DY6 Metals: Tapping into Malawi’s underexplored rare-earths potential
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China may have a firm grip on the rare earths market, but a remote corner of southeastern Africa has been catching the eyes of geologists, investors, and ASX companies looking to play a part in diversifying the world’s critical mineral supply.
The scramble for rare earths is back on the global agenda as economies look to counter a growing reliance on rare earth mining, refining, and manufacturing from one of the world’s biggest superpowers.
Australia, Canada, and Africa have long been known to hold vast quantities of rare earth elements (a group of 17 metallic elements important in the production of many modern technologies) but renewed interest in the latter comes as international mining companies move closer to commercialisation.
Canadian mineral explorer Mkango Resources secured an Environmental Social Health Impact Assessment (ESHIA) approval for its Songwe Hill rare earths project in the Phalombe district of Malawi in January, which puts the company on track to securing a mining licence.
Once production kicks off in 2025, Songwe Hill will be the first commercial rare earth project in Sub-Saharan Africa.
Lindian Resources (ASX:LIN) grabbed a slice of the rare earth pie when it nabbed a deal to acquire the globally significant Kangankunde REE project in southern Malawi for US$30 million in August 2022.
The company recently secured $9m in funding via a share placement for the construction of a rare earths concentrate processing facility at the site and has been hosting several interested parties from the industry with a view to seal offtake agreements and further funding down the line.
But as well as attracting advanced players, the rare earths hunt is also pulling in newer ventures to the landlocked country, such as DY6 Metals which is set to list on the ASX in June.
DY6 Metals non-executive chairman, Dan Smith, says Malawi holds promise as a potential REE hub given the cluster of high-grade rare earth projects already in the region, the stable political environment, government support, and infrastructure.
“It’s a jurisdiction where there’s a push for foreign investment and we’ve seen that with a number of our peers operating in the country,” he says.
“Sovereign Metals – owner of one of the largest rutile projects in the world – has been operating in the region for many years and has been able to attract capital outside of Australia and the UK,” he says.
“Our peers have been able to advance their projects with permitting in a way that gives us comfort.
“For ease of doing business Malawi is English-speaking, and in terms of resource potential it has some of the highest-grade carbonatite deposits in the world, though the region is still very much underexplored,” Smith adds.
“There’s potential for us and other players to identify further project opportunities in the country.”
The company’s flagship project, Machinga, is only 40km east-southeast of Lindian’s Kangankunde project, with the major Lilongwe-Zomba highway running through.
Although the Southern Malawi alkaline province is known to host a range of light and heavy rare earth (HRE) projects, the very high ratio of HRE TREO results at Machinga – with peak values of 39% – in conjunction with high ratios of DY2O3 with an average of 3.3%, sets the project apart from the rest.
Smith says the company is hoping to get on the ground soon after listing to kick off a ~5000m RC and diamond drilling campaign to follow up targets drilled by prior owner, Globe Metals and Mining (ASX:GBE), in 2011/2012.
“A 2010 trenching program pulled up some nice numbers including 7m at 1.26% TREO and 33m at 0.71% TREO so we will follow up those areas and extend the drilling program along strike from the north and south to see how far we can chase that mineralisation,” he explains.
While the main focus for DY6 will be on Machinga’s rare earth potential, another virgin REE project lies in its wings.
Salambidwe has had limited exploration and represents a low cost, high upside exploration opportunity for DY6.
Forming part of the Chilwa alkaline suite of southern Malawi, which hosts the Kangankunde Deposit (2.5Mt at 4.2% TREO), Machinga REE Project and numerous other REE prospects, Smith says the project is more of a greenfields opportunity.
The company will conduct various exploration activities such as radiometrics, mapping and soil and rock chip sampling which DY6 Metals plans to work up progressively alongside Machinga.
The Ngala PGE-copper-nickel project has also received no significant modern exploration, including no electromagnetics to target high-grade massive sulphides.
But given its location, within close proximity to the Nacola rail/port corridor and grid power, the project could benefit in the future from access to supporting infrastructure with a pit to port solution for exporting products to global markets.
With $2.5m secured from two Hong Kong-based cornerstone investors – Zhenshi Group and Zhung Nam New Material Company – DY6 Metals is looking to raise up to $7m at $0.20 per share by the time the offer closes in early June.
“We were able to negotiate a great deal with the vendor of the projects and come on with a relatively low enterprise value of $3.4 million compared to our peers,” Smith adds.
“Outside of Australia, China and Brazil, Africa is really the place to be for these types of rare earth projects and we can’t wait to get on the ground and start exploring.”
This article was developed in collaboration with DY6 Metals, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.