Mining & Trade News

By Modester Mwaija

As Malawi approaches the half way mark of the period for the implementation of 2022-2027 Mining Strategic Plan, concerns are growing over the sector’s slow progress. Chamber of Mines and Energy in Malawi and Civil Society Organisations (CSO’s) express concern that deep-rooted challenges are delaying efforts to move the country’s mining industry forward.

The strategic plan was designed to transform the mining landscape and boost economic growth. The plan sets forth a range of objectives aimed at increasing production, enhancing transparency, and ensuring that local communities benefit from mining activities.

“The strategic plan’s mission is to coordinate, facilitate and promote participation of all stakeholders in the sustainable development, utilization and management of mineral and petroleum resources for socioeconomic growth and development,” reads the plan

Grain Malunga, Coordinator for the Chamber of Mines and Energy, says the mineral sector is developing at a very slow pace due to insufficient financial and human resources.

“We still have not seen significant progress in establishing key institutions like the Mining Development Corporation and the National Mining Company and there has been no specific targets in investments, exploration and mining,” Malunga says.

He also says the sector is facing infrastructure challenges including lack of access to reliable energy and unreliable transport networks. 

Malunga, however, acknowledges that the current regulatory frameworks are adequate to promote transparency in the mining sector. These include Mines and Minerals Act 2023, Access to Information Law and Anti-Corruption Act.

Kennedy Rashid, National Coordinator for Natural Resources Justice Network (NRJN), raises concerns over the environmental impacts of unregulated and illegal mining activities, particularly in areas like Makanjira where some parts of the Namizimu forest have been cleared, and the chemicals that are being used by Artisanal and Small-scale Miners (ASMs) in Nkhatabay and Nkhotakota in streams where gold is being panned.

“The main concerns on the environmental side include deforestation, water pollution, air pollution, land degradation, and siltation,” says Rashid.

He says the challenges can only be addressed if the Ministry of Mining is financed and adequately staffed to carry out its functions and provide services to all scales of mining activities.

“There is a need to mainstream training or capacity building on responsible mining, and increased inspections and audits by both the Environmental Protection Authority, Malawi Human Rights Commission, and Mining Regulatory Authority,” says Rashid.

He also calls on government to mainstream open contracting, beneficial ownership disclosure, revenue transparency, environmental and social impact accountability.

“This can best be achieved if we could mainstream the Extractives Industry Transparency Initiative (EITI) standards and the African Mining Vision framework (AMV). We need to localize both the AMV and EITI standards but in consideration to our context thus in respect to our laws and regulations,” says Rashid.

Despite the current challenges, the future of Malawi’s mining sector appears promising, as stakeholders continue to push for reforms and improvements that will unlock the full potential of Malawi’s mineral wealth.

By Modester Mwalija

Local quarry miner Chawezi Resources has rehabilitated a 9km access road to its quarry mine in Nathenje in Lilongwe, which is serving the local community besides making it easy for its customers to reach the mining site.

Chawezi has contracted local construction firm Plem Construction to carry out the road construction works, which are part of its major infrastructure upgrade at the quarry mine.

Chawezi Quarry Manager Leckson Chigoneka told Mining & Trade Review in an interview at the site that the Company’s commitment to corporate social responsibility (CSR) is evident in its ongoing efforts to improve the lives of those living near its operations.

“As part of our CSR programme, we have executed several projects including providing access to clean water, which was a critical need in the area and improving road accessibility to help people travel more easily from the village to town”, Chigoneka said.

The miner supplies tap water sourced from underground to households close to the site.

In addition to these efforts, Chawezi Quarry has been involved in environmental conservation through tree-planting initiatives.

 “We are committed to operate in tandem with environmental laws and regulations. Planting trees is one of the ways through which we are contributing to the sustainability of the environment around us,” Chigoneka said.

Meanwhile, Chawezi Resources is working on installing an asphalt plant at the mining site, a project which will be completed in three months time. Chigoneka described the development as a major milestone to the nation as it will play a major role in the completion of road projects in the country.

He said: “The new asphalt plant marks a significant step forward for Chawezi Quarry. It is a project that is not just big in scale, but also in terms of the benefits it will bring.”

“We expect it to take more than a year to be completed but the long-term gains for both the company and Malawi’s infrastructure development will be substantial.”

Chigoneka also said that the plant, to be installed in only three months time, will produce asphalt specifically for road construction, ensuring that Malawi’s infrastructure projects have a steady supply of high-quality materials. This in turn is expected to drive further growth in the construction sector.

“Our goal is to support the country’s development by providing the materials needed for building and maintaining roads. This project will allow us to do that on a much larger scale,” he said.

Chigoneka also said that besides the economic advantages, the new project is set to have a significant positive impact on the local community.

“We have already employed more than 40 people from the surrounding villages, and this number is expected to rise as the project progresses as the additional revenue generated by the asphalt plant will enable us to continue and expand our support to the community,” he said.

Chawezi Quarry Mine produces about 35,000 tons of quarry and quarry dust per month.

The Mine owned by Chawezi Resources, which is a subsidiary of Akatwiri Holdings, is located on a tenement area of about one square kilometre.

Besides the Nathenje project, the Akatswiri Holdings Group owns another quarry mine in Nsanje and has plans to set up quarry mines close to cities of Blantyre, Mzuzu and Zomba.

The Akatswiri diversified resources group has mineral tenements across Malawi and also offers consultancy services in mining engineering, geology and construction.

By Wahard Betha

The Ministry of Mining has assured players in the sector that it is ready and much prepared to fully implement the newly gazetted Mines and Minerals Act of 2023.

On June 28, 2024, Minister of Mining Monica Chang’anamuno gazetted the new Mines and Minerals Act of 2023 in so doing operationalising the Mining and Minerals Regulatory Authority, which has been formed under the new Act.

Director General (DG) for Mining and Minerals Regulatory Authority Samuel Sakhuta told Mining & Trade Review in an interview that the Government is ready to operationalize the Authority in accordance with the new Act but what has remained is recruitment of Board Members. 

Sakhuta said: “The government is very ready to move the new Act. The Authority has just started working but there are just a few gaps that are supposed to be filled to be fully fledged.”

“As you may be aware, the first step was to put the Act that has incorporated the Authority in place.”

“When it was commenced, the Authority had no DG, had no Board Members, but by July 31 the government had appointed the DG, meaning now we have the DG but the Board Members will be announced anytime soon. That is what we are pushing for because the DG cannot fully function without Board Members.”

Sakhuta said after the government announces the names of the Board Members, next will be induction of those members to ensure that all members are conversant with processes in the country’s extractive industry.

He said: “They (Board Members) have to move in with common knowledge of how to conduct these things. You know that the DG will only act as head of the secretariat to make sure that all operations are done as required.”

“The previous Act had no Authority. We had the Commissioner who was implementing the Act while this time we have DG as the head, with the Board Members.”

“At some point the DG may also guide on how to operationalize some of the things that are technical in nature so that the Board does not make mistakes.”

Commenting on the development, Geoscience Consultant Ignatius Kamwanje expressed excitement towards enactment of the new Mines and Minerals Act saying it contains some of the changes that match the current status of the mining sector. 

Kamwanje said: “Am very happy to see that in the new Mines and Minerals Act there are some aspects that have been put in place which are in familiarity with the current trends.”

“For example, incorporation of the Community Development Agreement (CDA) which is like now empowering communities to have that sense of ownership of the mining project within their area.”

“It is one way of empowering communities at large and it is also giving communities an opportunity to have a tradeoff with the government and mining company,” he said.

Kamwanje advised the government to ensure strict enforcement of the regulations in order to successfully implement the Act.

Consulting Partner for Perekezi Consultants Chikomeni Manda commented that the key reforms introduced in the new Act will significantly promote transparency, accountability and sustainability in the industry.

Manda said through the establishment of clear guidelines for mining sector, the Act seeks to attract more investment and create a more conducive environment for growth and development.

He also commended the Act for addressing pertinent issues such as community engagement, environmental protection and revenue sharing which are crucial in ensuring that the benefits of mining are shared equitably among all stakeholders.  

Manda said: “The new Act is expected to bring significant changes to Malawi’s mineral sector by introducing stricter regulations and increasing transparency in the industry through the Authority.”

“This could lead to improved governance and accountability as well as attracting more foreign investment.”

“Additionally, the Act may also help to address issues such as illegal mining and environmental degradation, ultimately benefitting the country’s economy and local communities.”

On implementation, he said the government needs to establish monitoring systems to track progress and enforce penalties for non-compliance.

Manda said: “It is also crucial for the government to actively engage stakeholders including businesses and advocacy groups to gather feedback and make any necessary adjustments to the Act.”

“By taking these steps the government can help ensure that the Act is effectively implemented and achieves its intended goals.”

In a separate interview, Programs Coordinator for Natural Resources Justice Network (NRJN) Joy Chabwera called on government to expedite deployment of District Mining officers and collaborate with different stakeholders conducting different advocacy activities focusing on mining in order to successfully implement the Act.

“It is very important to recruit District Mining Officers because when you go to the Councils, there are currently no officers to assist you on mining issues,” Chabwera said.

He also urged the Ministry to exercise contract disclosure in line with Extractive Industry Transparency Initiative (EITI) standards.

 “We are also expecting collaboration with Civil Society Organizations (CSOs) in successful implementation of this Act,” said Chabwera.

He also tipped the government to scale up awareness campaign on mining issues so that many Malawians are able to understand how the industry can shore up the economy.

By Tione Luwanga

In August 2024 Globe Metals and Mining (Africa) Limited became the first mining company in Malawi to comply and implement the Community Development Agreement (CDA) with the qualified communities that surround the Kanika Niobium Project since the new Mines and Minerals Act 2023 came into being.

Section 169 subsection 1 of the Act stipulates that “a holder of a large-scale mining licence shall assist in the development of qualified communities affected by its operations to promote sustainable development, enhance the general welfare of the quality of life of the inhabitants and shall recognise and respect the rights, customs and traditions of the local communities that are consistent with the constitution.”

Subsection 3 adds that no holder of large-scale mining licence shall proceed to do commercial production before the ratification of the CDA by the qualified affected community.

Chief Mining Engineer in the Ministry of Mining, George Maneya said the historic ceremony demonstrates that the Ministry of Mining is ticking. 

He said: “This is historic. This is in line with the current laws in the Mining Act. The CDA signing will now bring confidence to the community that this project will benefit them. It will also work as a reference point when one party has issues over the project.”

Maneya added that after the signing, the documents will have to go back to the Ministry for final approval.

In his speech, Paramount Chief Inkosi ya Makhosi M’mbelwa V said what was delaying the compensations was the CDA and now that it has been signed, the process should not take ages.

“The CDA is one of the factors that the investors were looking for and now that we have signed, I was reminding the Globe Metals Officials that they should expedite the process because the affected community has been deprived of much needed development because they know that their land has been designated for the mining project,” said M’mbelwa

Globe Metals and Mining Chairperson, Macleod Nyirongo, said the assessment is the company’s priority.

“The signing is a flagship which is saying the community has agreed and so Globe will go to the next step and the next step is to have an assessment. What do people have? Those people who are directly affected by the project. What is the value of the assets that they have? What are they going to be compensated for, so that they can continue with their lives?” narrated Nyirongo.

Nyirongo said following the assessment, the company will develop an engagement plan involving people around Kanyika mine area.  

“We need to prepare an engagement plan to ensure that people understand Globe’s actions are planned and predictable,” said Nyirongo.

Central to the CDA is the management of the 0.45% of gross revenue which will be remitted back to the community as part of Corporate Social Responsibility (CSR), according to the law.

To comply with this, Globe Metals has put a landmark of 0.45 percent to which Senior Chief Mabilabo said is not bad.

“Pasono pano tawapulikiska wa mgodi kuti ka wakwamba waka kwene tili kukamba nawo wa kuti pala vinthu vayamba Kwenda makola mbwenu wazakakwezgeko ndalama iyi panji kufika pa 1 percent, apo mbwe vinthu vikwenda makola. (Currently we have agreed with the 0.45 percent because the company is just starting but we have spoken to them already to consider increasing the amount if the company starts making tangible profits),” he said.

He added that a Board of Trustees, including Trustees from the Northern and Central Regions as well as the Kanyika District, has been established and mandated to handle the resources according to the needs of the community.

Affected District Councils were represented by respective District Commissioners; Rodney Simwaka of Mzimba District council and James Kanyangalazi of Kasungu who signed as witnesses.  

Speaking prior to the event, Simwaka said the two councils’ responsibility will be to monitor the seamless implementation of the CDA.

Government has already given Globe Metals the go-ahead to start the mining operations through the provision of the mining licence in 2021 and approving the Mining Development Agreement (MDA) in March 2023.

The signing ceremony was supposed to take place on June 10, 2024 but was postponed due to the tragic death of the country’s former vice president Dr Saulos Klaus Chilima.

Once in operation the Kanyika Niobium Project, with its large deposit of niobium, tantalum and zircon will be the first such mine in Africa as well as the fourth largest Niobium mine in the world, and has an estimated lifespan of about 25 years.

Niobium is used for high-tech technologies like aerospace, metal, atomic energy and electronics industries. It is also used in the medical field, optical, lighting and chemical industries. 

Globe Metals plans to build the refinery plant in Lilongwe.

ASX-listed DY6 Metals reports outstanding progress in Malawi mineral exploration projects

By Marcel Chimwala

ASX-listed DY6 Metals has reported outstanding progress in its exploration for various minerals including Rare Earth Elements (REEs), Niobium (Nb), Platinum Group Elements (PGEs) and lithium in Malawi.

DY6 is conducting exploration works in a number of its licence areas in Malawi including Tundulu in Phalombe where it is prospecting for REEs.

Tundulu REE project update

The Company’s Chairman Daniel Smith says in a Press Statement that DY6 has collected 63 metallurgical samples from 37 sample locations along the high-grade historic trench (TUTR10) in the newly granted Tundulu tenement.

The sampling is intended to be representative of the mineralised Bastnaesite and Apatite carbonatite rock types exposed within the trench. Historical results from TUTR10 returned average grades of 7.1% P2O5 and 1.8% Total Rare Earth Ore (TREO) across 83m.

Smith reports that each of the samples will be analysed separately with a portable X-ray Fluorescence (XRF) onsite at DY6’s drill core warehouse prior to dispatch to SGS Laboratories in Perth and South Africa.

He says five bioavailability samples were also taken across various trenches, targeting phosphate rich rocks with P2O5 greater than 15%.

“Bioavailability is used for analysis on phosphorous rock sources to determine the solubility of phosphate in soils. This analysis is useful in determining whether a particular phosphate rock type is suitable for direct fertiliser applications where the phosphate would be applied directly to the soil for uptake,” Smith says.

Tundulu is formed of several hills in a ring around a central vent called Nathace Hill where the majority of the historic surface sampling and drilling was undertaken. The predominant geology at Nathace Hill is REE apatite hosting carbonatites and feldspathic breccia and comprises a large inner agglomerate vent. Mineral rich carbonatite also occurs at Tundulu Hill east of Nathace and Makhanga Hill west of Nathace and is previously unexplored and prospective for REEs and niobium mineralisation.

REE mineralisation remains open towards southern and western directions of Nathace Hill and potentially extends beyond the boundaries of the previously established mineralised area over Tundulu Hill. Initial indications of mineralisation appear to be high in valuable MREEs and low measurable radioactive uranium (U) and thorium (Th). This compares favourably to Lynas Rare Earths’ Mount Weld Central Lanthanide Deposit in Western Australia where Th and U concentrations in the ore are approximately 660 ppm and 25 ppm respectively.

Meanwhile, DY6 has engaged Perth-based consulting metallurgists Met Chem Consulting for initial metallurgical evaluation to review historical testwork work programs and assess the findings from the 2017 metallurgical report, completed by the previous operators of the licence. Met Chem Consulting has 20 years' experience and has overseen beneficiation testwork and pilot programs for many ASX-listed companies and overseas rare earths projects.

“The testwork by DY6 will initially focus on validating the beneficiation results achieved by the previous laboratory. Conducting test work at this early stage enables the Company to ascertain the preliminary viability of producing two product streams; a REE commercially saleable concentrate and a mixed phosphate concentrate containing rare earths,” says Smith.

Machinga Rare Earth and Niobium Project

DY6 is also prospecting for REEs and Niobium in its Machinga tenement. Smith reports in the Company’s quarterly report for the quarter ended June 30, 2024 that during the quarter, the Company reported the receipt of assay results for its second comprehensive reconnaissance rock chip and soil sampling program completed at Machinga Main Licence Area Anomaly.

Significant rock chip samples include:

• 2.26% TREO, 0.19% Nb2O5 (MEX061)

• 1.60% TREO, 0.60% Nb2O5 (MEX098)

• 3.22% TREO, 0.75% Nb2O5 (MEX141)

• 1.00% TREO, 0.11% Nb2O5 (MEX270)

• 1.16% TREO, 0.41% Nb2O5 (MEX510)

Smith says: “The results indicate multiple parallel zones consistent with the drilling results. The area of drilling and to the southeast tend to show patchy results due to extensive soil cover derived from up slope to the west, but clearly anomalism is not being dispersed.”

“The two western anomalies where sample density is higher show a much more continuous character of greater TREO results, highlighting the scale potential of REE mineralisation in this area of the licence. This zone was only partially tested by the first phase of drilling as no drilling was completed west of the main road.”

“The extension of this trend is highly significant as this is within the Forestry Reserve, where DY6 has a forestry permit, and not within farming activities, allowing for future exploration activities west of the highway.”

Ngala Hill PGE Project

DY6 is also conducting exploration at Ngala Hill Platinum Group Elements (PGE) prospect in southern Malawi. Smith explains in the report that during the quarter, DY6 was in the process of commencing a reconnaissance program at the highly prospective PGE project.

“The Company has since commenced engagement with local community members at the project site with the purpose to facilitate awareness of the exploration program planned,” he says.

DY6 will commence a reconnaissance mapping and rock chip sampling program to validate and potentially expand the significant area of interest at Ngala Hill.

Salambidwe and Mzimba

DY6 is also proceeding with exploration for REEs at Salambidwe in Chikwawa and prospecting for lithium in the Mzimba central licence area which has just been formally granted by the Mines Department. DY6’s other remaining lithium exploration licence applications awaiting grant are Mzimba West, Mzimba South and Karonga North.

By Tawonga Nyirenda Mayuni

Investors from Morocco have expressed interest to produce fertilizer in the country using the Tundulu rock phosphate in Phalombe.

Public Relations Officer for the Ministry of Mining Tibonge Kampondeni told Mining and Trade Review that the Ministry in conjunction with the Ministry of Agriculture and the OCP group of Morocco have plans to conduct further investigations of the rock phosphate deposits of Malawi starting with Tundulu Rock Phosphate.

“The Ministry in conjunction with the Ministry of Agriculture and the OCP Africa group has plans of conducting investigations of the rock phosphate deposits in Malawi starting with the Tundulu rock phosphate with an aim of establishing a manufacturing plant for the OCP’s Nitrogen Phosphorus, Sulfur and Boron (NPSB) fertilizer in Malawi as soon as possible,” she said

Kampondeni explained that currently the Ministry of Agriculture and the OCP group intends to start crop trials using the NPSB fertilizer which is currently manufactured outside Malawi so that it can be introduced into Malawi.

Commenting on why Malawi keeps importing fertilizer when the country has deposits that can be exploited to manufacture fertilizer, Kampondeni said that the government relies on the private sector to invest and the Ministry is ready to work with them.

Kampondeni mentioned that the data that the country has is sufficient enough to kick-start the production of fertilizer locally.

She said: “We have various agro-mineral deposits like phosphate, gypsum, vermiculite, limestone, nepheline syenites and feldspars in many parts of the country.”

“Some of these have been studied in detail, for example the Tundulu phosphate deposits in Phalome and the Mlindi Ultra-phosphate in Neno.”

Kampondeni also said the government of Malawi is currently intensifying exploration to identify additional deposits of agro-minerals and estimate the quantity of the resources.

However, Kampondeni said that funding challenges are negatively affecting exploration activities such that the Ministry is working on mobilizing funding from development partners and research funding schemes.

“For example, the Ministry and the University of Kyoto in Japan have submitted a project concept entitled ‘Integrated use of agro-minerals, dry excreta and drone technologies in soil remineralization for crop production and climate smart agriculture in Malawi’ to the Japanese government under the Science and Technology Research Partnership for Sustainable Development (SATREPS) funding scheme,” she said.

Meanwhile, the Malawi government has put in place some incentives for attracting investors in agro minerals for local fertilizer production.

Kampomdeni explained that the incentives for large scale investors include; 100% capital allowance, duty free importation of equipment, Zero input VAT, accelerated depreciation because if the value capital remains high it reduces the income, loss carry-over for 10 years, and provision of concessions on consumables that are directly inputting into the production like chemicals and reagents.

OCP Africa is a subsidiary of OCP group, a leading producer of phosphoric acid and fertilizer. The group has been in the industry for over 100 years. The headquarters of OCP Africa is in Casablanca, Morocco.

By Marcel Chimwala

ASX-listed Sovereign Metals has announced that the excavation of a test pit, using dry mining methods, has been completed successfully. The excavation is part of the ongoing Pilot Mining and Land Rehabilitation Program at the Company’s Kasiya Rutile-Graphite Project in Lilongwe, Malawi.

Sovereign Metals MD Frank Eagar explains that the completion of this phase of the Pilot Program confirms that Kasiya can be efficiently mined using standard mobile excavators and trucks, further demonstrating operational alternatives as part of the ongoing Pre-Feasibility Optimisation Study.

The test pit has been excavated as planned with all work on schedule to a depth of 20 metres, handling approximately 170,000 bench cubic metres. Steady-state operations envisage 24 million tonnes of material being mined annually. The excavatedmaterial is being stockpiled on site and as part of the next phase of testwork will be separated into various size fractions through the use of cyclones. Once separated into different size fractions, the material will be backfilled into the test pit for materials deposition testwork.

For the test pit, the excavation was completed with a dry mining fleet consisting of four excavators, 20 trucks and a support fleet including two bulldozers and a motor grader.

Eagar says: “Completion of the test pit at this scale marks a significant achievement. The mining, hydrology and geotechnical data collected throughout is invaluable in our understanding of the orebody and the simplicity of a potential dry-mining operation at Kasiya. We now look forward to the next steps of the pilot phase including the hydraulic mining trial, cyclone separation of ore, backfilling of test pits and soil rehabilitation.”

Eagar explains that the saprolite-hosted mineralisation at Kasiya is largely homogenous and has relatively consistent physical properties throughout the 1.8 billion tonnes Mineral Resource Estimate.

“Data collected from the pilot phase confirmed that no drilling, blasting, crushing, grinding or milling will be required prior to stockpiling material for processing into rutile and graphite products; an indication of potentially lower mining costs and a lower carbon footprint comparable to hard rock deposits,” he says.

Eagar reports that hydraulic mining trials will begin in coming weeks. A temporary water storage pond has been constructed and sealed using natural clay from excavated material, minimising the use of conventional plastic lining. The pond is being filled by eight boreholes delivering water to site and is nearing its capacity of six million litres. Water from the storage pond will initially be used for the hydraulic mining stage.

He says the main pit will be backfilled with dry material, while material from hydraulic mining will be used to fill rehabilitation pits as part of the rehabilitation phase of the trial.

Background to the Pilot Phase

The Pilot Phase is a critical part of Kasiya’s optimisation study and ongoing feasibility work; empirical data generated from the Pilot Phase will determine optimal project excavation, material handling, processing, backfilling and rehabilitation approaches. The Pilot Phase is being undertaken on a 9.9-hectare site and includes the following activities:

1. Test Pit: A test pit of 120m by 110m excavated to a depth of 20m, allowing optimisation of hydraulic and dry mining excavation methods.

2. Stockpiles: The excavated material will be temporarily stored in 4 stockpiles, namely all dry mining material, wet slimes (in a pond) and two sizes of sand fractions from the hydraulic mining.

3. Backfilling and Grading: The material will be placed back into the pit, and all areas will be graded.

4. Rehabilitation Demonstration: Sovereign will construct eight small rehabilitation demonstration pits covering a combined area of 100m by 130m. These will be used for water storage, excavated material storage, and demonstration of multiple land rehabilitation approaches.

5. Temporary Laydown Areas: Four areas will be used as temporary laydown areas, offices, and associated infrastructure.

6. Communication: The Pilot Phase will be an educational opportunity for Project stakeholders. Sovereign will undertake a series of stakeholder visits and consultations for this purpose.

Eagar explains: “Sovereign’s objective is to restore land after mining to conditions that achieve the same or better agricultural yields than existing land uses and crop yields. The Pilot Phase will demonstrate to local communities the successful rehabilitation of land for agricultural use post-mining; land rehabilitation will form an integral component of the ongoing optimisation study.”

“Results of this Pilot Program will also allow Sovereign to determine optimal excavation and backfill approaches, providing critical information for the upcoming Definitive Feasibility Study.”

By Marcel Chimwala

ASX-listed Lotus Resources has announced that it has signed a Mine Development Agreement (MDA) with the Government of Malawi (GoM), for its Kayelekera uranium mine, a major milestone in its redevelopment.

Lotus CEO Keith Bowes says the Agreement ensures that the mine will operate under a stable fiscal regime and provides the necessary confidence to investors.

Bowes explains that the MDA guarantees a Stability Period of 10 years during which the Project will not be subject to any detrimental changes to the fiscal regime.

He says the MDA’s key tax terms are aligned with the Kayelekera Restart Definitive Feasibility Study (DFS) assumptions, including royalty rate of 5% and corporate tax rate of 30%.

“There is also relief provided on Resource Rental Tax and Withholding Tax, specifically as it applies to dividends to non-residents,” he says.

The MDA also provides exemptions for import and export duties, plus excise and Value Added Tax (VAT) on capital goods and specified consumables directly related to mine production.

Bowes adds that the MDA includes internationally recognised principles relating to legal protection on security of tenure, dispute resolution and expropriation.

“MDA demonstrates the commitment by the GoM to develop the local mining industry, a key pillar of Malawi 2063, their new economic vision,” he says.

Bowes also points out that Rio Tinto’s increased shareholding in Sovereign Metals, which holds another key mining project in Malawi, indicates the increased attractiveness of Malawi as a mining destination.

He says: “We are extremely pleased to have finalised our MDA with the Malawian Government. I would like to thank all parties involved in these negotiations, especially the Presidential Delivery Unit who were instrumental in finalising the agreement. The relevant ministries including mining, finance and justice have all been very supportive in our negotiations as we have gone through multiple iterations of the MDA.”

“It has been a timely conclusion to these negotiations as we have seen increased demand for the Kayelekera product from a number of utilities which coincides with the current perceived shortages and strong prices in the market. With the completion of the MDA, we can now move ahead quickly with concluding some of our offtake discussions.”

MDA key terms

The MDA specifies key fiscal terms, legal protections and non-fiscal government support under which Lotus will develop and operate Kayelekera. Lotus has benchmarked comparable fiscal regimes elsewhere in informing its MDA discussions with the GoM.

The MDA is aligned with current Malawi legislation. Key terms agreed include:

• A stability period of 10 years from date of execution during which the Project will not be subject to any detrimental changes to the fiscal regime

• Royalty rate of 5% and the corporate tax rate of 30%

• Tax losses from acquisition are included, with protection from disputes on tax refunds through the principle of tax set-off. The agreement also includes ability to restructure historical loans and tax losses on a tax neutral basis

• Malawi’s currently legislated Resources Rent Tax (RRT), which is not fit for purpose, does not apply. Instead, the GoM proposes to consider an alternate supernormal profits tax (that may consist of a sliding scale linked to uranium price) to replace the current RRT. The Company will receive a waiver until such time as this is effective.

• Exemptions for import and export duties, excise and VAT on capital goods and on specified consumable items directly related to mine production

• Withholding Tax relief (currently 10% for a mining company) on dividends to Lotus for the majority of the mine life

• The maintenance of foreign currency bank accounts inside and outside Malawi that are supportive of project financier requirements

• A Community Development Agreement with a minimum value of 0.45% of project revenue set aside for community projects

• Specific legal protection is afforded to the Company, including Security of tenure, Dispute Resolution and Arbitration and non-discrimination

Engagement with Government of Malawi

Lotus’s negotiations with the GoM were based on the concept of a fair and equitable split of economic benefits for investors that meets the project financing needs, delivers an economically viable project and provides the necessary benefits to the local communities, the Malawian people and the GoM.

Consideration has been given to not only fiscal items such as taxes and royalties but also economic benefits including jobs, business development, local procurement and supporting local businesses and communities.

Next steps

Bowes states that the company’s current priorities include to complete offtake negotiations for the first phase of contracting with offtake agreements likely to have a pre-payment component to support project financing, complete the front-end engineering design program and finalise project financing.

He explains that Lotus’s debt advisor, Orimco, has identified potential financiers to assist in the project financing while Independent Technical, Environmental and Legal reviews are planned prior to receiving credit approved proposals.

Lotus is also expected to complete negotiations and sign a Power Supply and Power Implementation Agreement with Malawi’s electricity utility Electricity Supply Corporation of Malawi (ESCOM).

By Marcel Chimwala

Lancaster Exploration, a 100% owned subsidiary of TSX.V and AIM listed Mkango Resources, has signed a Mining Development Agreement (MDA) for the Songwe Hill Rare Earths Project in Phalombe with the Malawi Government.

The signing ceremony was held at the Office of the President and Cabinet in Lilongwe, Malawi during the evening of Friday July 26th, 2024.

Hon. Minister Monica Chang’anamuno MP, Minister of Mining for Malawi stated

“The signing of the MDA marks a momentous and significant occasion in the history of Malawi's mining sector. It is with great pride and optimism that we sign the MDA between the Government of Malawi and Lancaster Exploration Limited (Mkango) paving the way to start mining Rare Earths at Songwe Hill in Phalombe.  The MDA signed by the Government of Malawi is a product of almost two years of hard work. I would like to thank the team at Mkango for their positive partnership spirit during the negotiation period. This Agreement is not just a contractual obligation; it symbolizes a renewed partnership, a commitment to sustainable development, and a shared vision for a prosperous future for both parties. The journey to this has been marked by diligent negotiations, mutual respect, and a deep understanding of the potential that lies beneath our feet. The conclusion and signing of this MDA is a testament to what can be achieved when we work together with a common purpose. It will ensure that the benefits of our mineral wealth are shared equitably and that our environmental and social responsibilities are upheld. The MDA we have signed today is a win-win agreement and is based on the belief that Government, the mining investor and Malawians share some fundamental interests of benefitting from these future mining activities. On behalf of the Malawi Government I would like to take this opportunity to assure the investors that the Government will adhere to its obligations reflected in this MDA.  I would like to reiterate Government’s commitment in ensuring that it provides requisite infrastructure to support the mining activities at Songwe Hill and the country in general. The future mining operations at Songwe Hill in Phalombe will have far-reaching impacts on our economy. As we are all aware mining represents the hopes and dreams of the Malawian people for economic growth, wealth and job creation in line with Vision 2063 and the Agriculture, Tourism and Mining (ATM) Strategy championed by His Excellency the President Dr Lazarus McCarthy Chakwera.  To the management team at Lancaster Exploration Limited (Mkango) I would like to thank you for your unwavering commitment to Malawi. Together, we are not just signing an agreement; we are embarking on a journey towards a brighter, more prosperous future for Malawi. Let this be a shining example of what can be achieved through partnership, perseverance, and a shared vision for a better tomorrow.”

Alexander Lemon, President of Mkango stated: “We are very pleased to announce this major milestone for the Company and the nation of Malawi. I am delighted that the MDA has been agreed and signed with the Government of Malawi. The Project when developed, is expected to be a game changer and transformational for  Malawi and Mkango welcomes the very strong support it is receiving from the Government of Malawi and all stakeholders. When developed, my hope is that Songwe Hill will catalyse a new industrial revolution in Malawi, creating employment opportunities ,producing high value-added exports, as well as further unlocking Malawi’s mineral potential and new infrastructure developments.”

Songwe is one of the very few rare earths projects globally to have completed a definitive feasibility study and hold a signed and approved Environmental, Social, Health Impact Assessment (“ESHIA”), which was completed in compliance with IFC Performance Standards and The Global Industry Standard for Tailings Management (2020) (“GISTM”) adopted for design and management of the tailings storage facility. The key rare earths being targeted at Songwe are neodymium, praseodymium, dysprosium and terbium which are all critical for the green transition and are essential to permanent magnets for electric vehicles, wind turbines and many electronic devices.

Key components of the MDA include:

➢ 5% royalty of gross revenue

➢ 30% corporate tax rate

➢ 10% non-diluting equity Interest in the Project to Malawi Government

➢ Exemption from customs and excise duties – Lancaster will be exempted from Export Duty, Import Duty,

Import Excise and Import VAT on imports and exports of capital goods as provided in the applicable law

➢ 10 years stability period

➢ 10 years Tax loss carry forward

➢ Community Development Expenditure is an allowable tax deduction

The key rare earths being targeted at Songwe are neodymium, praseodymium, dysprosium and terbium which are all critical for the green transition and are essential to permanent magnets for electric vehicles, wind turbines and many electronic devices. Rare earth elements are critical enablers of clean energy and electro-mobility. They are used in a wide range of applications that have transformed modern society, and due to their unique physical and chemical properties, are exceptionally challenging to duplicate or replace.

UK and Canadian listed Mkango has been conducting detailed geological exploration and feasibility study work since 2010 at Songwe Hill in Phalombe and invested over US$35million to date

 The Company works closely with the local communities and prioritizes employing both skilled and non-skilled workers from the community, and carries out a number of corporate social responsibility projects in different areas including education, health, agriculture and infrastructure development.