Mkango Announces 60 Per Cent Increase in Measured and Indicated Resources, Including the First Measured Resource for the Songwe Hill Rare Earths Project in Malawi
Mkango Announces 60 Per Cent Increase in Measured and Indicated
Resources, Including the First Measured Resource for the Songwe Hill Rare
Earths Project in Malawi
LONDON and VANCOUVER, British Columbia, Feb. 04, 2019 -- Mkango Resources Ltd. (AIM / TSXV: MKA) (the " Company"
or "Mkango"), the rare earths exploration and development company focused on Malawi, is pleased to announce an updated
mineral resource estimate for the Songwe Hill Rare Earths Project (“Songwe”).
• 60% increase in total Measured and Indicated Resources to 21 million tonnes (“mt”), including first Measured
Resource estimate for Songwe
• Majority of the previously delineated near surface Inferred Resource upgraded to either the Measured or
Indicated categories
• Key objectives of 2018 drilling programme achieved, with the updated resource underpinning the ongoing
feasibility study
• Approximately 95% of the Measured and Indicated Mineral Resource blocks are less than 160 metres (“m”)
below the surface of the hill indicating that the majority will be accessible by open pit mining
• Updated and enlarged resource underpins Mkango’s strategy to be a long term, sustainable producer of
neodymium, praseodymium, dysprosium and terbium used in permanent magnet motors for electric
vehicles, wind turbines and other clean technologies
• Publication of the NI 43-101 Technical Report in relation to the resource update will trigger the next £7m
milestone investment from Talaxis to fund completion of the feasibility study
Cut-off grade
Measured Mineral
Resource estimate
Indicated Mineral
Resource estimate
Total Measured and Indicated
Mineral Resource estimate
Inferred Mineral
Resource estimate
Base Case
1.0% TREO
8.8 mt grading 1.50%
TREO
12.2 mt grading 1.35%
TREO 21.0 mt grading 1.41% TREO
27.5 mt grading
1.33% TREO
TREO: total rare earth oxides based on total La 2O3, CeO 2, Pr 6O11, Nd 2O3, Sm 2O3, Eu 2O3, Gd 2O3, Tb 4O7, Dy 2O3, Ho 2O3,
Er2O3, Tm2O3, Yb 2O3, Lu 2O3, Y 2O3. Grades of individual rare earth oxides are shown in the appendix. 4% geological losses
applied to account for voids.
William Dawes, Chief Executive of Mkango stated: “All the objectives for the 2018 drill programme have been achieved
and we are very pleased to announce this increased resource at Songwe. This provides a solid platform for completion of a
revised mine plan to be incorporated into the feasibility study. Based on the larger Measured and Indicated Resource, the
feasibility study will evaluate opportunities to include more tonnes into the mine plan, expand operations, extend the mine life,
reduce the strip ratio and therefore reduce mining costs.”
The updated base case Mineral Resource Estimate equates to a 60% increase in the Measured and Indicated Resource
tonnage and a 48% increase in the Inferred Resource tonnages versus the base case 2012 Mineral Resource Estimate, which
formed the basis for the 2015 pre-feasibility study. The Mineral Resource is open at depth. The combined Measured and
Indicated Mineral Resource Estimate, totaling 21mt grading 1.41% TREO, will form the basis of the updated mine plan for the
ongoing feasibility study, which will evaluate a bulk tonnage, open pit mining operation focused on broad zones of near surface
and outcropping rare earths mineralisation. The updated resource supersedes the 2012 Mineral Resource Estimate, and
therefore renders the mining and economic information in 2015 pre-feasibility study obsolete. Updated mining and economic
information will be generated as part of the ongoing feasibility study based on the new resource.
The Measured Mineral Resource Estimate comprises 42% of the combined Measured and Indicated Mineral Resource
Estimate indicating a substantial increase in geological confidence to support the completion of the Feasibility Study.
The majority of the previously delineated near surface Inferred Mineral Resource Estimate has been upgraded to either the
Measured or Indicated categories, achieving a key objective of the 2018 drill programme. Approximately 95% of the Measured
and Indicated Mineral Resource Blocks are at a depth of less than 160m below the surface of the hill indicating that the
majority will be accessible by open pit mining.
Bulk samples for pilot metallurgical test work totaling approximately 60 tonnes have been selected from areas within the
Measured and Indicated Mineral Resource Estimates and a public awareness campaign to communicate progress of the
project and explain the bulk sampling programme is underway in Malawi. Pilot testing will commence following export of the
bulk sample and completion of ongoing metallurgical optimisation.
Mineral Resource Estimate
The Mineral Resource Estimate was independently prepared by The MSA Group of South Africa (“MSA”). Jeremy Witley Pr.
Sci Nat. (the Qualified Person (QP) for the Mineral Resource Estimate) of MSA in collaboration and agreement with Dr. Scott
Swinden, PGeo, the QP for the Exploration Information, has currently identified 1.0% TREO as an appropriate cut-off grade for
the current Mineral Resource Estimate. This will be further refined over the course of the ongoing feasibility study. The Mineral
Resource Estimates at different cut-off grades are illustrated in the table below.
Mineral Resource estimates at different cut–off grades 1
0.5% TREO cut off
grade
Base Case 1.0% TREO cut off
grade
1.5% TREO cut off
grade
Million TREO TREO Million TREO TREO Million TREO TREO
tonnes % tonnes tonnes % tonnes tonnes % tonnes
Resource Categories
Measured 13.34 1.26 167,573 8.81 1.50 131,929 3.67 1.86 68,278
Indicated 24.30 1.06 258,092 12.22 1.35 165,469 3.13 1.79 55,805
Total Measured &
Indicated 37.64 1.13 425,665 21.03 1.41 297,398 6.80 1.83 124,084
Total Inferred 59.65 1.02 608,194 27.54 1.33 366,154 5.92 1.75 103,414
1 Mineral resources are not mineral reserves and do not have demonstrated economic viability
The mineral resource has been drilled to a maximum depth of 355 m below the surface of Songwe Hill and is based on three
phases of diamond drilling completed by Mkango in 2011, 2012 and 2018 totaling approximately 17,800 m in 125 drill holes.
The areas drilled to date are in an elevated position on the northern slopes of Songwe Hill, which rises approximately 230 m
above the surrounding plain. The mineral resource forms an irregular, roughly circular surface expression with a diameter of
approximately 450 m. The maximum depth of the Inferred Mineral Resource is 390 m below surface, with the Measured and
Indicated Mineral Resource occurring to a maximum depth of 200 m, paralleling the topographic surface of the hill and
surrounding plain. The majority of the Measured and Indicated Mineral Resource occurs to a depth of approximately 160 m.
Geological domains, comprising Carbonatite, Mixed (altered and brecciated Carbonatite and Fenite) and Fenite dominant rock
types, were used to guide the mineral resource evaluation. The Carbonatite dominant domain generally comprises a higher
proportion of elevated TREO grade mineralisation than the Fenite dominant domain.
Key assumptions, parameters and methods used to estimate the Mineral Resources
• The drillhole intersections were used to estimate proportions of carbonatite (defined for this estimate as >15% Ca) and
non-carbonatite for each cell in a three dimensional block model by means of indicator kriging. TREO values and
density were estimated for carbonatite and non-carbonatite separately for the entire model using ordinary kriging. The
final grade for the block was derived by multiplying the estimated proportion of carbonatite and non-carbonatite in the
block by the estimated grade of carbonatite and non-carbonatite;
• The estimation block model cells are 20 mN by 20 mE by 5 mRL. The block models comprise sub-celled block
dimensions of 5 mN x 5 mE x variable RL to closely fit the topography;
• No capping or cutting to limit any input grade data was undertaken as part of the mineral resource estimation, extreme
outlier grades not being a feature of this deposit;
• Datamine Studio RM was the modelling package; and
• The mineral resource was classified as Measured, Indicated and Inferred based on the degree of geological certainty
and drillhole density, supported by confidence parameter outputs from kriging (Kriging Efficiency and Slope of
Regression). In general, the Mineral Resource was classified as Measured where it occurs within a 30 m by 30 m
drillhole grid, Indicated where the Mineral Resource occurs within a drillhole spacing of closer than 50 m by 50 m.
Inferred Mineral Resources were declared within the more sparsely drilled areas and extrapolation from the closest
drillhole was limited to 50 m.
Scientific and technical information contained in this release including sampling, analytical, and test data underlying the
information has been approved and verified by Dr. Scott Swinden PGeo of Swinden Geoscience Consultants Ltd who is a
“Qualified Person” in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Scientific and technical information contained in this release relating to the mineral resource estimate has been approved and
verified by Jeremy Witley Pr. Sci Nat of The MSA Group Pty Ltd, who is a “Qualified Person” in accordance with National
Instrument 43-101 – Standards of Disclosure for Mineral Projects.
Mkango operated an industry-standard programme of strict QAQC protocols for drill hole analyses, including the insertion of
blanks, standards and duplicates and check analyses of more than 3% of the samples carried out by Actlabs, Ancaster,
Ontario. Sample preparation and analytical work for the drilling and channel sampling programmes were provided by Intertek-
Genalysis Laboratories (Perth, Australia), employing ICP-MS techniques suitable for rare earth element (REE) analyses and
following strict internal QAQC procedures, inserting duplicates, blanks and standards. Internal Laboratory QAQC was also
completed to include blanks, standards and duplicates.
Verification activities were conducted by the Qualified Persons during site visits to Songwe and at the MSA office, and
included the inspection of the drilling and trenching programmes, the review of core handling and core sampling procedures,
the review of borehole data collection protocols and QA/QC systems, checks of the database against the original borehole
logs, checks of the database against original Assay Certificates and the examination of the database used for the Mineral
Resource estimation.
The NI 43-101 compliant technical report in respect of the mineral resource estimates described herein will be filed on SEDAR
within the next 45 days.
About Mkango Resources Limited
Mkango's primary business is exploration for rare earth elements and associated minerals in the Republic of Malawi, a country
whose hospitable people have earned it a reputation as “the warm heart of Africa”. The Company holds interests in three
exclusive prospecting licenses in Malawi: the Phalombe licence, the Thambani licence and the Chimimbe Hill licence.
The main exploration target in the 80% held Phalombe licence is the Songwe Hill rare earths deposit. This features carbonatite
-hosted rare earth mineralisation and was subject to previous exploration in the late 1980s. Mkango completed an updated Pre
-Feasibility Study for the project in November 2015 and a Feasibility Study is currently underway, the initial phases of which
included a 10,900 metre drilling programme and updated mineral resource estimate.
Under the terms of an agreement with Talaxis, Talaxis will fully fund the Feasibility Study for Songwe by investing £12 million
for a 49% interest in the project (via Mkango subsidiary Lancaster Exploration Ltd). Talaxis will also have the option to acquire
a further 26% interest by arranging funding for project development including funding the equity component thereof. If Talaxis
exercises its option, Mkango will retain a 25% interest, free carried to production. To-date, Talaxis has invested £5 million,
which has funded the initial phases of the Feasibility Study, for a 20% interest in the project, with Mkango holding 80%.
By investing a further £2 million, Talaxis will acquire a 49% interest in Maginito Ltd, a new subsidiary of Mkango focused on
neodymium alloy powders, magnets and other technologies. This includes the collaboration with Metalysis Ltd announced in
September 2017, which is focused on advanced alloys using neodymium or praseodymium with other elements for permanent
magnet manufacturing. Permanent magnets are critical materials for most electric vehicles, direct drive wind turbines and
many other high growth applications. Neodymium is a key rare earth component at Songwe. To date, Talaxis has invested £1
million for a 24.5% interest in Maginito with Mkango holding 75.5%.
The main exploration targets in Mkango’s remaining two 100% held licences are, in the Thambani licence, uranium, niobium,
tantalum and zircon and, in the Chimimbe Hill licence, nickel and cobalt.
For more information, please visit www.mkango.ca.
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement may have been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this announcement.
Cautionary Note Regarding Forward-Looking Statements
This news release contains forward-looking statements (within the meaning of that term under applicable securities laws) with
respect to Mkango, its business and the Project. Generally, forward looking statements can be identified by the use of words
such as “plans”, “expects” or “is expected”, “scheduled”, “estimates” “intends”, “anticipates”, “believes”, or variations of such
words and phrases, or statements that certain actions, events or results “can”, “may”, “could”, “would”, “should”, “might” or
“will”, occur or be achieved, or the negative connotations thereof. Forward looking statements in this news release include
statements with respect to the global market for products using the rare earth metals the Company is exploring for, completion
of the feasibility study and of the transactions contemplated in the agreement with Talaxis, as well as the use of proceeds
from the investments into the Company by Talaxis and the timing of such expenditures. Readers are cautioned not to place
undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon
which they are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and
unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts,
projections and other forward-looking statements will not occur, which may cause actual performance and results in future
periods to differ materially from any estimates or projections of future performance or results expressed or implied by such
forward-looking statements. Such factors and risks include, without limiting the foregoing, market demand for the metals and
associated downstream products for which Mkango is exploring, researching and developing, the positive results of a feasibility
study on the Project, delays in obtaining financing or governmental or stock exchange approvals. The forward-looking
statements contained in this news release are made as of the date of this news release. Except as required by law, the
Company disclaims any intention and assumes no obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as required by applicable law. Additionally, the Company
undertakes no obligation to comment on the expectations of, or statements made by, third parties in respect of the matters
discussed above.
For further information on Mkango, please contact:
Mkango Resources Limited
William Dawes Alexander Lemon
Chief Executive
Officer President
[email protected] [email protected]
UK: +44 207 3722
744
Canada: +1 403 444
5979
www.mkango.ca
@MkangoResources
Blytheweigh
Financial Public Relations
Tim Blythe, Camilla Horsfall, Julia Tilley
UK: +44 207 138 3204
SP Angel Corporate Finance LLP
Nominated Adviser and Joint Broker
Jeff Keating, Caroline Rowe
UK: +44 20 3470 0470
Alternative Resource Capital
Joint Broker
Alex Wood, Rob Collins
UK: +44 20 7186 9004; +44 20 7186 9001
The TSX Venture Exchange has neither approved nor disapproved the contents of this press release. Neither the TSX
Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this release.
This press release does not constitute an offer to sell or a solicitation of an offer to buy any equity or other securities of the
Company in the United States. The securities of the Company will not be registered under the United States Securities Act of
1933, as amended (the “U.S. Securities Act”) and may not be offered or sold within the United States to, or for the account or
benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the U.S. Securities Act.
Appendix
Rare earths distribution at different cut-off grades
Measured Mineral Resource - Individual Rare Earth Grades at 0.5%, 1.0% and 1.5% TREO Cut-Offs
Cut-Off Million La2O3 CeO2 Pr6O11 Nd2O3 Sm2O3 Eu2O3 Gd2O3 Tb4O7 Dy2O3 Ho2O3 Er2O3 Tm2O3 Yb2O3 Lu2O3 Y2O3 TREO
%TREO Tonnes ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm
0.5 13.34
2,948
5,664 602
2,033 301 82 194 24 109 18 42 5 31 4
504
12,560
1 8.81
3,581
6,793 715
2,391 343 94 221 27 124 20 47 6 35 5
572
14,975
1.5 3.67
4,673
8,517 874
2,855 392 107 251 31 140 22 52 7 38 5
631
18,594
Indicated Mineral Resource - Individual Rare Earth Grades at 0.5%, 1.0% and 1.5% TREO Cut-Offs
Cut-Off Million La2O3 CeO2 Pr6O11 Nd2O3 Sm2O3 Eu2O3 Gd2O3 Tb4O7 Dy2O3 Ho2O3 Er2O3 Tm2O3 Yb2O3 Lu2O3 Y2O3 TREO
%TREO Tonnes ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm
0.5 24.30
2,538
4,797 502
1,687 256 69 165 20 90 15 35 4 25 3
415
10,620
1 12.22
3,369
6,195 634
2,083 301 81 191 23 103 16 39 5 28 4
465
13,535
1.5 3.13
4,688
8,279 826
2,637 359 96 224 26 116 18 42 5 30 4
508
17,858
Inferred Mineral Resource - Individual Rare Earth Grades at 0.5%, 1.0% and 1.5% TREO Cut-Offs
Cut-Off Million La2O3 CeO2 Pr6O11 Nd2O3 Sm2O3 Eu2O3 Gd2O3 Tb4O7 Dy2O3 Ho2O3 Er2O3 Tm2O3 Yb2O3 Lu2O3 Y2O3 TREO
%TREO Tonnes ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm ppm
0.5 59.65
2,346
4,601 494
1,691 255 68 159 19 85 14 33 4 25 3
399
10,197
1 27.54
3,189
6,079 639
2,134 306 82 188 22 100 16 39 5 29 4
464
13,296
1.5 5.92
4,375
8,064 825
2,700 368 98 226 27 122 19 47 6 35 5
558
17,475