THIS
ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Pensana
Plc
("Pensana"
or the "Company")
Longonjo
Operations Update
Pensana
Plc (LSE: PRE) is pleased to provide an operations update on the
Longonjo rare earth project.
Highlights
Following
the revised financing and development strategy announced on the
27 June 2023, which will see Longonjo
fully funded into production on a staged basis, with the upfront
capital expenditure reduced to US$200
million, the project team has been heavily focussed on the
re-engineering design and the due diligence required for the
financing, namely:
-
Re-engineering
of the mine and process plant to the Stage 1, US$200 million Capex design;
-
Preferred
vendor re-pricing for the revised equipment schedule;
-
Redesign
of the monthly mine schedule and Run-of-Mine blending strategy for
years 1-5 to meet the redesign throughput rates;
-
Completion
of the optimised Tailings Storage Facility (TSF)
design;
-
Site
infrastructure development to facilitate commencement of main
construction activities; and
-
Execution
of the Livelihood Restoration Programme arrangements with the local
community under the Relocation
Action Plan.
Engineering
Developments
The
revised process plant design is a scaled-down version of the
existing processing route with revised mining, comminution,
flotation, thickening, calcining, leaching and product
precipitation throughput rates.
Key
components of the redesign are:
-
All the
main permits remain valid including the exploitation licence, the
environmental and social impact assessment (ESIA), the construction
permit, the Livelihood Restoration Programme and the Relocation
Action Plan as developed in conjunction with the local community
and the relevant provincial authorities;
-
Minimising
pre-production spend while ensuring that the project's potential
for generating economic benefits on a larger scale is not
compromised;
-
Production
of a standardised, highly marketable, radionuclide-free, Mixed Rare
Earth Carbonate;
-
The
modular sulphuric acid plant is the pivot point around which the
engineering and design work is currently being undertaken and
optimised;
-
The
historical metallurgical testwork and extensive pilot plant trials
conducted in collaboration with equipment vendors in Australia and elsewhere continue to underpin
the plant design criteria;
-
All of the
selected vendors of major and long-lead equipment items have been
re-engaged and they remain committed to the project;
-
Recent
pricing reviews and updated quotations have been obtained in
preparation for a Class 2 AACE study which will provide a high
degree of confidence and adequate contingency;
-
Enhanced
modularisation will enable off-site pre-fabrication, testing and
containerised transport which will ensure a faster and more
efficient construction; and
-
High
levels of local job creation, training and skills transfer remain
as previously planned.
Site
Activities
Site
infrastructure development in preparation for main construction
continues - being largely unaffected by the revised development
strategy - including earthworks (Group Nov), electrical
reticulation (Elecktra) and water/sewerage services in preparation
for camp construction.
The SRK
team is making good progress on the geotechnical investigations in
support of the dual purpose TSF detailed design. The selected TSF
site has been confirmed as providing suitable excavated material
for use in the TSF starter walls, pit haul roads, plant terracing,
and other construction related requirements, thus mitigating visual
impact and the need to develop borrow-pit sources and associated
licensing and material transport costs.
Integration
of the Longonjo project bulk reagent consumption requirements
(including sulphur and caustic soda) into the Trafigura/Mota Engil
led strategic mineral focussed Lobito Corridor port and rail
concessions is being pursued as part of the ongoing operations
readiness preparation. Logistic and opex benefits are obvious in
terms of broader reagent supply to the existing DRC Copperbelt
mines, alongside the limestone which will be sourced from the
existing quarries in the Lobito area.
Engineering
Team Strengthened
Following
the existing workstreams completed in the Wood FEED study and the
identified long-lead equipment suppliers, Pensana has engaged with
the African based ADP Group and ProProcess to develop and implement
the detailed design and execution plan within the initial
US$200 million capex
envelope.
ADP Group,
which is part of the Lycopodium Group, has designed, built and
commissioned metallurgical plants in Angola since 1997, with particular emphasis on
a modular approach to optimise regional fabrication, installation
and commissioning time. ProProcess is an Africa-centric vertically integrated
hydrometallurgy engineering and modular fabrication company
servicing the global mining community over the past 14
years.
Expansion
of the owner's team under Paradigm Project Management supervision
continues to be an integral part of the Longonjo project
development with a growing capacity within the Angolan subsidiary,
Ozango Minerais. The owner's team has matured well over the past
two years. Initially assuming responsibility for the design and
execution of the operational support infrastructure (electrical,
civils, earthworks, camp and water infrastructure) the owner's team
responsibilities now extend to an overarching co-ordination of
execution of the project as well as the procurement, construction,
operational readiness and commissioning activities.
Community
Development
A key
focus area for the Company is ensuring that the project delivers a
strong Resettlement Action Plan
and
Livelihood Restoration Programme as an integral part of its
activities. The project will not displace housing or any existing
structures and involves only economic displacement of subsistence
agricultural activities within the licence area, which will be
compensated for on a land for land basis.
Two
extensive nearby land blocks have been identified to provide new
land for those economic activities displaced by the project
following positive meetings with the Sobas (traditional leaders)
and other relevant parties. The replacement land is currently in
the latter stages of agricultural quality and yield assessment by
experienced personnel in agricultural potential and ecology, led by
Vuna Agri, with a view to the land
being acceptable and available as needed during the project
development and implementation.
Transitional
support for an initial twenty-eight project affected households
(PAHs) pending Livelihood Restoration Programme roll-out has been
implemented in the form of fortnightly food packages of local
produce supplied from a dedicated warehouse in the Longonjo
village, in quantities proportional to the size of the agricultural
fields currently under siteworks or development. This process will
continue until PAHs are able to fulfil their previous crop yields
through a robust Livelihood Restoration Programme.
Pensana
CEO, Tim George
commented:
"We
are pleased to confirm that the team is on schedule with the Stage
1 re-engineering to the US$200
million Capex design and are also well advanced on the
financial due diligence for the main financing later this
year.
We
acknowledge and very much appreciate the ongoing support from the
Government of Angola, the ongoing
financial support from FSDEA and the engagement from ABSA and
others for the financing and development of this important
strategic minerals project over the next two years.
Longonjo
hosts a world class, high-grade, near surface magnet metal
rare-earth orebody, with direct access to affordable hydroelectric
power and the Lobito Corridor rail and port infrastructure which
are now both operated under recently announced long-term concession
agreements.
Longonjo
will produce a highly marketable, clean (radionuclide-free), Mixed
Rare Earth Carbonate independent of the timing of any other
developments.
We
will continue to advise on Longonjo's progress and expect to
provide further news on results from exploration activities at the
promising Coola Project, adjacent to Longonjo, in the near
future."
About
Longonjo
Longonjo
hosts one of the world's largest undeveloped rare earth deposits,
containing a JORC Compliant Ore Reserve of over 166,000 tonnes of
NdPr oxide, with an initial 20-year mine life and with considerable
exploration potential to extend the resource base both immediately
below the existing orebody as well as at the recent discoveries on
the nearby Coola exploration licence.
Longonjo
Proved and Probable Ore Reserve September
2022 reported using a 0.3% NdPrO (approx.)
cut-off
Classification
|
NdPrO cut-off
(%)
|
Tonnes (Mdt)
|
NdPrO
(%)
|
TREO (%)
|
NdPrO
(t)
|
TREO
(t)
|
Proved
|
0.3-0.4
|
13.3
|
0.67
|
3.19
|
89,300
|
424,000
|
Probable
|
0.3-0.4
|
16.8
|
0.46
|
2.05
|
77,000
|
323,000
|
Total
|
0.3-0.4
|
30.1
|
0.55
|
2.55
|
166,000
|
767,000
|
Notes:
-
Million
tonnes are dry and rounded to one decimal place. Grades are rounded
to three significant figures.
-
No
fixed cut-off is applied to the rare earths NdPrO, the cut-off
varies between 0.3% NdPrO and 0.4% NdPrO.
-
The
variable NdPrO cut-off reflects the block cash flow positive method
used to determine the economically viable portion of the
resource.
-
NdPrO
tonnes and grade is inclusive of the TREO and not additional to
it.
The near
surface, deeply weathered orebody, has an average depth of less
than 30 metres, with an average mine grade of 3.73% TREO and 0.79%
NdPr over the first five years.
The
process routes and key equipment required for beneficiation of the
mined material at Longonjo are those commonly used in the broader
minerals processing industry.
Following
comminution and flotation, the rare earth mineral concentrate is
subjected to acid roast, leaching and selective precipitation to
produce a refined Mixed Rare Earth product providing customers with
a clean, radionuclide-free product available for export via the
recently refurbished Port of Lobito.
The
Longonjo operation is located close to major existing
infrastructure in the form of the recently upgraded Benguela
railway line, linking the project to the Atlantic Port of Lobito,
(the Lobito Corridor) and hydro-power infrastructure.
The US
International Development Finance Corporation is currently
performing due diligence for a potential US$250 million investment to finance the Lobito
Atlantic Railway Corridor to connect the DRC Copperbelt with the
Port of Lobito. The Lobito Corridor is anticipated to become one of
most important rail transport infrastructure systems within the
South African Development Community (SADC) region over the next 25
years.
This
follows the award of a US$450 million
contract by the Angolan Ministry of Transport to a consortium of
Trafigura, Mota-Engil and Vecturis to operate and maintain the
Benguela railway through to the DRC Copperbelt on a private
concession basis, as part of the Lobito Corridor
development.
This is
expected to have a positive impact on the transport logistics
during the construction period and for reagent and product
transport during operations.
At full
production, after completing the phased development, the mine will
target production of up to 38,000 tonnes per year of refined Mixed
Rare Earth product containing 14,000 tonnes of TREO and up to 4,400
tonnes of NdPr oxide, equating to around 5% of the global annual
production of NdPr oxides for downstream processing or sale on the
international market.
The
Longonjo Ore Reserve estimate was prepared by Snowden Optiro in
August 2022 as part of the Longonjo
Project Feasibility Study, using the guidelines of the Australasian
Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves (JORC Code, 2012 Edition).
The
Competent Person's statement for Longonjo Ore Reserves was released
on 23 September 2022 and is available
on the Company's website at
www.pensana.co.uk/company-reports
About
Angola
The
Angolan government has implemented a modern mining code with an
attractive fiscal regime and a range of investment incentives
including tax exemptions and customs duty exemptions.
Over the
past decade it has also made significant investments in
business-critical infrastructure such as railways, ports, bridges,
and roads.
Angola's economic profile has improved significantly over
recent years, with the country's public debt falling from 131% of
gross domestic product in 2020 to 66% in 2022. The IMF has
projected that the economy will grow by 3.5% in 2023.
Following
an upgrade by Moody's in late 2021, all three major rating agencies
raised their credit assessment of the country's sovereign debt in
2022, with Fitch and Moody's upgrading the country outlook from
neutral to stable in the second half of the year.
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, Chairman IR@pensana.co.uk
Tim George, Chief Executive Officer
Rob Kaplan, Chief Financial Officer