Malawi: The ASX stocks marching to a new beat in the heart of Africa

Africa as a whole may be tarred with the brush of ‘sovereign risk’ when it comes to mining development, but the eyes of investors are turning towards pro-mining jurisdictions where an increase in foreign spending for resource exploration is underway.

Within the span of 30 days between June and July this year, the ASX welcomed three new explorers in Chilwa Minerals (ASX:CHW), NGX (ASX:NGX), and DY6 Metals (ASX:DY6), who together raised in excess of $25.5mn in IPO funds, fast-tracking exploration campaigns targeting rare earths, niobium, nickel, copper, PGEs, mineral sands, and graphite.

The centre of all this investment action? Malawi, a landlocked country in Sub Saharan Africa where it is fondly described as “the warm heart of Africa”, and whose government views mining as one of, if not the main pillar of its economic revival.

According to Lindian Resources (ASX:LIN) managing director Alistair Stephens, the current President Lazarus Chakwera deserves much of the credit for this resurgence with his bold plans to increase the mineral sector’s long-term contribution to GDP from today’s 1pc to 10pc by 2063.

“He is incentivising investors to develop mining, and it coincides with two great discoveries – our Kangankunde rare earths discovery and Sovereign Metals’ rutile project, which are both going to be world class assets,” Stephens told Stockhead.

“These two discoveries form part of the President’s pillar of ATM – Agriculture, Tourism and Mining – and in my opinion, will focus investor attention back on Malawi as a good investment environment from a mining perspective.

“The country has a proactive government, a good Mines Act, and two globally significant world class deposits, which means opportunities.”

Rio invests in graphite-rutile play Sovereign Metals

Last month, mining major Rio Tinto (ASX:RIO) made a third-party endorsement in Sovereign Metals’ (ASX:SVM) Kasiya rutile-graphite project in Malawi when it unveiled a $40.4m investment to become a 15% strategic investor in the company.

Funds will be spent on a definitive feasibility study at the 1.2bn tonne project, further outlining its potential to supply highly sought-after natural rutile and graphite to global markets.

The Government of Malawi publicly applauded the timely investment and marked it as a milestone towards realising the country’s aspirations of growing the mining industry.

But it is junior explorer Globe Metals and Mining (ASX:GBE) that pipped even the majors to be the first company to sign a mining development agreement under the new Mines and Minerals Act in March this year.

NOW READ: Sovereign receives a $40.4m shot in the arm from Rio Tinto

Appetite for discovery

In an interview with Stockhead, GBE’s Grant Hudson said the company’s former managing director Stephens (the current CEO of Lindian Resources) and former executive director – exploration and non-executive director Julian Stephens (the current MD of Sovereign Metals) both played a part in getting the developer to where it is now after nearly 12 years.

“You must remember, Malawi didn’t even have a Ministry of Mining until a few years ago,” he explained.

“Mining was a department of the Ministry of Energy until recently, it just didn’t get the focus that it needed.

“The country also doesn’t have a huge amount of expertise running around because their main mining functions have traditionally been on small coal mines, so when the Kayelekera mine was built around 2006/2007, it was a huge contributor to the GDP.

“Malawi was suddenly sitting on uranium.

“But then of course the uranium price dropped, and in 2014, Paladin Energy had to put it into care and maintenance… there’s still every chance that will revive.”

Since then, more discoveries have been found.

“Lindian has uncovered its 261 million tonne rare earth deposit, Sovereign Minerals has the largest rutile deposit in the world, and both these projects stack up against anything worldwide,” Hudson continued.

“This government has given the mining industry impetus, they have a strong Minister of Mining, Monica Chang’anamuno, who’s a ball of fire.

“They haven’t sat on their hands; this is the third minister they’ve had since 2021 because they are looking for someone that delivers, and she is very good.”

Niobium in Malawi

GBE is progressing development work at its Kanyika niobium project in Malawi, the first new niobium project globally in 50 years, which will produce a pyrochlore mineral concentrate that contains both niobium and tantalum in commercially valuable volumes.

The company plans to ship the material to a refinery for advanced processing into high purity materials.

Both the United States and the European Union have placed niobium on their list of critical minerals supporting climate change, as well as the production of numerous new age technologies like wind turbines, medical imaging, space travel, and ultra-rapid rechargeable batteries for electric vehicles.

Globe received further endorsement for the project with a site visit from Chang’anamuno and the Honourable Ibrahim Matola (Minister of Energy) on June 8 to inspect the progress of Kanyika.

With the execution of the MDA in March, all approvals are now in place allowing Globe to develop the project and provide confidence to third parties looking to participate in the project in terms of financing and off-take.

At the smaller end of town, DY6 Metals (ASX:DY6) recently appointed Lloyd Kaiser as CEO to lead the company’s portfolio of strategic critical minerals projects, including the Machinga HREE-niobium in Malawi.

In July, the company launched into a seven-hole, 840m diamond drilling program to follow up on historical drilling in 2010 that returned assays such as 11m at 1% TREO (including 330ppm Dy) from a down-hole depth of 12m and 5m at 1.5% TREO from 26m.

It has also completed a 200m by 50m soil sampling program over and to the north of known mineralisation at the Machinga North prospect to delineate extensions of mineralisation for follow-up drill testing.

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On the rare earths front

Meanwhile, Lindian (ASX:LIN) is busy at its Kangankunde rare earths project, where it recently reported a maiden resource estimate of 260Mt at an impressive, high-grade of 2.19% total rare earth oxides (TREO).

Speaking with Stockhead, CEO Stephens said the project is at the start of something that will have a greater impact than just a fundamental change on the company as well as the country of Malawi.

“The project has construction capability on the entire rare earth supply chain from China and on downstream processing, which will unleash a tsunami of investment into magnets and enable things like carbon abatement technologies to prosper.”

The resource was established in a little over 10 months, and on just 14,000m of drilling.

It includes 5.7 million tonnes of contained rare earths, with a high percentage of critical metal elements and non-radioactive mineralisation.

Who else is in the hood?

ASX newcomer Chilwa Minerals (ASX:CHW) listed on the ASX in early July with an advanced stage heavy mineral sands project in Malawi, near the border of Mozambique.

The project has an inferred mineral resource estimate (19.4Mt of heavy sands at 4.3%, containing 0.83 Mt THM at a 1% THM cut-off grade) completed concept studies, and key mineralogical and metallurgical test work.

A 6,000m drilling program has been planned for the Mposa Main project area in the third quarter.

NGX (ASX:NGX) is the Sovereign Metals spin-out of its Malawi graphite assets, which SVM said would enable it to focus on its Kasiya rutile project.

The company owns the advanced Malingunde project, which already boasts a measured, indicated and inferred resource of 65Mt at 7.2% total graphitic carbon for 4.68Mt of contained graphite, more than half of that in the higher measured and indicated categories.

They’ll also pick up the Duwi project, just 15km east of the Malawian capital of Lilongwe.