Mkango Resources Limited Songwe REE Project Malawi

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Mkango Resources Limited Songwe REE Project Malawi Mkango Resources Limited Songwe REE Project Malawi NI 43-101 Pre-feasibility Report Prepared By The MSA Group (Pty) Ltd for: Mkango Resources Limited Prepared By: Rob Croll Fellow SAIMM Scott Swinden P.Geo Michael Hall Pr. Sci.Nat., MAusIMM Clive Brown Pr.Eng., Fellow SAIMM Gavin Beer (Ext.Met) MAusIMM (CP) Jansen Scheepers Pr.Eng. Tinus Redelinghuys Pr.Eng. Guy Wild Pr.Eng Graham Errol Trusler P.Eng Effective Date: 19 September 2014 Report Date: 06 November 2014 MSA Project No.: J2897 TABLE OF CONTENTS 1 SUMMARY ............................................................................................................................................... 1 1.1 Property Description and Location ..................................................................................................................... 1 1.2 History and Ownership ............................................................................................................................................ 1 1.3 Geology and Mineralization .................................................................................................................................. 2 1.4 Status of Exploration................................................................................................................................................. 3 1.5 Mineral Resources ..................................................................................................................................................... 3 1.6 Mineral Reserves ........................................................................................................................................................ 4 1.7 Mining ............................................................................................................................................................................ 5 1.8 Process Overview ....................................................................................................................................................... 9 1.8.1 Processing plant capital cost estimate ........................................................................................... 10 1.8.2 Processing plant operating cost estimate .................................................................................... 10 1.9 Tailings ........................................................................................................................................................................ 11 1.10 Environmental Aspects ......................................................................................................................................... 14 1.10.1 Legal framework ..................................................................................................................................... 14 1.10.2 Potential environmental risks ............................................................................................................ 15 1.11 Market Studies and Contracts............................................................................................................................ 16 1.12 Capital and Operating Cost Estimates ............................................................................................................ 18 1.12.1 Capital Costs ............................................................................................................................................. 18 1.12.2 Operating Costs ...................................................................................................................................... 19 1.13 Financial Valuation ................................................................................................................................................. 19 2 INTRODUCTION .................................................................................................................................... 23 2.1 Scope of Work .......................................................................................................................................................... 23 2.2 Principal Sources of Information ...................................................................................................................... 23 2.3 Qualifications, Experience and Independence ............................................................................................ 23 3 RELIANCE ON OTHER EXPERTS .......................................................................................................... 25 4 PROPERTY DESCRIPTION AND LOCATION ...................................................................................... 26 4.1 Location ...................................................................................................................................................................... 26 4.2 Mineral Tenure, Permitting, Rights and Agreements ............................................................................... 28 4.2.1 Exclusive Prospecting Licenses in Malawi ..................................................................................... 28 4.2.2 EPL 0284/10R Phalombe ...................................................................................................................... 28 4.2.3 General Provisions .................................................................................................................................. 30 J2897 Mkango Songwe Hill PFS November 2014 Page: ii 4.2.4 Overlapping EPLs .................................................................................................................................... 31 4.3 Environmental Liabilities ...................................................................................................................................... 31 5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...... 33 5.1 Accessibility ............................................................................................................................................................... 33 5.2 Climate and Physiography................................................................................................................................... 34 5.2.1 Climate and meteorological Overview ........................................................................................... 34 5.2.2 Physiography ............................................................................................................................................ 42 5.3 Local Resources and Infrastructure .................................................................................................................. 43 6 HISTORY................................................................................................................................................. 45 6.1 Ownership History .................................................................................................................................................. 45 6.2 Historical Exploration ............................................................................................................................................ 45 6.2.1 Pre-1981 Programmes .......................................................................................................................... 45 6.2.2 Post-1981 Programmes ....................................................................................................................... 46 6.2.3 Japan International Cooperation Agency and Metal Mining Agency of Japan, 1986 - 1988 .......................................................................................................................................................... 46 7 GEOLOGICAL SETTING AND MINERALIZATION .............................................................................. 52 7.1 Regional Geology.................................................................................................................................................... 52 7.2 Geology of the Songwe Carbonatite Vent .................................................................................................... 54 7.2.1 Carbonatite ............................................................................................................................................... 54 7.2.2 Fenite ........................................................................................................................................................... 57 7.2.3 Breccia ......................................................................................................................................................... 57 7.2.4 Silicate-rich dykes ................................................................................................................................... 58 7.3 Mineralization ........................................................................................................................................................... 58 7.3.1 Geological domains ............................................................................................................................... 58 7.3.2 Geometry of the Mineralization ........................................................................................................ 64 7.3.3 Thorium ...................................................................................................................................................... 66 7.3.4 Mineralogy ...............................................................................................................................................
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