LONDON: Altona Energy has entered into a Memorandum of Understanding (MoU) with mining consultancy company, Akatswiri Mineral Resources, to acquire a majority stake in a rare earth mining project in the Chambe Basin, Mulanje in Southern Malawi.

Akatswiri is currently the 100% owner of Akatswiri Rare Earths Pvt Ltd, a Malawi registered company, which has applied for Exploration licence APL 0153 – the Chambe Rare Earth Project. It is expected that the licence will be granted in June, following government final approval.

The terms of the MoU state Altona will initially acquire a 51% holding in ARE, rising to 75% on certain project milestones being met. Akatswiri will remain a 25% shareholder. The consideration for the transaction will be Altona Energy ordinary shares.

Chambe is a large, ionic adsorption clay-hosted Rare Earth Elements (REE) project bearing appreciable quantities of critical heavy and light REEs, particularly Ytterbium, Dysprosium, Yttrium, Neodymium and Praseodymium. Extensive exploration work has been carried out on the site since September 2010, confirming the presence of mineralised Rare Earth Oxide clays, similar to many of the larger REE mines in China. The benefits of extracting REE from ionic clay deposits include lower operating and capital costs, as well as shorter times for development.

The expansion of new energy sectors and increases in the demand for electric vehicles is driving demand for neodymium, praseodymium and other “technology” metals which are used in permanent magnets, a key component in electric vehicle manufacturing. It has been widely reported that many companies are looking for alternative REE supplies outside China, which has controlled the supply for the past several years.

Christian Taylor-Wilkinson, Interim CEO of Altona, commented, “Although still at an early stage, we are in active discussions with Akatswiri’s highly experienced team, led by Hilton Banda. We are looking to commence our due diligence in June which we hope will quickly lead to a binding agreement. We are also speaking with a number of parties to work with us through the acquisition and fund the subsequent mining project.”

Hilton Banda, CEO of Akatswiri, commented, “We are happy to work with Altona Energy Plc as our partners in developing the Chambe Rare Earths Project. Working with Altona gives us confidence that we will secure the funding necessary to develop Chambe as a strategic and sustainable producer of rare earths. The project has already received support from Government, local communities and key stakeholders, through our active engagement and involvement with local communities over the past three years.”

Both the Company and Akatswiri have commenced due diligence to examine the feasibility of the acquisition of ARE by Altona. However, until a formal agreement has been signed, the deal is conditional, and not binding on either the Company or Akatswiri. There can be no guarantee that the discussions in respect of the MoU signed with Akatswiri will be successful, however, the Board believes that this is a positive step towards the Company’s goal of acquiring a majority investment in a viable mining project.

The due diligence process is expected to take up to three months to complete and is dependent upon certain factors, including Akatswiri providing an up to date geological report which it expects to gain access to in due course. The report, it is understood, will form the key components of a Competent Persons Report (CPR), which the Company believes will be required ahead of a fund raise, which is a necessary element of the project’s success.