UK-listed Pensana Rare Earths has signed a heads of agreement with China Great Wall Industry Corporation (CGWIC) which will provide engineering, procurement, construction and financing to the firm’s $200m Longonjo Project, situated in Angola.
The benefit of such an arrangement is that finance is largely located around one source; in this case, commercial Chinese banks, in return for the project contract. CGWIC also has an existing track record of project work in Angola and has government trust and support.
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 the Longonjo project was the first major rare earths mine to be brought online in over a decade. It would help meet growing demand for the magnet metals critical for electric vehicles and offshore wind turbines.
In terms of the agreement, debt funding will cover no more than 85% of project development costs leaving Pensana responsible for funding the remainder. The term of the facility put in place would depend on the particular terms from commercial banks and the life cycle of the project, but is not expected to exceed eight to 10 years.
Production from Longonjo has been scoped at 60,000 tons of concentrate with annual production of 4,600 tons of NdP for the first three years.
Pensana listed in London on July 6, the first resources company to do so since the Covid-19 pandemic. The company did not raise capital, however, as first envisaged with its prelisting preparations last year as two rounds of funding, including support from Angola’s sovereign wealth fund, generated $15m.