REG-Pensana Plc: Longonjo Operations Update

PensanaAnnouncement

21/08/2023 07:15

 

 

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

 

 

 

 

 



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