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In short:Feasibility nearing completion and on track having successfully produced rare earth carbonate.Mining development agreement being finalised but Malawi government has publicly confirmed it’s intention to do so, and has already started building the road infrastructure.Discussions with potential off take partners ongoing (see link to Jones Group which is in effect the US govt), and discussion with capital providers. It would appear this will get developed out and sold to the US govt. Expect to announce final results of feasibility and MDA within 3 months of today.IMO it won’t take 3 months. The US govt willwant this before any risk of the Chinese getting eyes on the Malawi prize particularly given current global events (rare earth is as important tor defense as it is for the auto industry). There is a reason why the plant is in Poland - a NATO country. The same NATO country that is reportedly to receive US jets in return for sending older aircraft to Ukraine.Remember they were speaking to the US govt sometime ago. Would appear to have been the plan for a long time.IMO the entire operation is strategically too important to US national defense interests for it to do anything other than get to production asap.I wouldn’t want to be out of this trying to guess when to enter ‘in the next 3 months’ given how fast things could move.
and if in doubt look at the mcap compared to the last set of financials, and then the potential future value based on the assets held. Even if you apply a very heavy discount based on the risks and current status it is undervalued by a long way IMO
The BOD will know the market doesn’t like uncertainty. Positive results from the feasibility will be great, but immediately the next question will be ‘and what’s the plan’.
No point having drip drip of news. They need to be able to update on progress and give a clear strategy on route to commercialisation of the project, or sale. If it’s not a JV or sale (which would be the obvious) then it will require an additional capital.
Invest on the fundamentals. Nothing has changed (other than the stability of the market). Sellers sell for their own reasons. Liquidity issues as a result of wider portfolio problems, lack of patience, perceived opportunity elsewhere etc etc. These boards are full of stories of missed opportunities - mainly from people who spend their time trying to catch something instead of focussing on fundamentals of the investment.
‘the global Neodymium Magnet market size is USD million in 2022 from USD 7309 million in 2021. The global Neodymium Magnet market size will reach USD 10930 million in 2028’
https://www.marketwatch.com/press-release/neodymium-magnet-market-growth-statistics-2022-global-trend-industry-size-share-business-strategies-emerging-technology-product-portfolio-countries-data-demand-status-and-forecast-2028-2022-02-09
In February 2021, President Joe Biden signed an executive order that authorized the defense department to investigate U.S. reliance on foreign imports and a lack of domestic processing of critical minerals—including neodymium.
https://www.technology.org/2022/02/23/climate-friendly-method-rare-earth/
From 2019 but emphasises the demand once the feasibility study is completed at Songwe Hill:
‘The U.S. Department of Defense has held talks with Malawi’s Mkango Resources Ltd and other rare earth miners across the globe about their supplies of strategic minerals, part of a plan to find diversified reserves outside of China’
There will be an ever increasing need for REE as nations across the globe increase defense spending.
https://www.reuters.com/article/us-usa-rareearths-pentagon-exclusive/exclusive-pentagon-eyes-rare-earth-supplies-in-africa-in-push-away-from-china-idUSKCN1T62S4
The completion of the feasibility study will confirm the commercial viability of the operation. It will also, according to MKA, provide an update on the resources. The feasibility for the plant in Poland is running in tandem. With both of these items cleared it derisks the entire proposition. Also note the Malawi govt debate last week where they confirmed they were in process with the Mining Development Agreement.
What was strange reading the accounts was that it MKA only sees the Feasibility study as being the only major expense item for the 12 months to Sept 22. No actual development or infrastructure costs.
The Talaxis announcement on the swap of their 50% of Songwe to MKA in exchange for ordinaries reads more like a restructuring exercise; they said 'brings Mkango’s structure in line with peers' and 'Consolidation of assets under Mkango’s control, increasing financial flexibility'
The Talaxis (investment arm of Noble Group) holding 32.4% of the stock is significant. Noble has had a recent troubled past but is on path to complete its restructuring and will rebuild its business. Talaxis is solely focussed on REE, and Noble is focussed on Asian Commodities markets.
In short with Talaxis as a shareholder, and with the feasibility study confirming commercial viability, the MKA business will become a prized asset.
Days feel like weeks when you’re waiting for news. I’ve been there many a time. Sometimes the release of things like this come down to the tiniest of process steps. The author, or one of the contributors, being on sick leave. Somebody not filing something on time that needs to form part of the evidence in the final report. Just about anything can delay it unexpectedly. It doesn’t mean that it will be anything other than a positive outcome that will ultimately increase value.
They said expected 1Q2022. That doesn’t mean guaranteed. It means that’s what they expected when they announced in Dec. Equally it didn’t say end of Q1 either. Unfortunately just got to wait; it could be anytime!
Sellers are impatient looking for the next opportunity thinking they can make a quick book elsewhere often hoping to jump back in before news. Reality is unless you know something on the inside you’re guessing on timing.
Trade on the fundamentals. MKA is funded, has the backing of significant investors, and is on track!
No lecture intended but having done hours of research over the last few days it’s hard to see this being in a better position.
Google ‘ mkango resources valuation analysis’ there is a wordless website by ‘aimchaos’ from March 21 that is fairly good
I tried to post a link earlier before realising links couldn’t be posted on this site. Live and learn!
New MKA but have been researching over the last few days. Posting here in case it's of use to anybody else thinking about entering. For transparency I took a position this morning at 29.18. Happy for anybody to correct me on any of the below.
The Company has been piloting hydrometallurgy processing flowsheet at Songwe Hill Rare Earth Element (REE) Project ahead of a Feasibility Study which expects in 1Q2022. Good summaries of the site https://mininginmalawi.files.wordpress.com/2019/04/2019-mkango-resources-ni-43-101-technical-report.pdf and https://www.sciencedirect.com/science/article/pii/S1464343X17302546
A summary of the Hydrometallurgy process is here: http://www.eurare.org/technologies/hydrometallurgy.html.
The Company announced on 14/12/21 that 'The piloting of the hydrometallurgy processing flowsheet is an integral part of the Feasibility Study and a critical step towards commercialisation of the Songwe project.'
Financial Statements as at 30/09/21 show cash balances of USD6,248,312 with working capital of USD5,276,613. The notes to the accounts state: 'The Company’s cash requirement for the next twelve months relates mainly to the completion of its Definitive Feasibility Study (“Feasibility Study”) for its Songwe Hill Project. Following the private placement which raised approximately $7.2 million net of expenses, the Company’s cash flow forecast reflects that the Company will have sufficient funding to meet its planned expenditure for at least the next 12 months.'
So in short baring any major disasters MKA is fully funded to complete the Feasibility Study.
In it's Sept 21 Management Discussion and Analysis
(https://mkango.ca/site/assets/files/4864/mkango_mda_sep_30_2021_-_final.pdf) MKA said: 'Updated mining and economic information will be generated as part of the ongoing Feasibility Study based on the new resource.'
This valuation analysis might also be helpful albeit done when MKA only owned 50% of Songwe Hill (it now owns 100%): https://aimchaos.files.wordpress.com/2021/03/mkango-resources-valuation-analysis-17.03.2021.pdf
IMO should build strongly towards Feasibility Study completion and if you look at the buys by interested parties it bodes well for confidence.