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Africa-focused exploration company Lindian Resources Ltd (ASX:LIN) has seen its share price jump more than 35 percent on news that a feasibility study for the first stage of its Kangankunde Rare Earths Project in Malawi has revealed it to be an exceptionally low-cost play for this commodity.
Feasibility work on Stage 1 of Kangankunde showed the project’s pre-production capital cost set at US$40 million (or A$60 million) – including a 12.5 percent contingency – making it one of the lowest current rare earths projects in these terms.
Additionally, Kangankunde’s low annual FOB operating cost – set at US$2.92 per kilogram TREO (total rare earth oxides) – also places it in the lowest quartile of the rare earths industry globally.
Altogether, the project is expected to have a payback period of less than two years, and enable a positive annual EBITDA (earnings before interest, taxes, depreciation, and amortization), despite the commodity’s low prices. Stage 1’s post-tax net present value is US$555 million, an IRR of 80 percent and an average annual EBITDA of US$84 million.
Lindian is also touting strong predictions for Stage 1’s production profile, with approximately 15,300 tonnes per annum of premium concentrate to be yielded from the project, at a TREO grade of 55 percent, with low levels of radionuclides (thorium and uranium) and limited acid consuming minerals.
Chief executive officer Alwyn Vorster said the feasibility study reflected Kangankunde’s world-class status at a time when rare earths were in increasing demand.
“It is distinguished by its high grade, low levels of impurities and attractive cost structure that positions the Project in the lowest cost quartile of rare earths projects globally,” he said.
“The Stage 1 development will require low upfront capital cost, presents low commissioning risk, and generates strong financial returns: importantly, Stage 1 could serve as logical springboard for future expansion options.
“Kangankunde is fully permitted to commence construction and operations once financing is confirmed.”
At 13:42 AEDT, Lindian shares were sitting at 14.2 cents, a rise of 35.71 percent since the market opened.
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