Today we have transferred all of our existing holdings in Mkango Resources Ltd into the Chaos Investments fund, at the share price as at close of trading on 27.07.2017. The amalgamated holding amounts to 4.6% of the Company’s issued share capital.
Our rationale for investing in Mkango is founded on our belief that the global rare earth elements (‘REE’) market is entering into a period of imbalance, catalysed by diminishing supply and rapidly growing demand. Our analysis on the global REE industry is set out in this report:
The thesis of the report is as follows:
“The supply / demand dynamics of the global rare earth elements (‘REE’) industry are set to become imbalanced, owing to quasi-monopolist China curbing domestic production, and to the rapidly accelerating global adoption of renewable energy technologies that utilise REEs. We are of the opinion that the approaching market imbalance will ultimately be corrected by the fast-tracking into production of ex-China REE deposits. As such, we believe that investors should be positioning themselves for the impending recovery in the rare earth sector by investing in late stage REE projects that possess mineralisation geared towards renewable energy applications.”
In our opinion, Mkango’s REE deposit in Malawi, Songwe Hill, represents one such project. We intend to publish our rationale for investing specifically in Mkango in the near future.