exemption for 3 years.
An updated MIC is currently being worked on, which is potentially expected to include various additional tax incentives as a result of amendments to the private investment legislation in Angola most notably:
· Reduction in the Corporate Income Tax rate, applicable for a period of up to fifteen years;
· Deferral of the payment of taxes for a period of up to six years;
· Investment Tax reduction applicable to the distribution of profits and dividends, for a period of fifteen years;
· An Investment premium (uplift) corresponding to the cost recoverable and tax deductible in terms of the investment to be made for mining and product marketing.
Offtake
The global market for radionuclide-free mixed rare earth carbonate (MREC) is increasing. Demand from the rest of the world ex China is increasing due to the expansion plans of existing downstream facilities in Europe, India and Asia and the establishment of new separation capacity in the US and Australia.
To meet this increased demand the Company is in advanced discussion with a number of parties for the offtake of the highly marketable, radionuclide-free mixed rare earth carbonate (MREC) and has signed letters of intent for up to 100% of the Longonjo offtake.
Site based activities
Approximately 25% of the US$15 million FSDEA loan has been deployed over the past three months on the following site-based activities:
the continuation of onsite activities with earthworks contractors Grupo Nov and electrical contractor, Elektra in preparation of commencement of main construction;
finalization of the preferred vendor re-pricing for the revised equipment schedule;
finalization of redesign of the monthly mine schedule and Run-of-Mine blending strategy for years 1-5 to meet the redesign throughput rates;
finalization of the optimized Tailings Storage Facility re-design;
finalization of execution of the Livelihood Restoration Programme with the local community under the Relocation Action Plan.
Saltend Update
Whilst the immediate focus is on the financing of the Longonjo project, progress continues with the financing for the Saltend rare earth separation facility. Rather than financing both projects contemporaneously as previously proposed the Saltend financing will follow the Longonjo financing. The financings are independent of each other with no financier in common between the two projects.
The capital cost for the Saltend facility has been revised up to US$250 million from the previous estimate of US$195 million in May 2022. The increase in the estimate is primarily due to the impact of inflation and a number of design changes.
The engineering design has been completed, the site cleared, the preparatory infrastructure works completed and the early-works contractors identified. The project is ready to commence construction once the finance has been arranged.
The proposed funding arrangements remain largely as previously advised, with ABG Sundal Collier recently confirming that it will place a bond for circa US$150 million with its institutional investor clients for which the Company has received green bond accreditation by Shades of Green (formerly part of CICERO, now a part of S&P Global).
The Company is in early discussions with UKIB and with other potential equity partners for the balance of the funding, namely circa US$ 100 million equity requirement.
As with the Longonjo financing, it is intended to finance the Saltend project at the subsidiary level as a stand-alone business with its own feedstock and offtake arrangements rather than at the Pensana corporate level.
To this end and as previously announced Pensana has entered into an MOU with offtake partners for 30% of the Saltend NdPr oxide production. These arrangements recognize that Longonjo will initially be producing MREC and allow for the ability to convert MREC offtake to oxide offtake in the future. The Company is also in direct discussions with OEM’s in the automotive and wind sectors including Siemens, JLR, Volvo, Mercedes, GE and tier 1 suppliers to the automotive sectors.
UK Government Support
By 2030 the UK is expected to transition from a being a major producer of internal combustion engines to a world leader in electric drive units (EDUs), producing three million EDUs annually, with a large proportion for export. Without a secure magnet metal supply chain this is under threat.
As recently announced Nusrat Ghani, Minister of State at the Department for Business and Trade and Cabinet Office, highlighted that the Saltend project would be an important step in supporting the UK automotive industry which employs 780,000 people and has offered the Company a Grant of up to £4,000,000 towards the funding required to build a rare earth oxide separation facility in the `Humber Freeport’ at Saltend.
Pensana has been nominated by the UK Government as a partner under the Minerals Security Partnership (MSP) between the US and its international allies.
Pensana plc (LON:PRE) has announced that the Secretary of State for Business and Trade has offered Pensana a Grant of up to £4,000,000 towards the funding required to build a rare earth oxide separation facility in the ‘Humber Freeport’ at Saltend.
The Offer of Grant, made under Section 7 of the Industrial Development Act 1982, follows an application submitted by Pensana to the Automotive Transformation Fund, is subject to terms set out in a grant funding agreement and conditional upon Pensana providing 1) clearance from the relevant authority monitoring state subsidies and 2) a funding, activities and deliverables plan which are expected to be provided in the coming weeks.
Chairman Paul Atherley commented:“The successful development of the US$250 million Saltend project would be an important step in supporting the UK automotive supply chain, which employs over 780,000 people, as it transitions to electric vehicles (EVs).
By 2030 the UK is expected to have transitioned from being a major European producer of internal combustion engines to be a world leader in the manufacture of electricdrive units (EDUs), producing three million EDUs annually, with a large proportion destined for export. Without a secure magnet metal supply chain this is under threat.”
Pensana Plc is establishing an independent, sustainable rare earth supply chain with mid-stream processing to produce magnet metal in the UK.
The Saltend project will deliver 450 jobs during construction and 150 high value jobs in operation with a significant opportunity for further expansion.
