Lynas Corporation Limited says it will continue to work with the Malawi Government to resolve issues of ownership affecting Kangankunde Rare Earth (KGK) resource development in Machinga.
The Australian Securities Exchange (ASX)—listed mining firm, has been embroiled in a dispute over the ownership of the mine with a South African geologist Michael Saner, who is claiming rights to KGK resources.
Saner claimed that Lynas, which was supposed to be exploring for rare earths at the mine, acquired the rights of the mine from a Malawian entrepreneur Tony Patel, who allegedly held them illegally.
But Lynas has always argued that it has a mining licence from the Ministry of Energy obtained in 2007.
In its quarterly report, the company said: “Since fiscal year 2012, no further capital investment has been made and the project remains on hold.”
A mining expert told Business News on Wednesday that the putting on hold of the project means that the company cannot engage in any exploration activities unless all issues are resolved.
“This also means Malawi has lost on the investment the company was supposed to avail to Malawi,” he said.
In 2011, Saner sought redress from a London law firm, Mishcon de Reya, informing Lynas that unless it takes certain steps to recognise his claims over the KGK deposits, he will take action.
His claim is that he had orders from High Court obtained in 2006 and 2010 that rare earths deposits belong to him.
But the company announced on November 30 2011 that it would seek to intervene in Malawi High Court proceedings as an “affected party”.
It was successful in obtaining a ruling from the High Court in May 2012 that it be added to the proceedings.
The Malawi Government formally approved and certified the transfer of a mining licence in relation to the KGK tenements to a subsidiary of Lynas in December 2010 and subsequently completed the acquisition of the fully-permitted KGK resource in March 2011.
Lynas originally paid $4 million (K1.5 billion, at the current exchange rate) net of value added tax (VAT) for its Malawi assets upon completion of a purchase agreement.
The agreement was signed in 2007 and it contained a number of conditions precedent that were satisfied before completion, including approval by the Malawi Department of Mine for transfer of the KGK tenements to Lynas, approval by the Malawi Investment and Trade Centre for Lynas project proposal, approval by the Malawi Exchange Control Authorities for the company to make payments as a foreign investor.
The Kangankunde Carbonatite Complex deposit has been subjected to extensive geological and process test work completed in 1987 and 1990 by the French geosciences organisation Bureau de Recherché Geologiques et Minieres (BRGM).
