Chilwa Minerals to list on ASX, advance historic Lake Chilwa heavy mineral sands and rare earths project

Development of the historic Lake Chilwa heavy minerals sands and rare earths project in southern Malawi, East Africa, is the priority for Chilwa Minerals (ASX: CHW) when it makes its debut today on the Australian Stock Exchange.

The Perth-based junior recently launched an initial public offering (IPO) which has raised $8 million through the issue of 40 million shares at $0.20 each.

Sequoia Corporate Finance was appointed lead manager to the offer.

The proceeds be used to run a two-year $4.5 million exploration program at Lake Chilwa targeting an advanced and high-value mineral assemblage which includes ilmenite and zircon as well as rare earth elements monazite and xenotime.

A 17,000-metre sonic drilling program has been set for the next 12 months with a view to delineating a high-grade, economic deposit with potential to be developed into an export operation which produces a magnetic and non-magnetic concentrate.

Chilwa said testing the mineralisation at a greater depth would be a priority as only 64 of the 1,600 holes historically drilled were deeper than 12m, providing a near-term opportunity to increase the existing resource at depth.

Project acquisition

As part of the ASX listing, Chilwa has acquired the Lake Chilwa project from Mota-Engil Investments (Malawi) Limited for an upfront consideration of 19 million shares which will be issued to Luso Global Mining

Both Luso and Mota-Engil Investments (Malawi) form part of Portuguese multinational company Mota-Engil Group (Mota) which has operations in 28 countries focused on construction and infrastructure management in sectors including mining and energy.

Importantly, Mota has been operating in Malawi for 25 years and has 400 staff in country, providing key relationships in both the government and corporate sectors.

Previous exploration at Lake Chilwa by Mota identified the Halala/Namanja, Mposa, Bimbi and Mpyupyu deposits within an initial 407sqkm licence area.

Additionally, an unexplored extension to the south and a new area of Chilwa Island was identified and granted in 2022 covering a further 471.7sqkm, more than doubling the size of the tenements.

At listing, ME Group will hold 30.6% (equating to 20.6 million shares) of Chilwa Minerals and a further 18.75 million performance rights which will vest upon the achievement of project milestones which include the announcement of a 3 million tonne indicated total heavy mineral resource, the completion of pre-feasibility and bankable feasibility studies, and a formal decision to mine.

ME Group’s holding is escrowed as to 50% for the mandatory 2-year period, with the remaining 50% voluntarily escrowed for an additional 12 months (3 years total).

More advanced stage

Chilwa Minerals said approximately $7.4 million had been spent on exploration at Lake Chilwa to date, enabling the company to be at a more advanced stage than a typical junior explorer when it hits the ground running.

Drilling is planned to commence around mid-July. This includes an existing JORC inferred resource and a scoping study already having been completed.

Post-listing, Chilwa Minerals will roll-out its own exploration program starting with sonic core drilling focused on increasing the size of Lake Chilwa’s inferred mineral resource which sits at 2.4 million tonnes total heavy minerals at a 1% cut-off.

The use of a sonic rig is expected to yield higher recoveries and assist in determining where the bedrock sits within the deposits. This amount of drilling is possible due to the ME Group’s recent purchase of a sonic drill rig.

This equipment is available for Chilwa to use at an agreed rate of US$60/m which is significantly less than independent quotes received by the company of ~US$200/m.

Additional mineralisation

Exploration will also target the licence extension area to the southwest and south, where additional mineralisation may exist.

Drilling and aero-magnetic surveying is expected to commence within two weeks of listing on the ASX with initial results being reported within three months.

As part of the ongoing exploration program, Chilwa said the economic viability of concentrating and extracting the rare earths-bearing minerals will be investigated.

Proximity to existing activity

Lake Chilwa is located in a mineral-rich region where companies like Lindian Resources (ASX: LIN) and Sovereign Metals (ASX: SVM) currently operate.

In May, Lindian announced the highest-grade rare earth assays received to date (up to 15.8% total rare earth oxides) from its Kangunkunde project, 60 kilometres to the west of Lake Chilwa.