Pensana PLC (OTCMKTS: PNSPF) (FRA: 48W) received a major investment this week. An anonymous buyer purchased 95 million shares for US$100 million.
The neodymium praseodymium (NdPr) miner and processor will use the capital to maintain smooth operations at its vast Longonjo operation in Angola, Africa.
In a London Stock Exchange announcement, chairman Paul Atherley explained that “the funds will be used to sustain Longonjo mine development ahead of the US ban on the use of Chinese-origin rare earth magnets/materials in US weapons systems from 2027,” and “will also be used to provide an alternative source of NdPr for civilian use following the announced 25% tariff on rare earths from China from 2026.”
In addition, the company will pursue a new drilling campaign aimed at extending the life of the mine by identifying new targets, supporting production of heavy rare earth oxides and supporting the company’s future listing on the Nasdaq.
Chinese rare earth materials will soon be banned from all Pentagon weapons systems. The latest national security measures also ban the use of rare earths produced or refined in Russia, Iran and North Korea. Last year’s Pentagon’s Defense Industrial Strategy aims to achieve a fully domestic “mine-to-magnet” supply chain within the next few years.
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The ban will be implemented in stages
The total ban will not begin until 2027. Affected substances include the heavy rare earths samarium, terbium, and dysprosium. These three are essential ingredients for rare earth magnets. Also, tungsten heavy alloys and tantalum-based compounds.
Reducing dependence on China for these heavy rare earths is particularly difficult because the United States currently lacks a national separation facility.
In addition, Pensana is looking to help provide alternative sources for the light rare earths neodymium and praseodymium as new tariffs loom. A 25% U.S. tariff on rare earth imports from China, set to take effect early next year as part of expanded trade measures, will push up costs by 15% to 30% for U.S. manufacturers in defense, electric vehicles and high-tech sectors, as China has a near-monopoly on processing these critical minerals.
While this could accelerate domestic production investment by companies such as MP Materials (NYSE:MP) (FRA:55H0), short-term supply shortages and retaliatory Chinese export restrictions could lead to increased demand for Tesla Inc. (NASDAQ:TSLA), Boeing Co. (NYSE:BA) (ETR:BCO), and Nvidia Inc. (NASDAQ:NVDA) (ETR: NVD).
Longonjo is fully licensed and permitted
From 2027, open pit rare earth operations will enter commercial production. The lifespan will be extended by about 20 years.
Prior to the latest equity financing, Pensana secured US$268 million for project development. Capital was provided earlier this year by African Finance Corporation, Absa Group Ltd. (OTCMKTS: AGRPY) and the Angolan Government Wealth Fund.
The material mined at Longonjo could support the production of more than 10,000 tonnes of rare earth permanent magnets. This is one of the world’s largest rare earth projects. This mine will position Pensana as one of the top international suppliers outside of China. Azary also expects Longonjo to attract attention from offtake partners who want to reduce their dependence on China.
The Angolan Government Wealth Fund holds a 10% stake in the project, which is majority owned by Pensana. Other investors will hold a 6% interest.
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