PRE Pensana Plc

 
TIDMPRE 
 
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION 
 
Pensana Plc ("Pensana" or the "Company") 
 
Technical Due Diligence Report on Longonjo 
 
Pensana (LSE:PRE) is pleased to advise that the technical due diligence report 
on the Longonjo rare earth project in Angola (the Project or Longonjo) 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 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 in Q2 of 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." 
 
About The Mineral Corporation 
 
The Mineral Corporation (TMC) was established in Johannesburg, South Africa in 
1997 and is home to a well-informed, globally-focused corporate and technical 
advisory team of mining sector professionals. TMC have expertise in mineral 
exploration, geology, mining engineering and development, mineral processing, 
mining infrastructure, ESG, statutory compliance, mineral asset valuation and 
techno-economic modelling. 
 
TMC understand that exploration and mining can be high risk industries and are 
confident that their skills can be applied to identify, resolve and minimise 
their clients exposure to such risk, thereby creating or preserving value. 
 
TMC cover all minerals, including precious metals, base metals, noble and 
refractory metals, energy minerals (coal and uranium), mineral sands, precious 

and semi-precious stones, rare earth elements and industrial minerals. 
 
Since inception, TMC has created or preserved many billions in various 
currencies (including rand, dollar, pounds) on behalf of clients. Their business 
model is founded on the qualification and quantification of mineral investment 
opportunities. TMC assemble teams of expert multi-disciplinary consultants who 
collectively craft an integrated business model to evaluate clients' 
enterprises. TMC's group of professionals offers knowledge from six continents 
but enjoys a particular passion for Africa. In many circumstances, TMC's 
imaginative, but always realistic, examination of mineral projects offers 
distinctive solutions to the complex alternatives that challenge investors. 
 
TMC also provide bespoke institutional research on the mining industry. 
 
The information contained within this announcement is considered by the Company 
to constitute inside information as stipulated under the Market Abuse 
Regulations (EU) No.596/2014. Upon the publication of this announcement via a 
Regulatory Information Service, this inside information will be considered to be 
in the public domain. The person responsible for arranging for the release of 
this announcement on behalf of the Company is Paul Atherley, Chairman. 
 
- ENDS - 
 
For further information, please contact: 
 
Shareholder/analyst enquiries: 
 
Pensana Plc 
 
Paul Atherley, ChairmanIR@pensana.co.uk 
 
Tim George, Chief Executive Officer 
 
Rob Kaplan, Chief Financial Officer 
 
 
This information was brought to you by Cision http://news.cision.com 
 
 
END 
 
 

(END) Dow Jones Newswires

January 24, 2024 02:00 ET (07:00 GMT)

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