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Mkango sells three-quarters of Songwe operator to Noble subsidiary
Rare earths explorer Mkango Resources has set itself up to offload a 75% stake in its Lancaster Exploration arm to Noble Group subsidiary Talaxis.
Talaxis invested £5m into AIM-listed company in January for a 20% interest in Lancaster, the licence holder for the Songwe Hill rare earths project in Malawi where Mkango will shortly commence a major drilling programme targeting the completion of an updated mineral resource estimate by the end of 2018.
Upon the publication of Mkango's disclosure report for the Songwe project, Talaxis will invest an additional £7m to fund the completion of a feasibility study. When the study has been completed will have the option increase its aggregate interest in Lancaster to 75%, by arranging to fund 100% of remaining project development costs.
Mkango will also give Talaxis the option to buy as much as 49% of its subsidiary Maginito. On successful completion of a second phase research and development programme with Metalysis, funded by a £1m investment from the Noble subsidiary, Talaxis will invest an additional £1m into Maginito for a further 24.5% interest.
William Dawes, chief executive officer of Mkango, said, "Following the signing of the definitive agreements, Mkango has a clearly defined pathway to production against the backdrop of a strong outlook for rare earths geared to the electric vehicle market."
"We look forward to working with Talaxis to develop Songwe as a long-term, sustainable producer of rare earths and complementary downstream technologies through Maginito. The next major milestone is an updated resource for Songwe, which triggers the next £7m investment from Talaxis," he added.
As of 0850 BST, Mkango shares had picked up 9.85% to 9.20p.