Pensana’s Angola rare earths listing is first mining IPO for UK since COVID-19 pandemic

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THE UK’s first resources-focused public listing since the COVID-19 pandemic took place today after Pensana Rare Earths brought its Longonjo project in Angola to the main board of the London Stock Exchange.

Longonjo, just over 300 kilometres from Lobito, is a deposit of neodymium and praseodymium – referred to as NdPr – minerals used in the manufacture of large permanent batteries used in electric vehicles and wind farms.

Paul Atherley, chairman of Pensana, said in an interview the outlook for Nd oxide and alloy prices was strong given public policy shift towards green energy. “There has been $16 trillion in stimulus efforts around the world, but particularly in Europe, and it has to be a green deal,” said Atherley.

The market was also supported by supply dynamics, he said. All but one of the world’s major rare earths mines was in China which is increasingly looking towards imports to meet domestic demand. China had also invested heavily in Angola.

“China has invested $20bn in Angola since 2008 and now they are saying they need something back for their investment. They haven’t seen a (Angolan) kwanza in return,” said Atherley.

Having raised $15m in two rounds of financing, including from Angola’s sovereign wealth fund, there was no need to raise additional funds via the IPO. Atherley said Pensana was sufficiently capitalised to see itself through to a bankable feasibility study, expected to be completed in October.

Funding for pre-production capital, recently increased to $200m from $132m as Pensana extended the project’s scope, would be tackled towards year end. If construction began next year, first production of NdPr would be in 2022. Production has been scoped at 60,000 tons of concentrate with annual production of 4,600 tons of NdP for the first three years. “We think this will be timed with a further increase in prices,” said Atherley.

Pensana is currently listed on the Sydney Stock Exchange where it has a market capitalisation of A$58.4m. Pensana owns 84% of the Longonjo project whilst the Angolan government has a 10% stake with the balance owned by minority shareholders.

This ownership structure is a far cry from the dispensation in Lourenco’s predecessor, Jose Eduardo dos Santos, where the government insisted on project control – an environment which saw investment in the country’s diamond sector all but dry up.