PRE Pensana Plc

 
TIDMPRE 
 
31 October 2023 
 
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION 
 
Pensana Plc ("Pensana" or the "Company") 
 
Update on Finance for the Longonjo and Saltend Projects 
 
The Company is pleased to provide the following update on the financing of both 
the Longonjo and Saltend projects. 
 
Highlights 
 
  · The engineering team has successfully completed a modular redesign of the 
Longonjo mine and processing facility, with a total Capex of US$200 million. 
  · The technical and economic due diligence review of the redesign by South 
African mining consultants, The Mineral Corporation, on behalf of ABSA Bank, is 
scheduled for completion in November. 
  · ABSA which has been mandated as the lead arranger for a US$120 million loan 
facility has provided high level commercial debt terms which include South 
African export credit agency support. 
  · FSDEA and a pan-African Multilateral Development Financial Institution are 
working to provide the US$80 million equity investment required to support the 
debt facility. 
  · FSDEA has provided a $15 million bridging loan facility towards the US$80 
million investment, which is available to meet operating cash flow requirements 
to facilitate early-stage development and the route to main finance. 
  · The Company is aiming to fully-fund the Longonjo project at the subsidiary 
level, Ozango Minerais(84% Pensana),which owns 100% of the Longonjo project and 
as a result the Company's holding in Ozango Minerais is expected to reduce from 
84% to 64% at a read-through valuation of 66 pence per share. 
  · An updated MIC is currently being worked on, which could potentially include 
various additional tax incentives as a result of amendments to the private 
investment legislation in Angola, including a reduction in the rate and deferral 
in the payment of Corporate Income Tax rate along with a reduction in the tax 
applicable to the distribution of profits and dividends. 
  · The Company is in advanced discussion with a number of parties for the 
offtake of the highly marketable, radionuclide-free mixed rare earth carbonate 
(MREC) and expects to be in a position to sign up to 100% of the production of 
the high value, clean MREC from the Longonjo Processing facility. 
  · The proposed funding arrangements for the Saltend rare earth separation 
facility remain largely as previously advised, with ABG Sundal Collier recently 
confirming that it will place a bond for circa US$150 million and are 
independent of the Longonjo financing. 
  · The Company is in early discussions with the UKIB and with other potential 
equity partners for the balance of the funding, namely circa US$100 million 
equity requirement at the subsidiary level and has received a UK Government 
grant of up to £4,000,000 towards the funding requirement. 
 
Paul Atherley Chairman commented: "The completion of the engineering redesign 
together with the technical and economic sign off by The Mineral Corporation 
during November is a very important step towards the execution of the financing. 
 
We are grateful for the ongoing support from FSDEA which is working closely with 
us and the team at ABSA to secure the funding to allow the commencement of 
construction at Longonjo in the first quarter of next year. 
 
We have been pleased with the strong interest in the high value radionuclide 
-free MREC product from Longonjo and are advancing a number of offtake 
agreements as part of the financing. 
 
We continue to progress the financing for the Saltend project which will be 
independent of the Longonjo financing and as previously advised will be a bond 
finance, however now with support from the UK Government." 
 
Longonjo 
 
The engineering team has successfully completed a modular redesign of the 
processing facility, with a total Capex of US$200 million. 
 
The redesign has been led by Project Manager Kevin Botha working with a team of 
contractors including ADP, part of Lycopodium group and specialist in modular 
minerals processing unit installation, with extensive experience in Angola, 
ProProcess a hydrometallurgical specialist with extensive expertise in modular 
processing plants throughout Africa and mining consultant Practara which has 
completed the detailed mine redesign and scheduling. 
 
South African mining consultants, The Mineral Corporation, is undertaking a 
technical and economic review of the redesign on behalf of ABSA, which is 
scheduled to be completed in November. 
 
As previously announced ABSA Bank, the South African based multinational banking 
and financial services conglomerate has been mandated as the lead arranger for a 
US$120 million loan facility. 
 
ABSA which has existing exposure to Angola's oil and gas sector and is looking 
to expand its interest in the country has identified the Longonjo project as an 
opportunity to gain exposure to the green energy sector. 
 
High level commercial debt terms have been drafted which include South African 
export credit agency support. These terms are expected to be finalised once the 
sign off from independent consultants The Minerals Corporation has been 
received. 
 
The Company continues to work closely with major shareholder, the Angola 
Sovereign Wealth Fund FSDEA. FSDEA is working with a pan-African Multilateral 
Development Financial Institution to provide the US$80 million equity investment 
required to support the debt facility. 
 
FSDEA has provided a $15 million bridging loan facility towards the US$80 
million investment, which is available to meet operating cash flow requirements 
to facilitate early-stage development and route to main finance. 
 
The Company is aiming to fully-fund the Longonjo project at the subsidiary level 
Ozango Minerais(84% PRE)which owns 100% of the Longonjo project. 
 
It is intended that the US$80 million equitywill be invested 
attheOzangoMineraislevel by FSDEA andan African multilateralagency and as a 
result Pensana's holding in Ozango Minerais will reduce from 84% to 64% at a 
read-through valuation of 66 p per share at the Pensana level. 
 
The valuation has been based on the independent third-party valuation prepared 
in March of this year at the time of the proposed US$220 million strategic 
equity investment by a multinational mining company. 
 
Further tax incentives 
 
The current Fiscal Terms currently in place under the Mining Investment Contract 
(MIC) include: 
 
·         2% royalty on revenue; 
 
·         20% Corporate Income Tax rate and a 5% municipal tax on taxable net 
profits following an initial six-year tax holiday; 
 
·         Custom duties exemption on imported equipment; 
 
·         Full 5-year capital repayment allowance; 
 
·         Dividend tax exemption for 3 years. 
 
An updated MIC is currently being worked on, which is potentially expected to 
include various additional tax incentives as a result of amendments to the 
private investment legislation in Angola most notably: 
 
·         Reduction in the Corporate Income Tax rate, applicable for a period of 
up to fifteen years; 
 
·         Deferral of the payment of taxes for a period of up to six years; 
 
·         Investment Tax reduction applicable to the distribution of profits and 
dividends, for a period of fifteen years; 
 
·         An Investment premium (uplift) corresponding to the cost recoverable 
and tax deductible in terms of the investment to be made for mining and product 
marketing. 
 
Offtake 
 
The global market for radionuclide-free mixed rare earth carbonate (MREC) is 
increasing. Demand from the rest of the world ex China is increasing due to the 
expansion plans of existing downstream facilities in Europe, India and Asia and 
the establishment of new separation capacity in the US and Australia. 
 
To meet this increased demand the Company is in advanced discussion with a 
number of parties for the offtake of the highly marketable, radionuclide-free 
mixed rare earth carbonate (MREC) and has signed letters of intent for up to 
100% of the Longonjo offtake. 
 
Site based activities 
 
Approximately 25% of the US$15 million FSDEA loan has been deployed over the 
past three months on the following site-based activities: 
 
  · the continuation of onsite activities with earthworks contractors Grupo Nov 
and electrical contractor, Elektra in preparation of commencement of main 
construction; 
 
  · finalization of the preferred vendor re-pricing for the revised equipment 
schedule; 
 
  · finalization of redesign of the monthly mine schedule and Run-of-Mine 
blending strategy for years 1-5 to meet the redesign throughput rates; 
 
  · finalization of the optimized Tailings Storage Facility re-design; 
 
  · finalization of execution of the Livelihood Restoration Programme with the 
local community under the Relocation Action Plan. 
 
Saltend Update 
 
Whilst the immediate focus is on the financing of the Longonjo project, progress 
continues with the financing for the Saltend rare earth separation facility. 
Rather than financing both projects contemporaneously as previously proposed the 
Saltend financing will follow the Longonjo financing. The financings are 
independent of each other with no financier in common between the two projects. 
 
The capital cost for the Saltend facility has been revised up to US$250 million 
from the previous estimate of US$195 million in May 2022. The increase in the 
estimate is primarily due to the impact of inflation and a number of design 
changes. 
 
The engineering design has been completed, the site cleared, the preparatory 
infrastructure works completed and the early-works contractors identified. The 
project is ready to commence construction once the finance has been arranged. 
 
The proposed funding arrangements remain largely as previously advised, with ABG 
Sundal Collier recently confirming that it will place a bond for circa US$150 
million with its institutional investor clients for which the Company has 
received green bond accreditation by Shades of Green (formerly part of CICERO, 

now a part of S&P Global). 
 
The Company is in early discussions with UKIB and with other potential equity 
partners for the balance of the funding, namely circa US$ 100 million equity 
requirement. 
 
As with the Longonjo financing, it is intended to finance the Saltend project at 
the subsidiary level as a stand-alone business with its own feedstock and 
offtake arrangements rather than at the Pensana corporate level. 
 
To this end and as previously announced Pensana has entered into an MOU with 
offtake partners for 30% of the Saltend NdPr oxide production. These 
arrangements recognize that Longonjo will initially be producing MREC and allow 
for the ability to convert MREC offtake to oxide offtake in the future. The 
Company is also in direct discussions with OEM's in the automotive and wind 
sectors including Siemens, JLR, Volvo, Mercedes, GE and tier 1 suppliers to the 
automotive sectors. 
 
UK Government Support 
 
By 2030 the UK is expected to transition from a being a major producer of 
internal combustion engines to a world leader in electricdrive units (EDUs), 
producing three million EDUs annually, with a large proportion for export. 
Without a secure magnet metal supply chain this is under threat. 
 
As recently announced Nusrat Ghani, Minister of State at the Department for 
Business and Trade and Cabinet Office, highlighted that the Saltend project 
would be an important step in supporting the UK automotive industry which 
employs 780,000 people and has offered the Company a Grant of up to £4,000,000 
towards the funding required to build a rare earth oxide separation facility in 
the `Humber Freeport' at Saltend. 
 
Pensana has been nominated by the UK Government as a partner under the Minerals 
Security Partnership (MSP) between the US and its international allies. 
 
The information contained within this announcement is considered by the Company 
to constitute inside information as stipulated under the Market Abuse 
Regulations (EU) No.596/2014. Upon the publication of this announcement via a 
Regulatory Information Service, this inside information will be considered to be 
in the public domain. The person responsible for arranging for the release of 
this announcement on behalf of the Company is Paul Atherley, Chairman. 
 
- ENDS - 
 
For further information, please contact: Shareholder/analyst enquiries: 
 
Pensana Plc 
 
Paul Atherley, Chairman 
 
IR@pensana.co.uk 
 
Tim George, Chief Executive Officer 
 
Rob Kaplan, Chief Financial Officer 
 
 
This information was brought to you by Cision http://news.cision.com 
 
 
END 
 
 

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