Pensana Secures Financing for Major Rare Earth Project in Angola

• Pensana has secured financing to begin construction of one of the world's largest undeveloped rare earth projects in Angola, aiming to produce 20,000-40,000 tons of material containing valuable magnet metals like neodymium & praseodymium (NdPr).
• The financing structure includes equity and debt components from three institutions: Angola's sovereign wealth fund (FSDA), Absa Bank (South Africa), and the African Finance Corporation, with a 60% debt to 40% equity ratio.
• Pensana aims to create a non-Chinese rare earth supply chain by producing a mixed rare earth carbonate (MRE) that can be further processed outside China, and is in discussions with potential partners for the crucial separation step.
• The project is expected to begin first production by the end of 2026, with full production in 2027 after a six-month ramp-up period, and the company is already talking about potential expansion.
• Pensana believes it is well-positioned for future growth as it's building during the bottom of the rare earth price cycle, with potential catalyst markets including electric vehicles, wind turbines, and the emerging humanoid robotics industry.

Pensana PLC, chaired by Paul Atherley, has announced a major financing deal that enables the company to commence construction on what is described as "one of the world's largest undeveloped rare earth projects." This development represents a significant milestone for the company, which has spent seven years conducting development studies for the Angola-based Longonjo project. During a recent interview, Atherley elaborated on the financing structure, project timeline, and strategic positioning of Pensana in the global rare earth market, particularly emphasizing their goal of creating a non-Chinese supply chain for these critical minerals.

Project Overview: Scale and Significance

The Longonjo rare earth project in Angola is described by Atherley as "basically a weathered carbonatite" - essentially a volcanic formation that has brought valuable minerals to the surface. According to Atherley, 

“[the company has] drilled it out and [the] top 30 meters contains magnet metal rare earths, neodymium & praseodymium. [The project has] in excess of 100,000 tons of this neodymium praseodymium, making it one of the top three in the world that's undeveloped."

The significance of the project's scale becomes apparent when Atherley positions it among industry leaders: 

"We're going to 20,000 tons initially and going up to 40,000 tons, which make us in the same range as Lynas and MP, so puts us right up into the top drawer." 

This scale is critical for establishing Pensana as a major player in the rare earth market. The project benefits from favorable geology, with Atherley noting it has an "incredibly low strip ratio like 0.2 waste to one of ore," indicating efficient mining potential with minimal waste material to process.

Financing Structure: A Complex But Secured Package

Perhaps the most significant announcement is the securing of financing, which Atherley describes as a considerable achievement given that "the equity markets [are] closed" and rare earth prices are "at the bottom of the rare earth price cycle." The financing package includes three key institutions:

1. FSDA (Angola's sovereign wealth fund): Described by Atherley as their "major shareholder" who has "backed us all the way through"
2. Absa Bank: A commercial bank from South Africa that has "made a move into Angola"
3. African Finance Corporation: Also making strategic investments in Angola

The financing structure consists of "roughly 60% debt, 40% equity spread across the three" institutions. Atherley explains the implementation sequence: 

"We'll look to draw down the equity first, start building, and then the debt piece gets put in place when the equity has been spent."

While the equity component appears ready to be drawn down "in the next couple of weeks," the debt component requires "detailed documentation" with "6 to 9 months to put that in place." Atherley expresses confidence that they can "draw down the equity straight away and keep drawing it down" while working to complete the "conditions precedent for the debt."

Strategic Positioning: Beyond Mine-Gate Sales

A key strategic element of Pensana's approach is to move beyond simply mining and exporting raw materials to China. Atherley articulates this distinction clearly: 

"The issue is, do you mine your product and sell at the mine gates and basically dig and ship to China, which has all the mid-stream processing, or do you start to go downstream?"

Pensana has chosen the latter approach, designing their project 

"To go all the way down to produce a mixed rare earth carbonate, which is a midstream product, which can then be sent to - doesn't necessarily have to go to China -  somewhere else to be turned into an oxide and ultimately a metal."

This positioning is significant because, according to Atherley, "We produce a super clean mix carbonate, and they are what customers want." The company has already engaged with potential customers, including Japanese groups, as they work toward creating "an independent non-Chinese global supply chain of rare earths."

Interview with Pensana Plc Chairman, Paul Atherley

Technical Challenges and Validation

Developing a rare earth project presents unique technical challenges, particularly in processing. Atherley explains that 

"Every step has to be pilot tested...to a point where you can produce a product that's satisfactory for the next step in the process."

The company has addressed these challenges by sending "four container loads of material from Longonjo" to laboratories in Western Australia where they "ran the process through those laboratories and sent it off to customers for validation." This testing at kilogram scale has given Pensana confidence that their product is "very sought after" and "very welcome" in the market.

The technical validation process involved both flotation and processing steps. As Atherley explains, 

"We have to metallurgically domain the ore because each of the different types of ores and combination of ores responds differently, and then secondly, we have to put it through a process route that gets us to this mixed rare earth carbonate."

Timeline and Ownership Structure

Pensana is now "mobilizing" with "engineers running around organizing people to arrive on site" and expects to draw down the first equity component "in the next few weeks." The timeline for project completion is "end of 2026" for "first production," followed by a "commissioning period" and a "targeted six-month ramp-up period," with "full production" expected "well into 2027."

Regarding ownership, Atherley outlines how the financing will affect Pensana's stake in the project. Starting from "84% ownership," their "preferred option" would result in dilution "to 70% ownership." This scenario would require them to "refinance about $18 million worth of...mezzanine finance" sometime "between now and 2030." If they choose not to refinance that component, it would convert and further dilute their ownership "down to an expected 52%."

Creating a Non-Chinese Supply Chain

A recurring theme in Atherley's discussion is the ambition to create a rare earth supply chain independent from China. The challenge lies particularly in the separation step, which Atherley describes as "the tricky one...the hard one" involving "sort of 27 steps" that essentially constitute "a chemistry set that requires a lot of experience."

"Most of that capacity...is currently in China. [we are] in discussions with parties who have got separation capacity ex-China [which would be] a very very important step if we were able to do that to create the non-Chinese supply chain."

Despite the challenges, Atherley conveys confidence in their position: 

"We're very popular at the moment because you know we're the only ones who [are] financed, we're the only ones - one of the very few that's in construction." 

Their ability to secure off- take agreements appears tied to their financing success, with Atherley stating, "It's the one that gets the finance that gets the off-take."

Market Outlook and Growth Potential

Atherley positions Pensana favorably despite current market conditions, noting they are:

"Building a project at the bottom of the rare earth price cycle, fully funded at the asset level, with the equity market closed. [He expects that] when rare earth prices take off, we will see that reward."

To illustrate the potential upside, Atherley draws a comparison to Boss Uranium, which reportedly went "from a company market cap...less than 100 million Aussie to two billion" Aussie dollars. He contrasts Pensana's current market capitalization of "100 million US" with their "nearest rival at the scale we're going at...Lynas, which is 4 billion."

Looking to future demand drivers, Atherley highlights not just established markets like electric vehicles and wind turbines, but also emerging technologies: 

"What's happening in China right now...is humanoid robots. Remember, you heard it from me first, but you and me are going to be the last generation that grow up without humanoid robots in our household, and they're all full of permanent magnets."

The Investment Thesis for Pensana PLC

• Rare Earth Market Position: Developing one of the world's top three undeveloped rare earth projects with over 100,000 tons of valuable neodymium and praseodymium.
• Scale Advantage: Plans to process 20,000 tons initially, scaling to 40,000 tons, putting Pensana in the same league as industry leaders Lynas and MP Materials.
• Financing Secured: Rare achievement of securing financing at the bottom of the rare earth price cycle when equity markets are largely closed to the sector.
• Strategic Production: Producing mixed rare earth carbonate (MRE) rather than just raw ore, adding value and enabling non-Chinese supply chain development.
• Significant Upside Potential: Current $100 million market cap compared to Lynas at $4 billion, offering substantial growth potential when rare earth prices recover.
• Timeline to Production: Construction beginning now with first production targeted for end of 2026 and full production in 2027.
• Expanding End Markets: Beyond established EV and wind turbine markets, emerging sectors like humanoid robotics will drive increased demand for rare earth magnets.

Macro Thematic Analysis:

The global push to secure critical minerals outside of Chinese control represents a fundamental shift in strategic resource planning for Western economies. Rare earths, essential for electric vehicles, wind turbines, and advanced electronics, have become a focus of national security concerns due to China's dominance in processing and production.

Paul Atherley highlights this shift when discussing U.S. initiatives: 

"There is some great work being done by Exim... they have just announced a strategic critical minerals resource initiative... it's to realign supply chains to the US." 

This represents what he calls "almost friendly fire for Europe" as nations compete to secure these strategic resources. The macro trend extends beyond current applications to emerging technologies that will dramatically increase demand. 

This vision of an "electric future based on electromagnetics" underscores why rare earth projects with Western-friendly jurisdictions and ambitions to create non-Chinese supply chains are attracting increasing attention from both government and commercial entities.

"It's an electric future based on electromagnetics and we will be a producer going into that rising thematic."