An international non-governmental organisation (NGO) no less than the globally respected Oxfam has blown wide open the fantasy that is London listed Mkango Resources (LON: MKA). In a study that reveals a systematic overestimation of production volumes and underestimation of project costs that distort the true reflection of the industry’s potential. You can read it HERE.
The Oxfam report was presented at the Bingu International Conference Centre (BICC) in Lilongwe on November 16th 2016, following a study that was carried out on Songwe Hill’s potential rare earth elements (REE). As most already know I and the respected City of London financial Journalist Mr Tom Winnifrith, challenged the Company at their Mining Maven rampfest on November 17th. William Dawes (CEO) failed to answer any of the questions which were then subsequently edited out of the presentation video. Much to my dismay and that of many who wanted to hear the answers. I’ve always reported my opinions based upon what I believe to be true and evidence gathered. But when a company deliberately edit out questions that exposes it as a financial basket case then serious questions on market manipulation arise. This report is absolutely damning on Songwe Hill which was touted as a highly promising deposit and a ‘game changer’—the report raised ‘serious’ questions about the economic viability of the project in the absence of major REE price increases. Songwe Hill failed to do a Pre Economic Assessment Study. Now you all know why.
Presenting the report, Oxfam consultant Don Hubert said the analysis of the study carried out on Songwe Hill Rare Earth Elements project in Phalombe, also highlights the risks of commodity price fluctuations and their impact on project viability and potential government revenue streams.
After many set backs and broken promises to locals Mkango now tell us the mine will be open in 2018, however the study disputes this saying the mine subject to financing of $216,000,000 would only be ready in 2020.
The Oxfam report observes that comparative analyses of mining feasibility studies reveal a systematic bias towards overestimating production volumes and project revenue and underestimating timelines and project costs.
The report indicates that revenue forecasts on the mine were certainly inflated, saying even if they were to materialise, an additional $30-50 million per year would not fundamentally change the government’s budget situation.
“Market analysts point to relatively low concentrations of REEs in the Songwe deposit, while Mkango claims that they have a comparative advantage in capital and operating costs,” reads part of the report.
Oxfam further observes that on the optimistic assumption that the project [Songwe Hill] does go ahead, production could not start until at least 2020, given the need for a definitive feasibility study, project financing and then around two years for mine development saying: “Depressed prices make delays likely”.
Mkango are basically financially insolvent. The company have still not released their Q3 accounts which will reveal a gaping financial cavern. Liabilities will be over $1,000,000 with cash in hand UNDER $200,000. Investors should note that we are a few weeks away from the end of Q4. Mkango, as admitted by their advisors to me on 17th November, will have to place and raise cash. This is at total odds to the lies trotted out to gullible investors who were told they would not dilute and place for 18months.