(Sharecast News) - Mining exploration company Altona Energy announced on Tuesday that, after a period of discussion, it has entered into a memorandum of understanding with mining consultancy firm Akatswiri Mineral Resources, to acquire a majority stake in a rare earth mining project in the Chambe Basin in southern Malawi's Mulanje area.
The AIM-traded firm said Akatswiri is currently the 100% owner of Akatswiri Rare Earths (ARE) - a Malawi-registered company - which has applied for exploration licence APL 0153 on the Chambe Rare Earth Project.
It expected the licence to be granted in June, following the final approval of the government.
The terms of the memorandum stated that Altona would initially acquire a 51% holding in ARE, rising to 75% on certain project milestones being met.
Akatswiri would remain a 25% shareholder, and consideration for the transaction would be Altona Energy ordinary shares.
Altona described Chambe as a "large, ionic adsorption clay-hosted rare earth elements (REE) project", bearing appreciable quantities of critical heavy and light REEs, particularly ytterbium, dysprosium, yttrium, neodymium and praseodymium.
Extensive exploration work had been carried out on the site since September 2010, confirming the presence of mineralised rare earth oxide clays, similar to many of the larger REE mines in China.
The board said the benefits of extracting REE from ionic clay deposits included lower operating and capital costs, as well as shorter times for development.
It said the expansion of new energy sectors and increases in the demand for electric vehicles was driving demand for neodymium, praseodymium and other 'technology' metals, which are used in permanent magnets - a key component in electric vehicle manufacturing.
Altona said a number of companies were looking for alternative REE supplies outside China, which had controlled the supply for the past several years.
"Although still at an early stage, we are in active discussions with Akatswiri's highly experienced team, led by Hilton Banda," said interim chief executive officer Christian Taylor-Wilkinson.
"We are looking to commence our due diligence in June which we hope will quickly lead to a binding agreement.
"We are also speaking with a number of parties to work with us through the acquisition and fund the subsequent mining project."
31 Mar 2015 10:48