Lindian Resources has added another layer of cost certainty to the company’s giant Kangankunde rare earths project in Malawi, locking in diesel pricing as it pushes through construction and commissioning ahead of first production and cash flow later in the year.
The company says it has secured a 12-month fixed-price diesel supply agreement with local operator Petroda Malawi for 500,000 litres priced at US$2.83 (A$3.96) per litre, structured in two 250,000-litre tranches.
Lindian says the first tranche has already been delivered to site, enabling a ready fuel supply during construction and commissioning without incurring storage headaches.
With a combination of fuel markets and interest rates still keeping miners on their toes, Lindian reckons the prepaid, fixed-price arrangement removes exposure to further price resets and, together with two months of on-site inventory, secures uninterrupted coverage through mining start-up and commissioning.
Even better, Kangankunde’s low three-megawatt power requirement is set to be met by existing grid power infrastructure, meaning the site does not require dedicated on-site generators and will have significantly lower fuel burn.
The fuel deal builds on a busy month for Lindian at Kangankunde. Early April saw the company complete an oversubscribed A$100 million institutional placement at 75 cents a share.
Lindian Resources executive director Zac Komur said: “This agreement removes a key input cost risk during construction and mining start-up and reinforces Kangankunde’s structural cost advantage. Locking in fuel pricing ahead of volatility provides certainty as we move toward first production and reflects the team’s disciplined approach to cost control and execution.”
According to management, the fresh funding has put stage-one mining and processing on a debt-free footing while also helping to advance its stage-two expansion workstreams and the company’s downstream Sareco mixed rare-earth carbonite (MREC) processing facility in Kazakhstan.
The MREC facility was previously operated by a joint venture (JV) between Japanese company Sumitomo Corporation and Kazakh national operator Kazatomprom. It will now be jointly operated by Lindian, with a 51 per cent interest and its in-country joint venture partner RA-Group, with a 49 per cent interest.
In late March, Lindian also flagged its Tipume accommodation camp was operational at the site, clearing a key bottleneck for its workforce mobilisation as construction ramps up.
With the project’s key inputs falling into place, Lindian says construction remains on schedule, clearing a path for a cleaner run through the business end of the build.
If the company can keep ticking off the logistics like this, and with its fuel supply secured for the foreseeable future, Lindian’s march toward first production from Kangankunde in Q4 looks set to continue its momentum.
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By Doug Bright
