RE: Cotec's convertible7 Sep 2022 09:42
Instead of spinning your wheels Munch, recognise that Songwe alone is saleable tomorrow @ c60p following the July DFS.
Keep your eyes on the prize, the AIM mafia will keep the SP pinned as long as they can ...
Highlights
· US$559.0 million post-tax net present value ("NPV"), using a 10% nominal discount rate, with an internal rate of return ("IRR") of 31.5%, payback period of 2.5 years from full production (5 years from start of capital expenditure) and post-tax life-of-operations nominal cash flow of $2.1 billion.
· Songwe is now *****confirmed as one of the very few rare earths projects globally to have reached the DFS stage*****, with a full Environmental, Social, Health Impact Assessment ("ESHIA") completed in compliance with IFC Performance Standards and The Global Industry Standard for Tailings Management (2020) ("GISTM") adopted for design and management of the tailings storage facility.
· Long operating life of 18 years, with mining assumed to commence in February 2025, production ramping up from July 2025 and averaging 5,954 tonnes per year total rare earth oxides ("TREO") for the first five years of full production (September 2025 - August 2030), including 1,953 tonnes per year of neodymium and praseodymium oxides, and 56 tonnes per year of dysprosium and terbium oxides, in a mixed rare earth carbonate ("MREC") grading 55% TREO, generating nominal EBITDA of US$215 million per year.
· Neodymium, praseodymium, dysprosium and terbium are critical for the green transition, used in permanent magnets for electric vehicles, wind turbines and many electronic devices.
· Initial capital expenditure ("capex") of US$277 million (excluding a US$34 million contingency) for development of mine, mill, flotation and hydrometallurgy plants, tailings storage facility, and related project infrastructure in Malawi.
· The NPV excludes any value attributable to the proposed Pulawy Rare Earth Separation Project ("Pulawy") in Poland, which is expected to process MREC from Songwe, enabling Mkango to capture additional value via growing its integrated downstream business with a captive source of primary raw material feed from Songwe. The NPV also excludes any value attributable to Mkango's interests in rare earth magnet recycling.
· The results of the DFS for an integrated project, comprising both Songwe and Pulawy, are expected to be announced when both the Mine Development Agreement ("MDA") with the Malawi Government is completed for Songwe and the feasibility study is completed for Pulawy.
· In parallel, a major focus for the Company will be further optimisation of the Project with the objective of lowering capex and operating costs ("opex"), both of which have been negatively impacted by current market dislocations, creating the potential to reduce costs as markets stabilise.
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