Mkango Resources has entered into a nonbinding heads of terms agreement with MetalNRG, which will earn up to a 75% interest in the Thambani prospecting licence, in Malawi, by spending up to $2-million on exploration. 

The parties expect to enter into a binding definitive agreement on or before June 30.

Under the terms of the agreement, MetalNRG will be required to spend $500 000 on exploration within the Thambani licence within 12 months of the date of the definitive agreement being concluded. This will include a drilling programme of about 1 500 m.

The details of this initial workplan will be determined in conjunction with Mkango.

The completion of this initial workplan will entitle MetalNRG to a 25% economic interest in the Thambani licence, with such interest limited to uranium only.

After the completion of the initial workplan, MetalNRG may elect to further explore and develop the Thambani licence by spending $700 000 over the subsequent 12 months.

The completion of this second workplan will entitle MetalNRG to a 49% economic interest in the Thambani licence, limited to uranium.

Thereafter, MetalNRG may elect to further explore and develop the Thambani licence by spending $800 000 over the subsequent 12 months.

The completion of this third workplan will entitle MetalNRG to a 75% economic interest in the Thambani licence, limited to uranium.

TSX-V- and Aim-listed Mkango will retain the right of first refusal on 100% of the offtake for uranium and other minerals.

“This transaction is another milestone for Mkango and for Malawi and is further endorsement of the company’s strategy and potential,” Mkango president Alexander Lemon said in a statement issued on Monday.

“With MetalNRG funding the Thambani uranium project and the previously announced transaction with Talaxis funding Mkango's Songwe Hill rare earths project, Mkango shareholders can look forward to an exciting year of news flow and progress in two of the market's most strategic commodities at present.

“We are pleased to be working with MetalNRG and look forward to a new drilling programme being carried out at Thambani.”