Lindian Resources has signed a non-binding term sheet with Gerald Group for a proposed $50m funding and offtake package to support the development of the Kangankunde rare earths project in Malawi.
The funding package will be a combination of equity, convertible instruments, and prepayment loan facilities. These funds will partially be repaid through the supply of monazite concentrate from the Kangankunde project under an offtake agreement with Gerald.
The proposed package will primarily finance capital expenditure (capex) for the rare earths project’s first phase. This is estimated at $40m, according to the feasibility study (FS) completed in June 2024.
In addition, the funds will support operational expenditure, including the creation of an initial run-of-mine stockpile.
As part of the agreement, Gerald is expected to receive full offtake rights for the monazite concentrate produced during phase 1 and partial offtake rights for phase 2.
Upon the activation of the first funding tranche, Gerald will gain the right to nominate directors to Lindian Resources’ Malawi subsidiaries and its board.
Negotiations to finalise binding terms and the completion of Gerald’s due diligence process are currently ongoing.
Lindian Resources CEO Alwyn Vorster said: “We are pleased that a globally recognised metals trading group, Gerald Metals, is working with Lindian towards accelerating the development of the world class Kangankunde Rare Earths Project.
“The proposed funding facility and offtake agreement for monazite concentrate will be key enablers to advance Kangankunde’s construction activities in the first half of 2025. We look forward to working with Gerald to expedite the finalisation of the binding arrangements as quickly as possible.”
Located 90km north of Blantyre, the Kangankunde rare earths project has a total indicated and inferred mineral resource of 261Mt.
The FS outlines a post-tax net present value (NPV) of $555m and an internal rate of return (IRR) of 80%, with a payback period of a minimum of two years.
Phase 1 of the Kangankunde rare earths project aims to produce an average of 15,300 tonnes per annum of premium monazite concentrate, generating an average annual earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $84m.
