Folks, up next we have Derek Bideshi, CFO from Lindian Resources. Derek has a background in finance and he's got a CPA from Canada and a CA from Australia. He's had roles at GM Finance Procurement with Iluka. He's also had roles with South32 and BHP. It's his first time at Diggers & Dealers, and a fun fact about Derek is he recently hung up his skates after 25 years as an ice hockey goalie. He's won seven championships across two continents, and no doubt he's been in a few dust-ups, so if you get into strife later on, folks, Derek's got your back. Please welcome Derek to the stage.
Thank you, Paul. Thank you for having us this year at Diggers for Lindian's first time presenting. On top of the dust-ups, there's probably been a two concussions, so I apologize if I read a lot because my memory isn't as good as it used to be. I am CFO for four weeks now, so I've been called in at the last minute. Our Exec Chair who was supposed to present is last-minute travel, so you get me. Really, I think probably, excuse me, at this point in Lindian's story, it's actually fitting. The story stopped being about promise and has actually started to become about delivery. We're in construction, in contracts, and looking at cash flows, so you're starting to talk about CFO territory. We call ourselves the new force in rare earths.
Over the next few minutes, I just want to show you why that's not a slogan, it's a schedule. This slide summarizes it all pretty plainly. Five months from first concentrate, fully funded, under construction, and offtake secured. Quickly about the people and the key people in the business, the board. This board was built for one thing, and that's delivery. Our directors bring a wealth of experience in all aspects of execution. Rob Martin, our Exec Chair, has 25 years across mining services, and capital markets and built and sold a major mining services business. Zac Komur, with project experience at BHP, Fortescue, and delivery of first gas at INPEX's AUD 37 billion Ichthys project ahead of schedule. Teck Lim, our former CFO, now brings that deep corporate finance experience to the board as a Non-Exec Director.
Park Wei, an experienced investor across property, mining, and finance. Here's the corporate picture. We're capitalized at around AUD 1.4 billion with 1.8 billion shares on issue. We've had two funding events that sit behind this, the AUD 91.5 million placement alongside our stage one Final Investment Decision, and the AUD 100 million placement for completing construction and advancing our stage two and SARECO downstream facility. Speaking as the CFO, the balance sheet is looking pretty good. We're fully funded for what we've committed to build, and we're headquartered in Perth with operations in Malawi, Kazakhstan, and Singapore. Here's where we sit among peers. Every rare earths hopeful lives somewhere on this line. Scoping studies, financing, construction, and production. Most of the Western pipeline is still on the left and working through permitting and funding. We're at the right-hand edge, financed, in construction, and targeting production this year.
The next new rare earth mine to market. The two Western producers, Lynas and MP Materials, sit around $14 billion of market cap, and we're at $1.4 billion. On an illustrated basis, that's a valuation gap from 7- 10 times. The way to close that gap is clear, and it's through delivery. It all starts with geology, and Kangankunde in Malawi is a genuinely world-class deposit, and the number that matters here is that 20%. Around 20% of the basket in the product we'll sell is neodymium and praseodymium, NdPr, and they're the two elements that make permanent magnets. Magnets are where the demand is. Electric vehicles, wind turbines, and increasingly robotics. On contained NdPr, Kangankunde stands up against every development peer on this chart. With over 1 million tons of contained NdPr in resource, very few ore bodies combine this scale with this quality basket.
Here's the snapshot. The numbers tell the story. A 261 million tons resource, a 23.7 million tons reserve at around 3% TREO, underpinning a 45-year reserve life. That's declared on just 9% of the resource. Expansion here is actually a drilling exercise, not a discovery exercise. Now the numbers I love. The stage one capital is $40 million and around $25 per kilogram on annual NdPr capacity. It's the lowest capital intensity globally. Post-tax NPV of AUD 831 million on an 80% IRR and a payback of around 18 months. The operating costs of AUD 292 per kilo are the lowest quartile, and this is no longer a study as we had first blast on July 1st, and active mining is underway. Why is it so cheap? The geology does the heavy lifting.
98% of the rare earths sit in a single mineral, monazite. We process one mineral, not a complex blend. The ore is fresh rock from surface, no weathered cap to strip or treat separately. The thorium is very low, which keeps radiation out of operations, shipping, and sales. The starter pit runs a strip ratio of 0.2 to 1. Put simply, the ore body mines more like a quarry. Every cost advantage in this presentation actually starts right here. Now who's going to buy it? The Iluka partnership anchors stage one on three fronts. Off-take. We've got a 15-plus-15-year agreement, 6,000 tonnes a year of monazite concentrate. It's 90,000 tonnes over the initial term. That's supplying Iluka's government-backed Eneabba Refinery right here in Western Australia.
For growth, Kangankunde becomes the cornerstone supply for Eneabba, with a scale path beyond that initial 6,000 tonnes, and pricing linked to NdPr oxide with a floor set above our cost of production. It gives us full participation in the upside, protected downside, uncapped upside. As a finance guy, that's what you want to see. How it scales. Stage one is in execution, an optimized plant capacity of around 20,000 tonnes per annum, fully funded through those two capital raises with first production expected in the fourth quarter of this year. Of that capacity, the 6,000 tonnes is committed to Iluka. 12,500 tonnes feeds our own downstream plant, which I'll talk to in a moment. The stage two is the step change. Fully permitted with a study underway targeting an additional 100,000 tonnes, a 500% increase to 120,000 tonnes per annum.
A final investment decision is targeted for December, and we are on track for that. Here's the downstream plant. As the new CFO, I think my favorite transaction coming into this company was this. Lindian is now the only ASX-listed rare earths developer with both an FID-approved mine in construction and an operating downstream MREC facility. The SARECO cracking and leaching plant in Kazakhstan is an operational facility for $15 million. That's $3 million upfront and $12 million deferred until after commercial production. Building the equivalent new would be about $500 million, and not to mention the four to six years of construction risk. We're paying around 3% of that for a plant that exists today, and the joint venture is 51% Lindian. We're the appointed manager. We hold the casting vote, and we get the marketing rights, global marketing rights.
We're getting downstream margin for some pretty slim downstream CapEx. The chemistry of that plant is proven. ANSTO and the SARECO team have confirmed recoveries of around 92% for total rare earths and 98% for NdPr through a conventional sulfuric acid bake and leach flow sheet. Infrastructure that's already operational, and uranium and thorium are below detection limits. These are not class seven dangerous goods. The product stockpiles and handles like a normal commodity. Commercially, MREC means higher payability than the concentrate and less reliance on third-party processors. Because we keep marketing control, we can flex the decision and the sales points between the concentrate and the MREC sales, depending on the pricing. This is optionality, and it's backed by that chemistry. Pulling it all together, an integrated mine-to-MREC supply chain across four countries.
Malawi is the engine room with the stage one mine and process plant. Australia takes 6,000 tonnes a year into Eneabba. Kazakhstan takes 12,500 tonnes a year into the SARECO facility at Stepnogorsk with access pathways to Western customers under the EU and U.S.-Kazakhstan critical minerals frameworks. The logistics are conventional and proven, and the seal containers will go by road to Blantyre Rail Siding, then 1,000 km of rail to Beira Port, Mozambique, and from there by sea and rail to Fremantle for Eneabba and to Kazakhstan. With the uranium and thorium so low, none of it needs that class seven dangerous goods permits, which makes shipping significantly easier. The concentrate shipments will commence in the fourth quarter of this year with the completion of Kangankunde, with first MREC targeted for the first half of 2027. Where is construction actually at in Kangankunde?
First on safety, more than 800,000 work hours without a lost time injury, and that is the number we're proudest of on this slide. Civil and structural works are ahead of schedule. Key concrete pours are complete. Tailings facilities around 50% complete, targeting completion in September. The 27 km power corridor is finished. 269 poles are ready for tie-in. 17 boreholes are drilled. Water permits are secured. Komatsu fleet is mobilized and operating. Haul road is complete. Around 27,000 tons of ore is already on the ROM pad. From here, it's commissioning in October, practical completion in November, and first production in the fourth quarter. The DRA-led stage two study stays on track for December. Remembering what I said about the geology, here's what it buys us in the plant. This is a beneficiation plant, not a chemical plant.
We crush, we grind, and we separate by gravity and magnetics. Out the other end comes a premium 55% TREO concentrate. We're relying on the simple mineralogy and the simple mining. The good thing about simplicity is it tends to be cheap. None of this happens, however, without Malawi. We have a strong, transparent relationship with the government, and we've hosted visits from the IMF and the UNDP. Kangankunde is recognized as one of the world's most significant undeveloped rare earth deposits, Malawi wants it developed well. We're working with the government to build Malawi's standing as a trusted mining jurisdiction. That same discipline applies on the ground, and our community program runs on a simple loop: consult, align, deliver, and sustain.
This means community forums with traditional leadership, local employment and procurement, and educational investment through initiatives like Project Early Learning. We've already built a school for 400 local children with houses for the teachers. This is a 45-year reserve on a multi-generational ore body, the community will outlast us, so we're trying to build accordingly. That's the company funded and building. Let me just quickly zoom out to the market it sells into, because the timing here matters. Demand for magnet rare earths is forecasted to grow to 8.2% compound a year, and that's driven by the robotics and EVs, wind, and advanced electronics. Supply is forecasted to grow at only 5.1%, so it's a cyclical squeeze. It's not a cyclical squeeze. That's a structural deficit. Against that deficit, who's positioned to help fill this gap?
Across the ex-China rare earths pipeline, most names are still at studies or financing, Lindian stands there as FID approved and fully funded, and delivered in 2026. In a sector still growing into its full potential, being funded and building is the strategic advantage. My last 20 seconds before I get yanked off by Paul, just what are we talking about earnings? The base case, and this is the base case, gives $83 million of annual EBITDA at an assumed $109 per kilogram NdPr. Once you got stage two and we increase that scaling, you're talking $12 million EBITDA for about every $10 of NdPr price. On that's all I have. Thank you very much