Reenova Investment Holding has made a formal application for a full mining licence for a rare earth concession in Madagascar in which it owns 75%.
The company, for years, has been trying to advance from the exploratory stage for this project, which covers an area of 238 sq km some 500km north of Madagascar’s capital, Antananarivo
“We are committed to bring this rare earth project beyond the initial exploration phase to realise its potential and unlock value,” says Reenova’s executive chairman Chen Tong.
“The receipt of the full mining licence for the rare earth project will be a crucial milestone for the group, to bring forth stable and sustainable earnings for our shareholders in the long term,” he adds.
Separately, Reenova had on Aug 26 appointed UOB Kay Hian to help raise net proceeds of up to $2.84 million, to help fund the project. The funds will be raised by placing out new shares of up to 20% of what Reenova has now.
Rare earth elements of various kinds, such as Praseodymium (Pr), Neodymium (Nd), Terbium (Tb), Europium (Eu), and Dysprosium (Dy) can be found in this project. These elements are needed in many electronics applications.
Two previous valuation reports, commissioned by Reenova’s previous management, put the value of the asset at more than US$1 billion, drawing intense scrutiny from the regulators.
According to a more sober independent valuation report issued by Behre Dolbear Australia in Sep 2018, the preferred value of this project was subsequently revised down to US$44.5 million ($61.7 million).
Drawing reference from data compiled by the Association of China Rare Earth Industry, Reenova estimates that it can sell its produce at between US$21,000 and US$22,490 per tonne. The project has an estimated resource of 560,000 tonnes.
Shares of Reenova, which has been languishing at between 0.2 and 0.3 cents for years, hit as high as 0.4 cents earlier this morning.
