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(Alliance News) - Mkango Resources Ltd, a rare earth minerals exploration company focused Malawi, on Friday said increased exploration expenses resulted in a widened net loss for the first half.
The company, which is developing the Songwe Hill rare earths project in the African country, also said that the ongoing feasibility study at the project will now complete in the second half of 2021, owning to movement restrictions put in place by Malawi due to the Covid-19 pandemic.
"Whilst the feasibility study on Songwe Hill is continuing with work underway in Australia, South Africa and the UK, the company believes that some work streams may still be impacted, however the degree of impact is currently uncertain. Following a review of the various ongoing work streams, the company is now targeting completion of the feasibility study in the second half of 2021, in line with an anticipated more stable market environment and favourable backdrop to advance project development," Mkango explained.
The company said that a government delegation has expressed satisfaction with all of the exploration and development works at the Songwe project.
Malawi's Mining Minister Rashid Gaffar said: "I am impressed with the progress of the project, as well as the project's level of transparency and all of the corporate social responsibility taking place. We understand you have invested a lot in this project, therefore as government, my ministry will support you so that the future mining operation commences."
For the six months ended June 30, the company's net loss widened year-on-year to USD2.4 million from USD1.1 million loss recorded a year ago.
Total expenses for the first half jumped year-on-year to USD2.1 million from USD1.5 million, which includes exploration of USD1.2 million versus USD756,171.
Mkango posted a net loss of USD913,764 for the second-quarter to June-end versus a USD365,739 loss. Mineral exploration expenditure for the quarter jumped to USD613,565 from USD301,186, mainly due to the mineral extraction development ongoing at the Songwe Hill project.
In addition to exploration expenditure, the company recorded foreign exchange losses of USD212,034 in the quarter compared with a gain of USD116,699.
Mkango did not generate any revenue in either financial periods, with the company still being in mine development phase.
The company had cash of USD6.4 million at June 30, compared with USD9.5 million at December 31, 2019.
Shares in Mkango were up 2.6% at 5.90 pence each in London on Friday afternoon.
By Tapan Panchal; tapanpanchal@alliancenews.com
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