A year of considerable progress

“It is with great pleasure that I am able to report to shareholders on a year of considerable progress for the company in its development of the world’s first independent and sustainable magnet metal rare earth processing hub at Saltend Chemicals Park in the UK.” – Paul Atherley, Chairman, Pensana.

The electrification of motive power is forecast to become the biggest energy transition in history. Two of the biggest components of this transition are the phasing out of internal combustion engines in favour of electric vehicles and the rapid growth of offshore wind, both of which are heavily dependent on powerful rare earth permanent magnets.

Currently, China supplies over 90% of these magnets and has made it clear that it is going to need all its production for its US$11 trillion 2060 carbon-neutral plan and that it feels under no obligation to supply the rest of the world.

An additional concern for European and US OEMs is that the current supply from China may not meet their environmental, social and governance (ESG) standards. Global Witness recently reported that over 16,000 Chinese miners have crossed the border into neighbouring Myanmar and are using highly toxic methods to extract rare earths, devastating ecosystems, endangering livelihoods and restricting access to safe drinking water.

Pensana is at the forefront of tackling these challenges. By establishing an independent and sustainable supply chain to the highest international standards, we will be able to provide our customers with the assurances they need in terms of supply chain resilience and transparency in terms of ESG.

An example of this was the recent announcement that Pensana has been selected by Polestar to join its collaboration to produce the world’s first climate-neutral car. The Polestar 0 Project is aiming to develop a climate-neutral supply chain for all its raw materials.

During the year, we received green bond accreditation from CICERO, Norway’s foremost institute for climate research, recognised as a leading provider of independent reviews of green bond and sustainability financing frameworks. CICERO rated the planned operations as light green with a governance score of good.

We recently launched our blueprint for sustainable rare earths, which outlines our aim to produce the lowest embedded carbon products in the rare earth industry, as well as a deep and meaningful carbon reduction with the company’s goal of achieving net zero across the value chain by no later than 2040. The blueprint is an important document as it clearly sets out our commitment to all stakeholders and importantly to our customers that we put the highest ESG standards at the heart of our operations. Sustainability is always going to be a work in progress, however, the blueprint provides a clear pathway to embedding ESG into every decision, at every stage, using independent experts to monitor our progress.

We are seeing increased levels of interest from automotive and offshore wind OEMs and are in advanced discussions with a number of parties seeking offtake arrangements. We are also in early discussions with new and existing major magnet manufacturers about becoming part of a realignment of international magnet metal supply chains and have recently signed a memorandum of understanding with a large non- Chinese magnet manufacturer for an offtake of 25% of Pensana’s rare earth oxide production post year-end.

At the time of writing, we are in the final stages of financing and, despite the current turbulence in the world’s financial markets, we are receiving strong interest and aiming to complete the main financing by the end of Q4 calendar year 2022.

We very much look forward to reporting to you on the progress of our company over the forthcoming 12 months.

Pensana plc (LON:PRE) explores and mines neodymium, praseodymium, and rare earth minerals. The company is looking to establish the world’s first fully sustainable magnet metal rare earth oxide producer at the Saltend Chemicals Park in the Humber Local Enterprise Partnership Yorkshire, UK.

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