Globe Metals & Mining Ltd (ASX:GBE) says the Kanyika Niobium Project has made a ‘material leap forward’ in terms of its capital cost and funding strategy.
The company's recently completed optimisation study for the project in central Malawi, which is secured by a large-scale mining licence, underscores key financial metrics and a refined development approach.
Project execution is anticipated to kick off by the end of 2024, with construction starting in early 2025.
The plan is to produce a pyrochlore mineral concentrate containing niobium and tantalum for advanced processing.
Drilling programs have defined the mineralisation, resulting in significant improvements in the process flowsheet.
Project risk lowered
The optimisation study, wrapped up on February 5, points to a pre-tax Net Present Value (NPV) of US$1.004 billion and an Internal Rate of Return (IRR) of 47.08%.
The unit cost of niobium pentoxide has decreased by 15% to US$18.90 per kilogram, boosting the gross profit margin to 71%.
Kanyika boasts a 27-year mine life with a two-phase development strategy adopted, reducing initial capital expenditure from US$70 million to US$46 million and lowering project risk in the process.
The total capital funding requirement for Phase 1 has been finalised at US$46 million, inclusive of a 25% contingency allocation.
The Phase 1 development plan is confirmed, outlining a clear path to project construction.
Funding strategy in place
Globe has also formulated a comprehensive funding strategy to support the project while minimising shareholder dilution.
The funding plan includes around US$8 million from strategic equity funders, US$15 million in project debt, US$9 million via convertible instruments and US$14 million from offtake pre-financing.
“It is fantastic to see how well our Kanyika Project has been received by the Government of Malawi, shareholders and funding institutions,” CEO Paul Smith said.
“Our project has taken a material leap forward in its journey into development and eventually production.”
Mostly on schedule
Phase 1 development for the project is progressing mostly on schedule, with minor delays due to the refinery relocation to Malawi.
The environmental and social impact assessment (ESIA) and associated incentives are expected to be finalised shortly. Globe's metallurgical test work for the Chlorination Refinery is advancing as planned, successfully passing laboratory tests.
The pilot-scale refinery will produce marketing samples to support ongoing offtake agreement discussions.
Following the pilot refinery phase, Globe will update its feasibility study to include the construction of the chlorination refinery in Malawi.