Pensana Metals Ltd (ASX:PM8) has now loaded four containers carrying over 60 tonnes of near surface weathered mineralisation from the Longonjo neodymium and praseodymium (NdPr) project in Angola.

The containers will be despatched to Perth Australia via the Benguela rail line and the Port of Lobito.

Pilot plant testwork on this bulk sample will enable the detailed process route design to be finalised and batches of NdPr-rich concentrate produced to be sent to selected potential customers in China.

An estimated 190 hole, 7,000 metre reverse circulation infill drilling programme has commenced at Longonjo. The drilling is designed to provide detailed data to support an upgrade of the resource from inferred to measured and indicated, as well as to test several potential extensions to known mineralisation.

A drone aeromagnetic survey has also commenced on site. The survey is designed to map high grade mineralised, potentially steeply dipping structures to aid in targeting exploration drilling that will test for potential extensions to the currently defined mineralisation.

Broker Ambrian takes a robust view of the potential of Longonjo, citing the recent pre-feasibility study that was completed by Pensana in support.

The plan is to operate from an open pit mine producing an average of 56,000 tonnes per year of NdPr concentrate over a nine-year life. The project will have an initial capital cost of US$131mln and an operating cost of US$1,323 per tonne of concentrate.

Ambrian argues that “the large size of resource, the low capex and operating costs, and the high returns of the Longonjo project in particular, stand out against other advanced NdPr projects.”

The broker adds: “We have constructed a project model based on Pensana’s pre-feasibility study and commodity price assumptions but have expanded the mine life to 24 years using additional inferred resources and also used a 14% discount rate (to account for Angolan country risk). We have then applied a 0.25x multiple to the NPV because the project is still in the exploration and development stage and needs to complete the DFS, raise finance, and complete construction to bring the mine on stream. This then gives us an initial price target of A$0.86/share for Pensana.”

The current share price is A$0.20.

“We would expect our NPV discount and country risk premium to reduce in time as the project reaches certain milestones and moves towards full operation,” continues Ambrian.

“This price target is 4.3x the current share price and given the positive project developments and the attractive outlook for its markets, we have placed a Buy recommendation on the stock.”