Pensana Metals — A World-Class Rare Earths Mine in the Making - (ASX: PM8)
We have just returned from a site visit to the world-class rare earths deposit at Longonjo in Angola, 84%-owned by Pensana Metals. The project is particularly interesting for its high grades of neodymium and praseodymium (NdPr); commodities which are critical in the development and growth of electric vehicles (EVs), while its location is exceptional; close to modern road, rail, and power infrastructure, which link to a new port development in Angola.
Critical stage of development: Pensana Metals is an Australian-listed junior mining company but plans to undertake a listing on the Main Board of the London Stock Exchange by the end of 2019. We visited the site with management because the project is reaching a critical stage of its development. It is nearing completion of an intensive year-long exploration programme and as a result has announced a significant resource expansion and is shortly expected to release an important pre-feasibility study (PFS).
Rare earth elements (REE): These are an exciting commodity group involved in environmental protection, improving energy efficiency, and enabling digital technology, making them critical in a rapidly growing and developing world. Of particular interest to Pensana Metals are NdPr which are used in permanent magnets which go in to electric motors and generators and are important in many ‘green’, carbon reducing technologies.
A play on the growth of electric vehicles: NdPr permanent magnets are more powerful than alternatives and so provide improved performance for a smaller size, which has led to many miniaturised applications. The largest use of NdPr magnets is in electric motors, and particularly for drive motors in EVs, but also in micro motors and sensors in vehicles, as well as generators in wind turbines. This makes NdPr, and Pensana Metals, an interesting play on the growth of electric vehicles and the developing low carbon economy.
Project being fast tracked to production: There are a number of late-stage REE exploration projects being developed, but importantly we believe that Longonjo will be one of the first to market in the near term for a number of reasons; not only because of the quality and size of the orebody and the enviable location close to critical established infrastructure, but also because the initial indications are for a high margin operation and because the proposed NdPr concentrate export strategy avoids the excessive capital cost of downstream processing planned at most other projects.
Our visit has increased our confidence: in the quality of both the resource and the management; in the stability of Angola and the credibility of its officials to see this project progress; and in the real potential of this project to be fast tracked to a profitable operation.