Mkango Resources Limited says it has raised 2.49 million Canadian dollars (about K3.2 billion) from existing shareholders to boost funding for its rare earths project at Songwe Hills in Phalombe District.
The Toronto Stock Exchange-listed mining group said in a statement on Tuesday that $2.19 million Canadian dollar (about K2.8 billion) came from existing shareholders while $302 000 Canadian dollar (about K387 million) was contributed by Eit Rawmaterials—a network of partners from industry, research and academia, which will acquire shares in one of its subsidiaries that will fund part of the Songwe project.
Reads the report: “EIT RawMaterials will, subject to the approval of the Toronto Venture Exchange, provide additional funding of $302 000 Canadian dollar (about K390 million) and receive a 5.7 percent interest in Mkango Polska sp, a subsidiary of Mkango Resources Limited, which will fund optimisation process for the Songwe Hill Rare Earths Project in Malawi.”
EIT RawMaterials comprises about 300 members from industry, university and research and development in the raw materials sector collaborating with the European Institute of Innovation and Technology and co-funded by the European Union.
Mkango Resources Limited chief executive William Dawes said the recent signing of the mine development agreement (MDA) for the Songwe Project and the opportunity to progress process optimisation through the investment by EIT RawMaterials, will enhance options for the Songwe project.
He said: “With the recent signing of the MDA for Songwe, existing shareholders were happy to continue to support the company with further investment at a minimal discount to prevailing prices.
“Furthermore, the investment by EIT RawMaterials further highlights the strategic importance of Songwe to the strengthening of rare earth supply chains in Europe and beyond.”
Mkango’s successful efforts to raise funds come weeks after Lotus Resources Limited, a company which is expected to reopen Kayerekera Uranium Mine in Karonga District, announced that it has identified financiers for the project.
In an interview on Tuesday, mining expert Ignatious Kamwanje described the development as positive, saying it gives hope that the two companies will roll out their projects on time.
He said: “Generally such projects require huge funding; hence; often face delayed commencement, but with news that the financiers are coming forward, it means investors are interested with the projects following the signing of MDAs.
“This means the commencement of the mining development would not face prolonged delays unlike in cases where the search of financing is led by the government,” said Kamwanje, a former geologist in the Ministry of Mining.
In a separate interview on Tuesday, geologist Grain Malunga described the two developments as inspiring, adding that they show investors’ growing confidence in the country’s mining sector, which is positioned to grow in the medium term.
“This shows confidence in the security of tenure and favourable regulatory and legal environment in Malawi,” he said.
Malawi boasts a diverse array of mineral resources, some mined for decades, while others hold untapped potential for medium to large-scale beneficiation, according the Malawi Government Annual Economic Report 2024.
Mininig contribution to gross domestic product (GDP) was at one percent last year, but when Kayelekera Uranium Mine was in operation, mining used to contribute about 10 percent to GDP.
