UK-based mining exploration company, Altona Energy has signed a Memorandum of Understanding (MoU) with Akatswiri Mineral Resources to acquire a majority stake in a rare earth mining project in the Chambe Basin, Mulanje in Southern Malawi.

The Akatswiri holds 100% ownership of the Malawi registered Akatswiri Rare Earths (ARE), which has applied for Exploration licence APL 0153 – the Chambe Rare Earth Project (Chambe) that it expects to be granted in June, following government approval.

As per the terms of the MoU, Altona will acquire an initial 51% holding in ARE in exchange for Altona shares.

The stake is expected to increase to 75% on certain project milestones being met while the remaining 25% will be held by Akatswiri.

Chambe is a large, ionic adsorption clay-hosted rare earth elements (REE) project bearing significant quantities of critical heavy and light REEs that mainly include ytterbium, dysprosium, yttrium, neodymium and praseodymium.

The due diligence process is expected to take up to three months to complete

Akatswiri CEO Hilton Banda said: “Working with Altona gives us confidence that we will secure the funding necessary to develop Chambe as a strategic and sustainable producer of rare earths.

“The project has already received support from Government, local communities and key stakeholders, through our active engagement and involvement with local communities over the past three years.”

Since September 2010, the extensive exploration work has been carried out on the site confirming the presence of mineralised Rare Earth Oxide clays that are similar to most of the larger REE mines in China.

Both the companies have already started due diligence to examine the feasibility of the acquisition. The due diligence process is expected to take up to three months to complete.

It is subject to certain factors that include Akatswiri providing an up-to-date geological report, which it expects to gain access to in due course.