Makango Resources (TSXV:MKA,LSE:MKA,OTCPL:MKNGF) Estimated returns updated for the Malawi-based Songwe Hill rare earth project and a planned processing facility in Poland.
New studies indicate that high-value exposure to magnet metals could lead to supply shortages.
The company said on Thursday (March 19) that an updated definitive feasibility study for Songwe Hill and a pre-feasibility study for the proposed Pulavi separation plant paint a clear picture of project feasibility under current circumstances.
Songwe Hill is one of a limited number of rare earth projects globally to reach definitive feasibility stage.
The project has an estimated after-tax net present value of US$339 million, at a discount of 10 percent and with an internal rate of return of 24 percent, with full production expected to pay off in 3.4 years.
Over its 18-year mining life, Songwe is projected to generate US$1.55 billion in after-tax cash flows.
Initial capital expenditure for Songwe is estimated to be US$297.8 million, excluding contingencies, with an average annual production of 5,954 metric tonnes of total rare earth oxides during the first five years. The output is expected to include key magnet materials such as neodymium and praseodymium, which are important for electric vehicles and wind turbines.
The project will produce pure mixed rare earth carbonates designed for export and further processing.
Makango plans to process this material at its proposed separation facility in Pulawy, Poland, creating an integrated supply chain from mine to refined product. The plant also shows strong headline economics at the pre-feasibility stage.
The study shows that the after-tax net present value is US$779 million and the internal rate of return is approximately 40 percent, with a payback period of just over two years. The project’s lifetime cash flow is estimated at US$4.95 billion.
Capital costs for the Polish plant are estimated at US$212 million including contingencies. The facility is designed to separate rare earth carbonates into different oxides, focusing on neodymium and praseodymium.
Makango said updated market analysis supports the investment case, with demand for rare earth magnets expected to grow faster than supply by 2040. The imbalance is driven by expansion in electric vehicles and renewable energy, sectors that rely heavily on permanent magnet technologies.
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Securities Disclosure: I, Gian Liguid, do not have any direct investment interest in any of the companies mentioned in this article.
